IFC and Armstrong will take a 16 and 20 percent equity stake in GEC, respectively. The investment will help the company expand its hydropower portfolio and invest in other renewable energy segments, such as wind and solar power.
CEO of GEC Le An Khang said that the investment will help GEC become a leader in renewable energy and provide sustainable alternatives to fossil fuel-based power generation in Vietnam.
GEC is located in the Central Highland province of Pleiku. In 2013, GEC joined the Thanh Thanh Cong Group. GEC was one of the largest private sector hydropower players in Vietnam with charter capital of 715 billion VND (34 million USD). This company manages 15 run-of-the-river small-scale hydro power plants with total capacity of 84.4 MW.
The investment of IFC and Armstrong will boost local confidence in the hydropower sector’s potential and help attract more international investors, Mr.Le An Khang added.
Local electricity consumption has outpaced the country’s economic growth rate two-folds over the past few years. With an expanding renewable energy portfolio, GEC will contribute to the government’s goal of increasing Vietnam’s installed power capacity by 14 percent per annum between 2015 and 2030.
Managing partner of Armstrong Andrew Affleck said the fund would share its knowledge and experience of developing and constructing multiple renewable projects in neighbouring South East Asian markets to help GEC build a leading position in Vietnam.
By developing sustainable hydropower and other renewable energy sources, GEC will help the country meet its estimated 10 percent annual increase in power demand, diversify its energy mix and reduce its reliance on imported fossil fuels.
IFC head for Infrastructure and Natural Resources for Asia Pacific Hyun-Chan Cho said that the IFC investment is an important step to encourage other investors to tap into the rich potential of Vietnam’s green energy sector, where participation by foreign investors is still modest.
He added that IFC’s global industry knowledge will help transform GEC into a role model for other emerging renewable energy players in Vietnam by showcasing best industry practices.
Hydroelectricity is the world’s largest source of renewable energy and accounts for one-fifth of its electricity supply from all sources. Over the last decade, IFC has invested more than $1 billion in 75 hydropower projects in 25 developing countries.
