The Vietnamese authorities have chosen a newly-created subsidiary of real estate conglomerate Vingroup for the development of the first phase of a major offshore wind project in the country. Morgan Stanley-backed German renewable company PNE, which claimed that the decision was a "surprise", has been excluded from the project. This is the latest blow to foreign investors who have been trying to invest in Vietnam's energy industry. Last year, Hanoi retroactively reduced subsidies for a number of renewable companies. Diverging opinions on electricity prices and deadlines also weighs heavily on foreign investment into the nascent nuclear and liquefied gas sectors. Vingroup, Vietnam’s largest company by market capitalisation and expanding under supportive government policies, is celebrating this decision as a major win. It has expanded its real estate business into tourism, healthcare and education. VinFast, an electric vehicle manufacturer listed on Nasdaq, is owned by the company. Last year, it set up new companies in sectors such as railways, steel, energy, entertainment, and space.

PNE INVESTED MILLIONS of DOLLARS PNE planned on investing $4.6 billion into the 2,000 megawatt off-shore wind project. Vietnam aims to reach 6,000 megawatts in offshore wind capacity by 2030-2035, up from zero today.

In a recent note, the People's Committee of the province of Gia Lai approved Vingroup's VinEnergo's bid for the first phase of the project. The bid was 48.3 billion Dong ($1.9million) and included an investment of VinEnergo. It did not mention PNE or another Vietnamese bidder that were?not chosen.

"We are surprised by this decision. PNE said that they are reviewing the reasons for the decision and will decide on the next steps afterward.

VinEnergo, although it hasn't developed an offshore wind farm as yet, has been awarded other projects since its founding in March.

Vingroup and the Gia Lai People's Committee did not respond when asked for comments.

Two people who are familiar with the operation said that PNE has been working on the project from 2019. They have conducted feasibility studies and performed wind tests. Sources declined to name themselves as they weren't authorised to speak about the project.

One person said that the company has already invested millions. PNE refused to comment on the costs. Sources said Vietnamese authorities expressed unexpected concerns over PNE's commitment to finance. One source claimed that the firm was asked to deposit investment money into Vietnamese accounts in advance as a guarantee. Morgan Stanley Infrastructure, a global investor, owns the majority of PNE.

On its website, the?German company announced that it had opened an office and signed a Memorandum of Understanding with Vietnamese authorities on pricing for electricity.

GOVERNMENT SUPPORTS THE NATIONAL CHAMPIONS Several?Western Wind Companies have left Vietnam in the last few months, including Norway's Equinor and Denmark's Orsted?and Italy?s Enel? To Lam, Vietnam's top leader is pushing for a new model of growth that supports national champions. This has at times caused friction with foreign investors who have been the backbone to Vietnam's decades long economic boom.

Vingroup is a major winner of this new policy. Its shares soared by more than 700% in the past year.

The Southeast is home to many multinationals with industrial operations geared towards exports.

As the country struggles with a significant increase in power generation, blackouts have occasionally occurred. The country has burned more coal to meet additional demands, despite promises to reduce its usage.

(source: Reuters)