HSBC might be breaking European Union rules on working with Russian banks by funding a new 1,200 megawatt coal-fired power station in Vietnam. The bank, which recently announced a US$100 billion fund to fight climate change, denies this.
The London-based global banking giant is the lead arranger and global coordinator for the financing of LongPhu1, a 1,200 megawatt coal-fired power station that is also being funded by Russian development bank Vnesheconombank.
By working with the Russian entity, HSBC is in breach of sanctions put into place by the EU after Russia annexed Crimea from Ukraine in 2014, Market Forces has claimed. The EU’s rules include restricting the Russian banking sector’s access to the sale of energy-related equipment and technology.
Vnesheconombank is financing the equipment supplies for the $1.59 billion LongPhu1 facility in Vietnam’s Soc Trang province, which is being led by state-owned energy company PetroVietnam.
Market Forces has lodged a complaint with the EU and the United Kingdom Treasury Office over the matter.
HSBC responded to questions from Eco-Business about the potential breach in EU sanctions regulations by saying that its “relationship in the financing of LongPhu1 is with PetroVietnam,” and not Vnesheconombank.
The transaction is in line with the bank’s global sanctions policy, which is listedunder its financial crime risk policies, HSBC said.
With clean, renewable energy alternatives available to coal, HSBC should be prioritising making these the new energy source of choice, rather than condemning communities to decades more toxic pollution.
Julien Vincent, executive director, Market Forces
The first phase of the LongPhu1 coal plant is scheduled to be up and running next month, with a second phase, another 600 MW capacity, to be completed by May 2018.
The plant, along with others in the south of Vietnam, is being built to address energy security problems in the region, the country’s deputy prime minister Hoang Trung Hai has said.
Market Forces has pointed out that the construction of coal-fired power stations in the country will lock it into producing greenhouse gas emissions and toxic air pollution for generations.
The group also pointed out that HSBC has just announced a new sustainable financing initiative that includes a pledge to discontinue the financing of new coal-fired power plants.