VIETNAM'S DEPUTY PM EMBRACES U.S.-VN ECONOMIC AGENDA;

UNCLAS SECTION 01 OF 02 HANOI 000536 SENSITIVE SIPDIS STATE FOR EAP/MLS BROWN AND PALMER USTR FOR BISBEE COMMERCE FOR 4430/MAC/AP/OPB/VLC/HPPHO E.O. 12958: N/A TAGS: EINV EINT ECON EFIN PGOV PREL VM SUBJECT: VIETNAM'S DEPUTY PM EMBRACES U.S.-VN ECONOMIC AGENDA; DISCUSSES AES, CHEVRON, AND GE DEALS REF: A) Hanoi 439 ("VN Ready for TPP Talks"); B) Hanoi 211 ("Plan To Deregulate Vietnam's Power Sector") HANOI 00000536 001.2 OF 002 (U) This cable is Sensitive but Unclassified. For official use only, not for dissemination outside USG channels or posting on the internet. ¶1. (SBU) Summary: In a June 2 meeting with the Ambassador, Deputy Prime Minister (DPM) Hoang Trung Hai encouraged movement on the U.S.-Vietnam economic agenda, particularly on GSP, TPP, and catfish. Hai was optimistic about completing pricing agreements for large AES and Chevron projects in Vietnam. He said the AES deal could be finalized within as little as ten days, and looked forward to getting through the current natural gas pricing discussions with Chevron to move on to further exploration and drilling. The DPM was neutral when a possible GE deal was raised. End Summary. AMBASSADOR'S UPCOMING VISIT TO THE U.S. -------------- ¶2. (SBU) In a June 2 meeting with the Ambassador, Deputy Prime Minister (DPM) Hoang Trung Hai expressed particular interest in moving forward with the Trans-Pacific Partnership (TPP),receiving Generalized System of Preferences (GSP) status, and finding a resolution on the catfish issue, each of which, he emphasized, would help Vietnam's exports (REF A). Hai, who oversees industry, trade, and investment issues, also encouraged the Ambassador to push the U.S.-Vietnam economic agenda during his June 4-22 visit to U.S. CHEVRON, AES, GE PROJECTS -------------- ¶3. (SBU) When asked about Chevron's five billion-dollar gas-to-power project, the DPM responded that the project was good for Vietnam and said he looked forward to other exploration projects after Chevron resolved the natural gas pricing issue with PetroVietnam. ¶4. (SBU) When the Ambassador expressed concern the proposed AES power plant project's being forced by a volatile market to increase its electricity tariffs when the MOU between AES and EVN (Electricity of Vietnam) expires on June 15, the DPM said that the GVN had given AES a counter-offer within the negotiated price range and will be ready to to ink the deal if AES "simply accepts the offer." (Note: AES remains non-committal about the Vietnamese counteroffer. The GVN had pledged to issue the investment license for this project before the end of Q1 2009. See REF B) ¶5. (SBU) In response to Ambassador's request for the status regarding GE's bid to provide turbines for the Nhon Trach 2 power plant in Dong Nai province, the DPM was neutral, praising the quality of GE's turbines, but complaining that they may still be too expensive. (Note: The Ambassador had sent the DPM a letter on May 28, 2009 advocating for GE's bid.) ECONOMIC CRISIS -------------- ¶6. (SBU) The DPM also said that the GVN was trying to show the public and the National Assembly (currently in session in Hanoi) that although Vietnam was through the worst of the economic crisis, the economy needed to be managed prudently, especially because monetary and financial conditions were still volatile. The economy will not "simply fly again," he stated. CIVIL NUCLEAR POWER -------------- ¶7. (SBU) The DPM thanked the Ambassador for U.S. cooperation in converting the Dalat nuclear research reactor from highly-enriched uranium (HEU) to low-enriched uranium, and the proposal to remove HEU spent fuel. He was also pleased to hear that the MOU on exchanging technical information related to Vietnam's ambitions for nuclear power generation was going through the clearance process in the United States. However, the DPM noted that barriers remained for U.S. businesses to invest directly in civil nuclear power projects in Vietnam, saying that GE told him they would have to go through its Japanese partner, Toshiba. COMMENT HANOI 00000536 002.2 OF 002 -------------- ¶8. (SBU) Although the GVN continues to support U.S. investment in the energy sector, several major projects remain pending. Investment in Vietnam's energy sector is still a long-term commitment for U.S. companies, as AES's seven-year effort to reach agreement shows. PALMER