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Signing for ADB Loan for Northern Power Transmission Expansion Sector Project

HANOI, VIET NAM (22 August 2006) - Today, in Hanoi, Asian Development Bank (ADB) and the Socialist Republic of Viet Nam signed the Loan Agreement for the Northern Power Transmission Expansion Sector Project. This ADB public sector loan of $360 million to the Government will enable power to be supplied to the industrial zones being located in one off the poorest regions in the country, the northern part of Viet Nam, for the purpose of facilitating employment and income-generating opportunities.

Viet Nam has experienced an economic growth of 7.5% per annum over the past decade, fuelling demand for electricity by about 15% per year. This rapid economic expansion has helped Viet Nam reduce its share of population living in poverty from 58% in 1993 to 25% in 2005, and it is envisaged that this will be further reduced to 15% by 2010. To meet the rapid demand in electricity and to avoid load shedding and voltage fluctuations that would undermine the operating cost structures of businesses across industry, services and trade, the government plans more than double the current installed generation capacity to about 24,000 MW by 2010. However, with the increased generation capacity, transmission bottlenecks will worsen unless the transmission system in the north is strengthened.

"Ensuring stable supply of power is essential for Viet Nam's continuing growth and efforts to reduce poverty," ADB's Country Director for Viet Nam, Ayumi Konishi, has remarked. "It is also a prerequisite for the potential investors who are showing keen interest in Viet Nam to actually making investment decisions to develop production facilities in the country."

The project will strengthen the high voltage transmission network in northern Viet Nam to enable efficient and reliable delivery of electricity to consumers, particularly benefiting industrial, commercial and residential customers in the country. By supporting industrial and commercial activity, the Project will create jobs; improve productivity and quality of outputs in the manufacturing sectors. The project will address the transmission bottlenecks, reduce transmission losses, facilitate efficient utilization of existing and planned power plants, and ensure availability of more electricity for rural electrification.

ADB, based in Manila, is dedicated to reducing poverty in the Asia and Pacific region through pro-poor sustainable economic growth, social development, and good governance. Established in 1966, it is owned by 66 members - 47 from the region. In 2005, it approved loans and technical assistance totaling $6.95 billion and $198.8 million, respectively.

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