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ADB UPS Energy Investment in Viet Nam

MANILA, PHILIPPINES (21 September 2007) – The Asian Development Bank (ADB) has approved a US$28 million first-stage loan for Viet Nam's Mong Duong thermal power project. The plant will ultimately add 2,200 megawatts of generating capacity to Viet Nam's electricity system.

Total ADB funding under the two-stage financing program will be $931 million.

Viet Nam's demand for electricity is growing at a rate of 16% each year. The country's continued economic development hinges on its ability to keep up with this growing demand.

"There is not a single example of a modern nation significantly reducing poverty without dramatically increasing its use of energy," said the Director of ADB's Southeast Asia Department Infrastructure Division, John Cooney.

"The only way we can fundamentally address the needs of the 8 million people in Viet Nam who still live on less than $1 a day is to make sure we put all of the indispensable building blocks of development in place."

Power shortages pose a serious and growing threat to Viet Nam's sustained economic growth. Power shortages impede job creation, industrial activities, telecommunications and commerce.

Power outages in Viet Nam are becoming increasingly acute during the dry season due to low water levels in hydropower plants, which currently generate approximately 40% of Viet Nam's electricity output.

"Viet Nam needs to diversify its energy resources to ensure a reliable, long-term source of power to fuel the nation's development," added Mr. Cooney. "Given its availability, and the fact that it is the most affordable source of energy in northern Viet Nam, where this project is located, coal is a necessary part of that mix."

A prerequisite of ADB support for the Mong Duong thermal power project was a detailed environmental impact study. In order to mitigate environmental impacts, the project will introduce circulatory fluidized bed boiler technology, which will significantly reduce emissions.

"While projects like Mong Duong are essential for Viet Nam's continued growth, we recognize that greater use of clean energy, renewable energy, and increased energy efficiency are critical to Asia's longer-term development," said Mr. Cooney.

ADB is working closely with Vietnamese authorities to implement the country's National Program on Energy Efficiency and Conservation. Viet Nam is one of six priority countries for clean energy investment assistance under ADB's $1 billion a year energy efficiency initiative.

ADB is also supporting energy efficient metro-rail transportation systems in Hanoi and Ho Chi Minh City, which will significantly reduce vehicle emissions in both cities.

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