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Mong Duong Power Plant Project Signed

HANOI, VIET NAM (9 October 2007) – Asian Development Bank (ADB) and the Government of Viet Nam signed today a Framework Financing Agreement for Mong Duong thermal power project of $931 million, and the loan agreement for its first-stage loan of $28 million. The plant will add 2,200 megawatts of generating capacity to Viet Nam's electricity system in 2012, and will be financed under the two-stage financing program. The second loan agreement is scheduled to be signed in two years.

On behalf of ADB, Ayumi Konishi, ADB's Country Director for Viet Nam signed the agreements with Mr. Nguyen Van Giau, Governor of the State Bank of Viet Nam representing the Government at a ceremony held this afternoon.

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.

"Sufficient power supply is an essential prerequisite for Viet Nam to sustain economic growth supported by domestic industry and services as well as large foreign direct investment," says Konishi. "Without power, neither domestic or foreign companies here can become efficient and competitive in the global markets. Viet Nam significantly reduced poverty through growth. For Viet Nam, rapid economic development is very important to reduce poverty."

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," Konishi continues. "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. We are particularly pleased that with this project, Viet Nam is adapting the new ‘clean coal' technology with the minimal impact on environment."

A prerequisite for ADB support to 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.

ADB is also 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.

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