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ADB and Viet Nam Sign $120 Million Loan for Northern Power Transmission Project

HANOI, VIET NAM (25 August 2005) – The Asian Development Bank (ADB) and the Government of Viet Nam today signed a US$120 million loan for a project that will help ensure a steady and reliable supply of power in northern Viet Nam.

The loan agreement was signed in Hanoi today by Bradford Philips, Country Director for ADB’s Resident Mission in Viet Nam, and Le Duc Thuy, the Governor of the State Bank of Viet Nam. Also present during the loan signing was Dinh Quang Tri, Vice President, Electricity of Viet Nam (EVN).

The Project will expand and upgrade a portion of the 500 kilovolt (kV) and 220 kV transmission systems to transfer additional power to improve system reliability and enhance the efficient utilization of existing and new power plants in northern Viet Nam.

The project will also strengthen the supervisory control and data acquisition system (SCADA), as well as the communications facilities at the north, central and south regional centers and the national load dispatch center (NLDC) in Hanoi. The upgrading of SCADA facilities will improve day-to-day load dispatch system performance and reliability.

In addition, the project will support power sector reform by ensuring that generating units of EVN are converted into corporations and that a single-buyer power market with transparent regulation of the sector is established in 2009.

“This project underscores the Government’s commitment to providing the infrastructure necessary for sustained economic growth and poverty reduction,” says Mr. Philips. “Developing an efficient and stable power sector is an essential element of maintaining the Government’s 7.5% average growth target up to 2010.”

Viet Nam’s power demand is forecast to continue to rise at about 15% annually from 2004 to 2010, with that in northern Viet Nam expected to increase by about 16.5% per year until 2010. The project area, which is in the process of industrialization, accounts for about 37% of the country's generation capacity and 39% of its total electricity consumption.

EVN expects to increase its installed generating capacity from 10,871 MW in 2004 to 20,666 MW by 2010. Capacity in high voltage and medium voltage transmission and distribution systems also needs to be improved commensurately to address transmission bottlenecks and reduce losses.

The project's total cost is estimated at $273.6 million, of which the French development agency Agence Francaise de Developpement will finance $50 million and EVN $103.6 million.

ADB's loan, which accounts for 43.8% of the total cost, comes from its ordinary capital resources (OCR), with a 25-year term, including a grace period of five years. Interest is determined in accordance with ADB's LIBOR-based lending facility.

EVN is the executing agency for the project, which is expected to be completed in June 2009.

The Asian Development Bank 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 63 members, with 45 from the region.

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