France, ADB Boosting Viet Nam Power Sector's Environmental Management Capacity

MANILA, PHILIPPINES (17 October 2007) - The Agence Française de Développement (AFD) and Asian Development Bank (ADB) are helping enhance the environmental management capacity of Viet Nam’s power sector for the sustainable development of its thermal power plants to meet the growing electricity demand in the country.

The Capacity Building on Environmental Management to the Power Sector, estimated to cost $720,000, will be financed through a $600,000 grant from the AFD to be administered by ADB. The balance will be covered by the Government of Viet Nam.

The assistance will focus on strengthening the capacity of Viet Nam Electricity in environmental management of thermal power plants, which are facilities that run on coal, oil and gas. Viet Nam Electricity accounts for 78%, or 8,822 megawatts, of the total installed capacity of Viet Nam. Around 61% of the installed capacity of Viet Nam Electricity is with thermal power plants.

The project will also assist the Department of Environment and Natural Resources of Quang Ninh province in northern Viet Nam address air pollution problems due to power development and improve the department’s capacity for managing air quality in the province. Quang Ninh has the largest coal reserves in Viet Nam, with more than 100,000 people employed by the coal industry, with many others working in subsidiary and services industries related to coal.

“The daily operation of thermal power plants, especially those based on coal, has been contributing to environmental problems and deteriorating air quality and public health in both urban and rural areas due to air emissions, waste generation and inefficiency of plant operation,” said Yue-Lang Feng, principal environment specialist of ADB’s Southeast Asia Department.

ADB’s country environment analysis for Viet Nam found that the environmental problems in thermal power plants were partly due to poor maintenance of equipment, out-of-date design and technology and weak capacity and institutional systems for environmental management. To address this, Viet Nam Electricity introduced cleaner technology for its new coal-fired power plants.

Viet Nam’s rapid annual economic growth of 7.5% over the past decade has contributed to the government’s success in reducing the proportion of the population below the poverty line, from 58% in 1993 to 19% in 2006. The government intends to maintain this growth momentum until 2010 and to further reduce the poverty rate to 15%.

With continued economic growth comes an estimated 16% annual increase in power demand. Any shortage in power is most likely to result in slower economic growth and possibly lead to failure in meeting the poverty reduction targets.

Viet Nam has drawn up its sixth Power Development Master Plan, which identifies the need for new power generation, transmission and distribution projects needed to meet the country’s growing electricity demand. ADB and other development partners are supporting the program.

At the same time, ADB’s country strategy and program 2007-2010 for Viet Nam underscores the importance of the environment and proposes initiatives to assist in building the government’s capacity in environmental management to ensure sustainable economic growth while at the same time providing funding support to the country’s infrastructure development.

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