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ADB Supports Environmentally Sustainable and Socially Inclusive Hydropower Project

Ha Noi, Viet Nam (6 October 2008) – The Asian Development Bank (ADB) and the Government of Viet Nam today signed a $196 million loan agreement for Song Bung 4 Hydropower Project in Quang Nam province.

The State Bank of Viet Nam Governor Nguyen Van Giau represented the government, while ADB's Country Director for Viet Nam Ayumi Konishi signed the loan agreement on behalf of ADB. Senior officials of Electricity of Viet Nam (EVN) and other government agencies were present at the ceremony.

The hydropower project, which is located in one of the poorest and most remote parts of central Viet Nam, is the first major hydropower project in the country to receive financing from a multilateral financial institution. Aside from ADB, Viet Nam Development Bank lends $22.3 million and state-owned EVN contributes $49 million to the project.

In line with its new strategic agenda to pursue environmentally-sustainable growth for the region, ADB is helping Viet Nam diversify its energy sources while keeping up with rapid increase in power demand accompanying economic growth.

"Rapid economic growth and socioeconomic development require reliable supply of electricity in both economically and environmentally sustainable manner," said Mr. Konishi at the signing ceremony. "We are very pleased to work with the Government and EVN to develop hydropower potentials particularly paying close attention to environmental and social aspects."

The 156-megawatt Song Bung 4 Hydropower Project will help Viet Nam meet its growing power demand which is expected to grow 16% per year through 2010, and by 12% annually thereafter.

The Song Bung 4 Hydropower Project will be constructed in the Vu Gia-Thu Bon river basin, an area predominantly inhabited by indigenous Co Tu minority.

In preparation for the project, comprehensive assessments of the project's environmental and social impacts have been undertaken and appropriate mitigation measures are included in the project's design. These include restoration and improvement of lost livelihoods in a culturally-appropriate manner for project-affected persons, provision of social infrastructure, and conservation offset to compensate for adverse impacts on the Song Thanh Nature Reserve.

"The Song Bung 4 Hydropower Project will not only contribute to meeting the rapid growing demand for electricity in Viet Nam with reliable and economical sources of electricity generation using the country's natural resources, but will also set an example for environmentally sustainable and socially inclusive hydropower development," Mr. Konishi added.

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