ADB Funds Viet Nam Hydro Project

News Release | 26 June 2008

MANILA, PHILIPPINES - The Asian Development Bank (ADB) will provide Viet Nam with a $196 million loan to construct a hydroelectric facility that will help ease growing power shortages that threaten the country's future economic growth.

The 156-megawatt Song Bung 4 hydropower project will be built on the Song Bung River in central Viet Nam's Quang Nam province. Song Bung 4 is expected to be completed in 2013, and is the first hydroelectric project in Viet Nam to receive funding from a multilateral financing institution.

Viet Nam has an acute need for more power generation. Electricity demand has grown at an average rate of 15% per annum and it is expected to maintain a high growth rate until 2015.

"Affordable and reliable electricity is essential to Viet Nam's continued economic growth and poverty reduction efforts," said ADB Energy Specialist Pradeep Perera. "This project will improve the stability and reliability of the country's power network, and will further reduce its dependency on fossil fuels."

Four villages with 206 households will need to be relocated to nearby sites due to the project. Most of these families belong to the Co Tu ethnic minority group, and most are currently living below the poverty line.

The project will provide affected families with new homes equipped with clean water and sanitation fixtures, and enhanced livelihood opportunities. The relocated communities will have better schools and health services, as well as improved road access.

"We have held extensive consultations with these families, and we will ensure their livelihoods are improved and their cultural practices are respected," Mr. Perera said. "ADB, through the Japan Fund for Poverty Reduction, will also provide a $2 million grant to finance enhanced livelihood improvements for the 206 families that go beyond current Government practices."

Extensive efforts have also been taken to minimize the environmental impact of the project. Though the project will affect migratory fish that use the river for spawning, there will not be any significant biodiversity implications.

The project also includes a 35-kilometer, 220-kV transmission line to Thanh My in Nam Giang district. The total cost of the dam is $267.3 million. The balance of the funding is being provided by the Viet Nam Development Bank and Viet Nam Electricity.