Viet Nam: Mong Duong 1 Thermal Power Project - Tranche 2

Sovereign Project | 39595-033 Status: Approved

Summary

ADB is helping build the Mong Duong 1 thermal power plant to provide reliable supply in northern Viet Nam. The first tranche of the project financed the preparation for the construction of the plant. Tranche 2 will cover the construction and commissioning of the power plant, and common facilities with Mong Duong 2, including freshwater supply system and cooling water discharge canal.

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Consulting Notices

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Procurement Notices

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Procurement Documents


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Project Name Mong Duong 1 Thermal Power Project - Tranche 2
Project Number 39595-033
Country Viet Nam
Project Status Approved
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2610-VIE: Mong Duong 1Thermal Power Project - Tranche 2
Ordinary capital resources US$ 902.85 million
Loan: Mong Duong 1Thermal Power Project - Tranche 2
Korea Exim Bank US$ 510.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Partnerships
Sector / Subsector

Energy - Conventional energy generation

Gender Equity and Mainstreaming Some gender elements
Description

1. Finance the contract for Engineering design, Procurement and Construction.

2. Finance the consulting service (project implementation consultant) for Tranche 2.

3. Fiinance the construction of the common facilities for MD1 and MD2 Thermal Power plant (MD2) to be built by private sector. These include the fresh water supply system for MD1 and MD2 and the coolinig water discharge channel.

Project Rationale and Linkage to Country/Regional Strategy

MFF Tranche 1 financed the preparation for the construction of the MD1 which was completed in 2013, while Tranche 2 is for the construction and commissioning of the MD1 power plant. Viet Nam's electricity demand remains high and will continue to grow strongly in the long-term. This is mainly because of the high economic growth. For example, average annual electricity demand growth was 12.1% during 2005 2014 and electricity consumption increased from 45.6 terawatt-hours (TWh) to 128.4 TWh in the same period. This demand is mainly driven by increased consumption by the industrial and service sectors. Reliable, quality power supply is indispensable to support the economic growth, and continued industrialization and modernization of the Viet Nam.

Power generation is still dominated by hydropower, which exhibits large seasonal fluctuation. At the end of 2008, the share of hydropower generation was 37% of the total of 15.8 GW. Due to the dependence of hydropower, the system reserve margin during the dry seasons remains low. All large hydro reservoirs are multipurpose serving not only electricity generation but are equally important for irrigation purposes. The share of gas-fired power plants in the south was 37% of the installed capacities in 2008 which could supply only a part of northern Viet Nam's power demand. In 2008, Viet Nam imported about 800 MW from the People's Republic of China to make up for the deficit in the north during the dry season.

The delay in construction of proposed new generation in the Power Development Master Plan VI, has lead to a situation in which the power supply is not adequate to meet the demand. At the same time, the system reserve margin was low in 2007 and 2008. The low system reserve margin coupled with the high share of hydropower capacity in the generation mix exacerbates power shortages especially during the dry season. Thus, timely completion of MD1 power plant will help improve the power supply and demand balance for northern Viet Nam.

Power market reform has taken new impetus and following have been achieved. Establishment of: NPT in December 2008; five power corporations in February 2010; three independent GENCOs in July 2012; EPTC in December 2007. It is expected to establish competitive power market in three phases: competitive generation market by 2014; competitive wholesale market during 2015 to 2021; and competitive retail market during 2021 to 2024. Phase I was launched in July 2012 with the legal unbundling of the three GENCOs and introduction of VCGM.

In 1997, the Government established the northern socio-economic special development areas covering Ha Noi, Hai Phong, Quang Ninh, Hai Duong, and Hung Yen provinces. In 2004, it was expanded to cover Ha Tay, Bac Ninh and Vinh Phuc provinces. Being parts of the special development area, investment, business and industrial development in these provinces were particularly strong and foreign direct investment accounted for 90% in the northern region, and 30% in the total country. Hence, it was noted that reliable supply of electricity is essential for the development of the northern socio-economic special development areas. Thus, financing and timely commissioning of the Project under Tranche 2 was crucial. The Project will add 1,000 MW generating capacity to the northern power system. The Project, together with ongoing ADB-financed transmission projects will strengthen the power supply grid around the northern socio-economic special development area thus ensuring reliable supply of electricity in the whole northern region and the country.

In addition, Tranche 2 financing will allow timely completion of the common facilities that will be used also for MD2 power plant to be developed by a private sector joint venture between AES and Vinacomin under the build operate and transfer (BOT) scheme. The first unit of MD2 is planned to be commissioned in 2015.

Impact Adequate and reliable supply of power to meet Vietnam's electricity demand in an environmentally sustainable manner.
Project Outcome
Description of Outcome Adequate system generating capacity to meet growing electricity demand in northern Viet Nam
Progress Toward Outcome Project is in advanced stage. Government of Viet Nam's support of the project has been consistent from the outset of the project.
Implementation Progress
Description of Project Outputs

A 1,000 MW CFB technology coal-fired power plant.

Common Facilities for MD2.

Status of Implementation Progress (Outputs, Activities, and Issues)

Ongoing. Engineering design, equipment procurement and construction activites under the EPC Package are substantially completed as of 31 August 2015. Progress of other civil works contracts are as follows: Freshwater Supply System - 100%, Cooling Water Discharge Canal - 100% and Ash Pond - 100%. Construction of fence between Mong Duong 1 and Mong Duong 2 ongoing.

Expected commissioning dates of Unit No. 1 and Unit No. 2 of the Mong Duong 1 Thermal Power Plant Project were slightly delayed and are now expected in September 2015 and November 2015, respectively.

Geographical Location Northern Vietnam
Safeguard Categories
Environment A
Involuntary Resettlement B
Indigenous Peoples A
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement Updated Resettlement and Ethnic Minority Development Plan for Fresh Water Supply component approved on 8 October 2012.
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Responsible ADB Officer Aruna Wanniachchi Kankanamalage
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Energy Division, SERD
Executing Agencies
Viet Nam Electricity
69 Dinh Tien Hoang Street
Ha Noi, Viet Nam
Timetable
Concept Clearance 29 Sep 2005
Fact Finding 11 May 2009 to 15 May 2009
MRM 22 Sep 2009
Approval 21 Dec 2009
Last Review Mission -
PDS Creation Date 24 Mar 2008
Last PDS Update 16 Sep 2015

Loan 2610-VIE

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
21 Dec 2009 09 Nov 2010 12 May 2011 31 Dec 2014 31 Dec 2016 -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 1,143.37 Cumulative Contract Awards
ADB 902.85 21 Dec 2009 844.67 0.00 94%
Counterpart 240.52 Cumulative Disbursements
Cofinancing 0.00 21 Dec 2009 764.51 0.00 85%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - - - Partly satisfactory - -

Safeguard Documents

See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

Title Document Type Document Date
Mong Duong 1 Thermal Power Project - Tranche 2: Environmental Monitoring Report (July-September 2015) Environmental Monitoring Reports Dec 2015
Mong Duong 1 Thermal Power Project - Tranche 2: Environmental Monitoring Report (April-June 2015) Environmental Monitoring Reports Dec 2015
Mong Duong 1 Thermal Power Project - Tranche 2: Semiannual Environmental Monitoring Report (July-December 2014) Environmental Monitoring Reports Nov 2015
Mong Duong 1 Thermal Power Project - Tranche 2: Quarterly Resettlement Monitoring Report (January-March 2015) Social Monitoring Reports Nov 2015
Mong Duong 1 Thermal Power Project - Tranche 2: Semiannual Environmental Monitoring Report (January-June 2015) Environmental Monitoring Reports Nov 2015
Mong Duong 1 Thermal Power Project - Tranche 2: Environmental Monitoring Report (January-March 2015) Environmental Monitoring Reports Apr 2015
Mong Duong 1 Thermal Power Project – Tranche 2: Resettlement Monitoring Report (October-December 2014) Social Monitoring Reports Jan 2015
Mong Duong 1 Thermal Power Plant Project - Tranche 2: Social Monitoring Report (November 2014) Social Monitoring Reports Nov 2014
Mong Duong 1 Thermal Power Project Tranche 1 & 2: Environmental Monitoring Report (January - June 2014) Environmental Monitoring Reports Aug 2014
Mong Duong 1 Thermal Power Plant Project: Resettlement Monitoring Report (January-March 2014) Social Monitoring Reports Mar 2014
Mong Duong 1 Thermal Power Plant Project: Income and Livelihood Restoration Program Report (February 2014) Social Monitoring Reports Feb 2014
Mong Duong 1 Thermal Power Project - Tranche 2: Environmental Monitoring Report (July-December 2013) Environmental Monitoring Reports Dec 2013
Mong Duong 1 Thermal Power Plant Project: Resettlement Monitoring Report (October-December 2013) Social Monitoring Reports Dec 2013
Mong Duong 1 Thermal Power Project: Tenth Independent Monitoring Report Social Monitoring Reports Dec 2013
Mong Duong 1 Thermal Power Plant Project: Resettlement Monitoring Report (July-September 2013) Social Monitoring Reports Sep 2013
Mong Duong 1 Thermal Power Project - Tranche 2: Resettlement Monitoring Report (March-June 2013) Social Monitoring Reports Sep 2013
Mong Duong 1 Thermal Power Project - Tranche 2: Environmental Monitoring Report (January-June 2013) Environmental Monitoring Reports Jun 2013
Mong Duong 1 Thermal Power Project: Ninth Independent Monitoring Report Social Monitoring Reports May 2013
Mong Duong 1 Thermal Power Project: Environmental Monitoring Report (July-December 2012) Environmental Monitoring Reports Dec 2012
Mong Duong 1 Thermal Power Plant Combined Resettlement Plan and Indigenous Peoples Plans Oct 2012
Mong Duong 1 Thermal Power Plant: Eighth Independent Monitoring Report Social Monitoring Reports Jul 2012
Mong Duong 1 Thermal Power Plant Environmental Monitoring Reports Jun 2012
Mong Duong 1 Thermal Power Plant Project: Seventh Independent Monitoring Report Social Monitoring Reports Sep 2011
Mong Duong 1 Thermal Power Plant Project: Sixth Independent Monitoring Report Social Monitoring Reports Sep 2010
Mong Duong 1 Thermal Power Plant Project: Fifth Independent Monitoring Report Social Monitoring Reports Apr 2010
Mong Duong 1 Thermal Power Plant Project: Third Independent Monitoring Report Social Monitoring Reports Nov 2009
Mong Duong 1 Thermal Power Plant Project: Fourth Independent Monitoring Report Social Monitoring Reports Nov 2009
Mong Duong 1 Thermal Power Project Resettlement Plans Jul 2009
Mong Duong 1 Thermal Power Plant Project: Second Independent Monitoring Report Social Monitoring Reports May 2009
Mong Duong 1 Thermal Power Plant Project: First Independent Monitoring Report Social Monitoring Reports Dec 2008

Evaluation Documents

See also: Independent Evaluation

None currently available.

Related Publications

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