Viet Nam: Ha Noi and Ho Chi Minh City Power Grid Development Sector Project

Sovereign Project | 46391-001

Summary

The project will strengthen the capacities and reliabilities of the power infrastructure in the two largest cities of the Socialist Republic of Viet Nam (Viet Nam) Ha Noi and Ho Chi Minh City through rehabilitation, expansion and development of the 220 kilovolt (kV) and 110 kV electricity power grids in the respective cities. The Government of Viet Nam has requested for a sector loan from ADB's OCR and a sector loan funded through participation of the AIF to assist with the financing of the project. The project is included in the country partnership strategy, 2012 2015 for Viet Nam.

Latest Project Documents

Consulting Notices

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Procurement Notices

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Procurement Documents


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Project Name Ha Noi and Ho Chi Minh City Power Grid Development Sector Project
Project Number 46391-001
Country Viet Nam
Project Status Approved
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 3161-VIE: Ha Noi and Ho Chi Minh City Power Transmission Development Sector Project
Ordinary capital resources US$ 172.70 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Partnerships
Sector / Subsector Energy - Electricity transmission and distribution
Gender Equity and Mainstreaming No gender elements
Description The project will strengthen the capacities and reliabilities of the power infrastructure in the two largest cities of the Socialist Republic of Viet Nam (Viet Nam) Ha Noi and Ho Chi Minh City through rehabilitation, expansion and development of the 220 kilovolt (kV) and 110 kV electricity power grids in the respective cities. The Government of Viet Nam has requested for a sector loan from ADB's OCR and a sector loan funded through participation of the AIF to assist with the financing of the project. The project is included in the country partnership strategy, 2012 2015 for Viet Nam.
Project Rationale and Linkage to Country/Regional Strategy

Socioeconomic Context and Sector Performance. Viet Nam's economy grew at an average rate of 6.3% per annum and gross domestic product per capita increased from $699 to $1,755 during 2005-2012. Economic growth was accompanied by an average electricity demand growth of 12.5% per annum during 2005 2012, while per capita consumption increased from 156 kWh in 1995 to 1,187 kWh in 2012. Viet Nam has also made notable achievements in increasing the household electrification rate from 50% in 1995 to over 97% by 2012, while reducing the poverty rate from 15.5% in 2006 to 11.1% in 2012.

Institutional Arrangement. The Ministry of Industry and Trade has policy and supervisory responsibilities for the energy sector, both as the line ministry and as the ministry with oversight responsibility for the state-owned energy enterprises. Vietnam Electricity (EVN), the main power utility in Viet Nam, is organized as a holding company with a series of wholly owned subsidiaries including the three Power Generation Corporations, the National Power Transmission Corporation responsible for the 500 kV and 220 kV transmission system, and the five Power Corporations responsible for the distribution and retail of electricity at voltage levels below 110 kV but also developing and operating 220 kV assets in their respective licensed areas. Hanoi Power Corporation (EVN HANOI) and Ho Chi Minh City Power Corporation (EVN HCMC), in particular, are the Power Corporations responsible for the largest load centers. Ha Noi and Ho Chi Minh City account for 16% of the total population.

Sector Challenges and Opportunities

Technical. Expanding the power system capacity in a sustainable manner to meet the rapidly growing electricity demand is a key priority of the government. According to the National Power Development Plan between 2011 and 2020 with Orientation Towards 2030 (PDP7), demand is expected to continue growing rapidly from 120 TWh in 2012 to 330 TWh in 2020 and potentially up to 700 TWh in 2030. To meet the growing demand, generation capacity is to be strengthened from 26.5 GW in 2012 to 75 GW in 2020. Nearly 44,000 km of 500 kV and 75,000 km of 220 kV lines will also be constructed to effectively transmit the generated power to the load centers. Total investment for the power sector up to 2020 is estimated to be $48.8 billion, of which $16.3 billion is for grid augmentation.

In the distribution subsector, particularly in Ha Noi and Ho Chi Minh City, their combined peak load of over 6.1 GW in 2012 or 23% of the total domestic load, is expected to nearly double to 11.2 GW by 2020. The investment needs up to 2015 for EVN HANOI and EVN HCMC are $987 million and $997 million, respectively.

Financial. The foremost challenge of the power utilities is to mobilize the vast financing needed to meet the above investment requirements while maintaining their financial sustainability. Although there are some non-EVN domestic and foreign investments in power generation, a large share of EVN's investments are financed by loans from commercial banks and development partners. The external borrowings of EVN HANOI and EVN HCMC are projected to be about $130 million and $80 million, respectively, per year on average during 2014 2015.

The retail tariff schedules are set by the government uniformly across the whole country. While the average retail tariff has increased by 79% in nominal terms during 2007 2013, it has decreased by 15% in real terms. Moreover, the current average retail tariff of about D1,500/kWh ( 7.14/kWh) is much lower than the long-run marginal cost estimated to be in the range of 8-9/kWh. Adequate and gradual tariff increase is required to ensure the long-term financial sustainability of the power sector.

Power Sector Reform and Modernization. Viet Nam's sector reform program process dates back to 1995, while ADB has supported the reform through six technical assistances between 1995 and 2009. The 2004 Electricity Law provided the legal basis for the ongoing reform being implemented in accordance with the roadmap for establishing an electricity market in three phases: (i) Phase 1 competitive generation market until 2014; (ii) Phase 2 pilot competitive wholesale market from 2015, and full implementation from 2017; and (iii) Phase 3 competitive retail market from 2021. Phase 1 was launched in July 2012 with the legal unbundling of the three Power Generation Corporations. The Electricity Regulatory Authority of Viet Nam (ERAV) is currently preparing Phase 2 with the support of development partners, whereas ADB will dispatch resident advisors to assist ERAV through an existing technical assistance. Further technical assistances to prepare ERAV and the market participants are also being discussed and coordinated with the development partners.

The government aims to reduce its energy intensity and increase reliability of power supply through system modernization and removal of constraints in the power grid. Viet Nam's elasticity ratio of electricity demand growth rate against gross domestic product growth rate has averaged around 2.0. PDP7 calls for reducing it to 1.5 by 2015 and to 1.0 by 2020. EVN has made a steady reduction of system losses from 12.2% in 2003 to 9.2% in 2012. At the distribution level, EVN HANOI targets reducing its losses from 7.1% in 2012 to 6.0% by 2020, while EVN HCMC plans to reduce it from 5.6% in 2012 to 5.0% in 2020. To further improve system reliability, both Power Corporations target reducing their respective system average interruption duration indexes by 30 40% by 2014 compared to 2012 levels. The present indexes are very high compared to developed country utility standards, due to antiquated equipment and inadequate capacities of the networks causing overloadings and short-circuits.

Impact Growth in national electricity demand is met in a sustainable manner
Project Outcome
Description of Outcome Improved reliability and efficiency of electricity supply in Ha Noi and HCMC
Progress Toward Outcome The project is still in the early stage of implementation to be able to assess progress towards outcome.
Implementation Progress
Description of Project Outputs

Four core substation and transmission line subprojects in Ha Noi developed and/or rehabilitated

Four core substation and transmission line subprojects in HCMC developed and/or rehabilitated

Up to 20 noncore substation and transmission line subprojects in Ha Noi developed and/or rehabilitated

Up to nine noncore substation and transmission line subprojects in HCMC developed and/or rehabilitated

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

The project is still in the early stage of implementation to be able to assess progress.

The project is still in the early stage of implementation to be able to assess progress.

The project is still in the early stage of implementation to be able to assess progress.

The project is still in the early stage of implementation to be able to assess progress.

Geographical Location
Safeguard Categories
Environment B
Involuntary Resettlement B
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects Environmental impacts and mitigation/monitoring measures have been assessed under the PPTA.
Involuntary Resettlement Involuntary resettlement impacts and mitigation/monitoring measures have been assessed under the PPTA.
Indigenous Peoples Indigenous peoples are not involved.
Stakeholder Communication, Participation, and Consultation
During Project Design Project stakeholders were consulted during project design.
During Project Implementation Throughout the implementation of all subprojects, consultation with local governments, local communities, non-governmental organizations and other stakeholders will be done.
Business Opportunities
Consulting Services Individual Consultant Selection (ICS) will be adopted in contracting consulting services.
Procurement

All procurement of goods under the ADB financing will be undertaken in accordance with ADB's Procurement Guidelines and the procurement plan for the project.

To ensure competitive bidding, international competitive bidding contract packages will be adopted. International competitive bidding will be used for Goods over $0.5 million and for Works over $5 million. ADB's prior review procedures will be followed. The Borrower agreed to include the relevant sections of ADB's Anticorruption Policy (1998) in all bidding and contractual documents. Installation and commissioning works will be undertaken by contractors through national competitive bidding (NCB).

Responsible ADB Officer Au Minh Tuan
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Viet Nam Resident Mission
Executing Agencies
Hanoi Power CorporationDAOQUANGMINHDLHT@YAHOO.COM.VN69 Dinh Tien Hoang Street,Hoan Kiem
District,Ha Noi, Viet Nam
Ho Chi Minh City Power CorporationBAOPQ@HCMPC.COM.VN35 Ton Duc Thang Street,Ben Nghe Ward
District 1, Ho Chi Minh City,Viet Nam
Timetable
Concept Clearance 02 Nov 2012
Fact Finding 10 Dec 2013 to 20 Dec 2013
MRM 27 Feb 2014
Approval 23 Sep 2014
Last Review Mission -
Last PDS Update 18 Mar 2015

Loan 3161-VIE

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
23 Sep 2014 07 Nov 2014 06 Feb 2015 31 Dec 2020 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 294.27 Cumulative Contract Awards
ADB 172.70 23 Sep 2014 5.69 0.00 3%
Counterpart 121.57 Cumulative Disbursements
Cofinancing 0.00 23 Sep 2014 0.05 0.00 0%

Loan 8286-VIE

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
23 Sep 2014 07 Nov 2014 06 Feb 2015 31 Dec 2020 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 0.00 Cumulative Contract Awards
ADB 0.00 23 Sep 2014 0.00 3.29 3%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 23 Sep 2014 0.00 0.00 0%

Safeguard Documents

See also: Safeguards
Title Document Type Document Date
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: Third Transformer Bank at 110 kV Thanh Xuan Substation Resettlement Due Diligence Report Safeguards Due Diligence Reports Jun 2015
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: Thanh Xuan 110kV Substation Initial Environmental Examination Initial Environmental Examination Jun 2015
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: Thuong Dinh 110kV Substation Initial Environmental Examination Initial Environmental Examination Jun 2015
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: Resettlement Due Diligence Report - Expansion of Thuong Dinh Substation Safeguards Due Diligence Reports Apr 2015
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project - Chem-Tay Ho 220kV Transmission Line: Resettlement Plan (March 2015) Resettlement Plans Mar 2015
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: Resettlement Due Diligence Report Safeguards Due Diligence Reports Mar 2015
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: Chem-Tay Ho 220kV Transmission Line Resettlement Plan Resettlement Plans Jun 2014
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: Mo Lao 110kV Substation and Transmission Line Initial Environmental Examination Initial Environmental Examination Jun 2014
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: Transmission line 220/110kV Chem-Tay Ho Initial Environmental Examination Initial Environmental Examination Jun 2014
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: Mo Lao 110kV Substation and 110kV Connection Resettlement Plan Resettlement Plans Jun 2014
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project Resettlement Frameworks Feb 2014
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: Rehabilitation and Renovation of Son Tay, Phuong Liet, and Tran Hung Dao 110 kV Substations Initial Environmental Examination Jan 2014
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: District 8 220 kV Substation and Upgraded Transmission Line Initial Environmental Examination Jan 2014
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: Tham Luong 110 kV Substation and Underground Transmission Line Initial Environmental Examination Jan 2014
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: Environmental Assessment and Measures, Environmental Assessment and Review Framework Environmental Assessment and Review Framework Dec 2013
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: Noi Bai Airport 110 kV Substation and Transmission Line Initial Environmental Examination Dec 2013
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: 110 kV Tran Hung Dao, Phuong Liet and Son Tay Substations Resettlement Plans Dec 2013
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: 110 kV Noi Bai Airport Substation and Associated 110 kV Transmission Line Resettlement Plans Dec 2013
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: 110 kV Underground Cable Connecting To Tham Luong Substation and Tham Luong 110 kV Substation Resettlement Plans Dec 2013
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: District 8 220 kV Substation and Nam Sai Gon - District 8 220 kV Transmission Line Resettlement Plans Nov 2013

Evaluation Documents

See also: Independent Evaluation

No documents found.


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