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.
|Project Name||Mong Duong 1 Thermal Power Project - Tranche 2|
|Project Type / Modality of Assistance||Loan
|Source of Funding / Amount||
|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|
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.|
|Description of Outcome||Adequate system generating capacity to meet growing electricity demand in northern Viet Nam|
|Progress Toward Outcome||Project completed adding 1,080 MW of installed generation capacity to the national grid.|
|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)||
Power plant has been completed and in commercial operation. PAC for generator Unit No. 1 was issued on 10 October 2015 with conditions. Unit No. 1 was commissioned and put into commercial operation on 6 November 2015. Generator Unit No. 2 was commissioned and put into commercial operation on 3 December 2015.
All the common facilities for Mong Duong 1 and Mong Duong 2 have been completed.
Loan closed on 31 December 2016. Financial closing of loan account expected by 30 April 2017.
|Geographical Location||Northern Vietnam|
Summary of Environmental and Social Aspects
|Environmental Aspects||Environmental Management Plans were satisfactorily implemented and completed.|
|Involuntary Resettlement||Resettlement and Ethnic Minority Development Plans were satisfactorily implemented and completed|
|Stakeholder Communication, Participation, and Consultation|
|During Project Design||During project design, between January 2006 and March 2006, key stakeholders participated in, and were consulted regarding, the preparation for the Resettlement Plan. These stakeholders included the (i) People's Committees of affected provinces, districts, and towns; (ii) affected households and companies; relevant Government agencies; and (iv) social organizations. A workshop was held in Cam Pha Town to present the Project's potential impacts, ADB's policies, proposed entitlements, institutional arrangements, and project schedule. This was followed by a stakeholder meeting in Mong Duong Ward. The concerns and suggestions provided by the affected persons during the workshops and public meetings then were incorporated in the resettlement plan. In addition, copies of public information booklets were distributed to the affected persons. Resettlement planning and implementation will continue to follow the Project's participatory approach.|
|During Project Implementation||Further consultations and stakeholder participation carried out during project implementation.|
|Responsible ADB Officer||Wanniachchi Kankanamalage, Aruna K.|
|Responsible ADB Department||Southeast Asia Department|
|Responsible ADB Division||Energy Division, SERD|
Viet Nam Electricity
69 Dinh Tien Hoang Street
Hanoi, Viet Nam
|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||27 Mar 2017|
|Approval||Signing Date||Effectivity Date||Closing|
|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||870.80||0.00||99%|
|Cofinancing||0.00||21 Dec 2009||880.13||0.00||100%|
|Status of Covenants|
Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.
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|Title||Document Type||Document Date|
|Mong Duong 1 Thermal Power Project - Tranche 2: Procurement Plan||Procurement Plans||Apr 2014|
|Loan Agreement for Mong Duong 1 Thermal Power Investment Program - Loan 2 between Socialist Republic of Viet Nam and Asian Development Bank dated 9 November 2010||Loan Agreement (Ordinary Resources)||Nov 2010|
|Project Agreement for Mong Duong 1 Thermal Power Investment Program - Loan 2 between Asian Development Bank and Viet Nam Electricity dated 9 November 2010||Project/Program Agreements||Nov 2010|
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.
Evaluation Documents See also: Independent Evaluation
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