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

Sovereign Project | 46391-001 Status: Active

Summary

ADB is supporting Viet Nam’s drive for more efficient, sustainable power supply from the country’s key electricity networks in its largest cities, Ha Noi and Ho Chi Minh. The project, which is cofinanced with a loan from the ASEAN Infrastructure Fund, will upgrade substations, increase transformer capacity, and expand 110 kilovolt and 220 kilovolt transmission lines.

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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 Active
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
Loan 8286-VIE: Ha Noi and Ho Chi Minh City Power Transmission Development Sector Project
ASEAN Infrastructure Fund US$ 100.00 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 confirm substantial improvement on reliability and efficiency of electricity supply in Ha Noi and HCMC.
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)

With the completion of the 110 kV Noi Bai substation, 50 MVA and 10 cct-km of 100 kV transmission lines had been developed.

Several contracts covering three core subprojects have been awarded and are at various stages of implementation. The package under one core subproject is under bid evaluation.

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) was adopted in contracting consulting services.
Procurement

All procurement of goods and services 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 $3 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 Staff

Responsible ADB Officer Au, Tuan Minh
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Viet Nam Resident Mission
Executing Agencies
Hanoi Power Corporation
[email protected]
69 Dinh Tien Hoang Street, Hoan Kiem District
Ha Noi, Viet Nam
Ho Chi Minh City Power Corporation
[email protected]
35 Ton Duc Thang Street, Ben Nghe Ward District 1

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 19 Sep 2016

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 37.00 0.00 21%
Counterpart 121.57 Cumulative Disbursements
Cofinancing 0.00 23 Sep 2014 16.60 0.00 10%

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 100.00 Cumulative Contract Awards
ADB 0.00 23 Sep 2014 0.00 21.39 21%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 100.00 23 Sep 2014 0.00 9.50 9%
Title Document Type Document Date
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: EVN HCMC Audited Project Financial Statements (January-December 2015) Audited Project Financial Statements Jun 2016
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: EVN Hanoi Audited Project Financial Statements (January-December 2015) Audited Project Financial Statements Jun 2016
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: Procurement Plan Procurement Plans May 2016
Loan Agreement for Ha Noi and Ho Chi Minh City Power Grid Development Sector Project between the Socialist Republic of Viet Nam Loan Agreement (Ordinary Resources) Nov 2014
Loan Agreement (AIF) for Ha Noi and Ho Chi Minh City Power Grid Development Sector Project between the Socialist Republic of Viet Nam Loan Agreement (Special Operations) Nov 2014
Project Agreement for Ha Noi and Ho Chi Minh City Power Grid Development Sector Project Project/Program Agreement Nov 2014
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: Report and Recommendation of the President Reports and Recommendations of the President Aug 2014
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: Project Administration Manual Project/Program Administration Manual Aug 2014
Dự án Phát triển Mạng lưới Điện tại Hà Nội và Hồ Chí Minh (trước đây là Dự án Phát triển Hệ thống Truyền tải Điện TP. Hà Nội và TP. Hồ Chí Minh) : Bảng Dữ liệu Dự án Translated PDS Jan 2014
Ha Noi and Ho Chi Minh City Power Transmission Development Sector Project Initial Poverty and Social Analysis Jun 2013
Ha Noi and Ho Chi Minh City Power Transmission Development Sector Project Concept Papers Nov 2012

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
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: Tham Luong Substation (HCMC) Resettlement Plan Resettlement Plans Dec 2016
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project - Son Tay Substation (Ha Noi): Initial Environmental Examination Initial Environmental Examination Nov 2016
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project - EVN HCMC Tan Cang Substation: Resettlement Due Diligence Report Safeguards Due Diligence Reports Oct 2016
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: 110 kV Tia Substation Subproject Resettlement Plan Resettlement Plans Sep 2016
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project - 110 kV Tia Substation (Ha Noi): Initial Environmental Examination Initial Environmental Examination Aug 2016
HN and HCMC Power Grid Development Sector Project - EVN Hanoi Connection Line to 220 kV Son Tay Substation: Resettlement Due Diligence Report Safeguards Due Diligence Reports Jul 2016
HN and HCMC Power Grid Development Sector Project - EVN Hanoi 110 kV Tay Ho-Yen Phu Underground Cables: Resettlement Due Diligence Report Safeguards Due Diligence Reports Jul 2016
HN and HCMC PGDSP - 110 kV HCMC Thu Duc Water Plant Substation and Connection Line: Initial Environmental Examination Initial Environmental Examination Jun 2016
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project - 110 kV Thuong Tin-Thanh Oai Transmission Line: Initial Environmental Examination Initial Environmental Examination Apr 2016
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project - EVN HCMC Thu Duc Subproject: Resettlement Due Diligence Report Safeguards Due Diligence Reports Apr 2016
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: 110 kV Thuong Tin-Thanh Oai Transmission Line Resettlement Plan Resettlement Plans Mar 2016
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project - 110 kV Phu Nghia Substation and Transmission Line: Initial Environmental Examination Initial Environmental Examination Mar 2016
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: 110 kV Phu Nghia Substation and Connection Line Subproject Resettlement Plan Resettlement Plans Mar 2016
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project - EVN HCMC-Tham Luong Substation Subprojects: Resettlement Due Diligence Report Safeguards Due Diligence Reports Feb 2016
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project - 110 kV Phước Long Substation and Connecting Line: Initial Environmental Examination Initial Environmental Examination Jan 2016
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project - 110 kV Tân Hưng Substation and Connecting Line, Stage 2: Initial Environmental Examination Initial Environmental Examination Jan 2016
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: Second Stage 110kV Tân Hưng Substation and Connecting Line - Resettlement Due Diligence Report Safeguards Due Diligence Reports Jan 2016
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: 220-110kV Cau Bong - Binh Tan Transmission Line - Resettlement Plan Resettlement Plans Dec 2015
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: 220-110kV Cau Bong-Binh Tan Transmission Line - Initial Environmental Examination Initial Environmental Examination Nov 2015
Ha Noi and Ho Chi Minh City Power Grid Development Sector Project: Resettlement Framework Resettlement Frameworks Oct 2015
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: 110kV Phước Long Substation and Connecting Line - Resettlement Due Diligence Report Safeguards Due Diligence Reports May 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 - 110 kV Noi Bai Airport Substation and Associated 110 kV Transmission Line (June 2014): Resettlement Plan Resettlement Plans 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

None currently available.

Related Publications

None currently available.


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