The Asian Development Bank has approved a proposal to extend a US$325 million guarantee for a 13-year syndicated loan of $342 million to state-owned the Electricity of Vietnam Group to support the country’s power development.
|A worker in an electricity cable production line of a company in Ho Chi Minh City (Filed photo: SGGP)|
The approval, made on Dec. 11, aims to fund urgent transmission and distribution improvements needed to meet rising power demand.
“This ADB guarantee enables Electricity of Vietnam to reduce its borrowing costs and to increase the tenor of the loan, while it also allows commercial banks to reengage in lending in Vietnam’s infrastructure sector,” Xavier Humbert, senior energy specialist in ADB’s Southeast Asia Department, said in a statement issued on Dec. 11.
The loan will fund new transmission lines, and upgrade rural and urban power grids, helping to expand service coverage, reduce system losses, and address growing demand, according to the Philippines-based bank.
ADB’s guarantee will help Electricity of Vietnam get to access long-term commercial bank loans on competitive terms and should help spur more private investment in the sector. Given the global economic crisis, foreign commercial banks require additional credit enhancements similar to the type of guarantee that is being provided by ADB.
ADB will also provide technical assistance on a grant basis from its Technical Assistance Special Fund of $600,000 to ensure Electricity of Vietnam to comply with procurement, and environmental and social safeguards, in carrying out infrastructure improvements.