ADB announces $730 mln loans to assist Vietnam’s power transmission

File photo shows a hydroelectricity plant under construction in the Central Highlands of Lam Dong. The Asian Development Bank announced Dec 16, 2011 that it would lend Vietnam up to US$730 million for electricity transmission upgrades. (Photo: Tuong Thuy)

The Asian Development Bank (ADB) will lend Vietnam up to US$730 million for electricity transmission upgrades to improve the delivery of power needed to fuel the country’s fast growing economy.

“Without the removal of these transmission bottlenecks the proportion of people without electricity would increase, and economic growth would be negatively affected,” Daniela Schmidt, energy specialist in ADB’s Energy Division for Southeast Asia, said in a Dec. 16 announcement.

“These network upgrades will increase power availability by reducing transmission system losses and other problems that are currently plaguing the system,” the expert said in the statement from the Philippines’ Manila, where the bank is headquartered.

The mutli-tranche loan facility for the Power Transmission Investment Program has been approved by the ADB Board of Directors with a first payment of US$120.5 million.

The program supports the construction of almost 648 kilometers of 500 kilovolts (kV) lines and over 100 kilometers of 220 kV lines, while upgrading associated substations, the bank said.

Funds will also be used to provide training and other support to the state-owned National Power Transmission Corporation.

According to the lender, Vietnam has expanded household electricity access, with the percentage of those without power dropping from 22% in 1999 to just 3% in 2010. The availability of reliable electricity has helped drive the country’s booming economy and sharply reduced poverty.

With power consumption rising at double the annual economic growth rate since 2004, and with electricity demand expected to rise 14% per annum over the next four years, ensuring a reliable power supply is a growing challenge, according to the loan provider.

ADB says Vietnam has since 2005 been working hard to increase power capacity, create a competitive power market and broaden ownership in the power sector with generating plants being gradually transferred to independent power producers. From 2011 to 2020, up to 46% of new generating capacity is expected to come from foreign and domestic private sector entities.

The investment program supports improvements expected to help boost per capita electricity consumption from 985 kilowatt hours (kWh) in 2010 to approximately 3,800 kWh in 2025.

ADB says its funds are expected to be released in four tranches, with the first loan from ordinary capital resources having a 25-year term. The program is due for completion by June 2020.

By Tuong Thuy

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