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Publish Date : 26-Sep-2014

The Asian Development Bank (ADB) has approved a $172.7 million loan to support Viet Nam’s drive for more efficient, sustainable power supplies from its key electricity networks in Ha Noi and Ho Chi Minh City. “Ha Noi and Ho Chi Minh City are home to around 15 million people or 16% of the country’s population and are at the forefront of rising national demand for power,” said Takafumi Kadono, ADB Energy Specialist. “To meet those needs the existing city grids need an overhaul and our assistance will focus on expansion, physical upgrades, and reduced system losses to achieve that goal.” The Government of Viet Nam, is projecting electricity demand to almost triple from 120 tera-watt (TWh) hours in 2012 to 330 TWh by 2030. The government has made expanding and improving system capacity a key priority and investments required to do this are estimated at up to $48.8 billion, alone, by 2020.

The foremost challenge of the power utilities in Viet Nam is to mobilize the vast financing to meet the investment requirement while maintaining their financial sustainability. Given the magnitude and complexity of reforms and the financing requirements in the power sector, the project has been developed through in-depth coordination with development partners. ADB’s operations in this sector leverage cofinancing and encourage joint initiative with other development partners. The project, which will be cofinanced with a $100 million ASEAN Infrastructure Fund loan, will develop and upgrade substations, expand 110 kilovolt and 220 kilovolt transmission lines, and develop increased transformer capacity. This will ensure smoother supplies, improved system reliability, smaller power losses—caused by overloading—and reduced greenhouse gas emissions.

ADB has been a strong supporter of Viet Nam’s energy sector and has invested more than $2.3 billion in the last two decades, including technical assistance to support power sector reforms. The current project, will run for about 6 years, with an estimated completion of end December 2020. The ASEAN Infrastructure Fund, which began lending in December 2013, was set up to help Asia meet its vast infrastructure needs, estimated at about $750 billion a year through to 2020. ADB is the joint largest shareholder with Malaysia, and also acts as cofinancier and administrator of the fund.

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