Vietnam’s two biggest cities to upgrade power grids on $273mn ADB loan

Vietnam’s two biggest cities to upgrade power grids on $273mn ADB loan

Vietnamese Prime Minister Nguyen Tan Dung has approved a financial mechanism to develop the power grids in Hanoi and Ho Chi Minh City under a foreign loan worth more than US$270 million, local media reported Wednesday.

The government will re-lend the $273 million credit package it borrows from the Asian Development Bank and the ASEAN Infrastructure Fund pursuant to a 20-year term to EVN Hanoi and EVN Ho Chi Minh City, according to the

Vietnam News Agency.

The borrowers are the subsidiaries of Electricity Vietnam (EVN), the country’s power monopoly. The two will have to repay the loan within 20 years.

They are not required to pay back the principal from now until March 15, 2020 but the borrowers are liable for the interest during that grace period.

EVN provides a guarantee for its Hanoi and Ho Chi Minh City units on the loan, which means the state-run power utility will repay the debts if the borrowers fail to do so.

The power grid upgrade projects in Vietnam’s two biggest cities are intended to reduce power cuts and ease the overloading of the 220/110kV system.

The projects also seek to improve electricity quality and reduce power loss to increase the credibility and safety of the grids.

EVN invested a total of VND125.45 trillion ($5.85 billion) in power projects across the country in 2014, according to The Saigon Times Online.

The investment, funded by both domestic and foreign loans, was nearly 28 percent higher than 2013, the economic newswire noted.

The intensive investment has heightened the supplying capacity of the national grid, ensuring electricity supplies for Hanoi, the southern and other key economic regions, according to EVN.

Last year EVN commissioned several new power plants, including the Vinh Tan 2 thermal-power plant in the south-central province of Binh Thuan and the Song Bung 4 hydropower facility in the central province of Quang Nam.

The ASEAN Infrastructure Fund is a dedicated fund established by the Asian Development Bank (ADB) and the Association of Southeast Asian Nations, which is comprised of Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Cambodia, Laos, Myanmar, and Vietnam.

The fund is an innovative ASEAN initiative to mobilize the region’s resources for its infrastructure development needs, according to its website.

The ADB was founded in 1996 and has since dedicated itself to improving people’s lives in Asia and the Pacific, according to the bank’s website.

Vietnam is one of the founding members of the development bank. ADB assistance in Vietnam amounted to $12.85 billion from 1993, when it resumed operations in the Southeast Asian country, to December 2013, according to an ADB fact sheet.

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