The Electricity of Vietnam, Power companies and the World Bank (WB) on November 8 inked a credit agreement to fund the Vietnam distribution efficiency project.
The total project cost is USD800 million in which the WB contributes USD449 million and USD30 million comes from the Clean Investment Fund (CTF) to support the implementation of smart grid technologies. The Australian Agency for International Development (AusAID) provides USD8 million in grants for technical assistance and capacity building. The remaining investment of USD313 million will come from the Government of Vietnam in counterpart funds.
The project aims to provide electricity users across Vietnam with better quality and reliable electricity services, and to reduce greenhouse gas emissions through efficiency improvements.
“The efficiency and modernization investments under this project will improve the reliability of energy supply to industries and households and contribute to Vietnam’s socio-economic development. Successful implementation of this project will contribute to strengthen Vietnam’s competitiveness and environmental sustainability, which are also key pillars of the Bank’s strategy for Vietnam in the 2012 – 2016 period", said Ms Victoria Kwakwa, WB Country Director for Vietnam.
According to Mr Van Tien Hung, senior energy specialist and task team leader for the project, reliable electricity supply will further reduce the need of households to use alternative and often more polluting fuels, such as coal and kerosene, to meet their domestic energy needs and should have positive gender and poverty impacts.
Besides, the project will contribute to meeting the objectives of the National Energy Development Strategy to 2020 by reducing investment needs in the power sector, strengthening energy security and contribute to climate change mitigation.
It covers the construction and reinforcement of electricity distribution networks, the introduction of smart grid technologies in distribution and a technical assistance and capacity building facility for the Electricity Regulatory Authority of Vietnam (ERAV) and the five power companies (Northern Power Corporation, Central Power Corporation, Southern Power Corporation, Ho Chi Minh City Power Corporation and Hanoi Power Corporation) to develop efficient electricity tariffs and design effective energy demand programs.
Over the last decade, the Bank has closely collaborated with the Vietnamese Government to expand the power network and to provide electricity to all corners of the country. As a consequence, access to electricity has increased from 50% in 1996 to about 97% in 2011. The focus of WB’s assistance now has shifted from providing new electricity connections to improving the quality of services to consumers.
Funding from the Bank comes from International Development Agency, an interest rate of 1.25%, a service charge of 0.75% and a 25 years repayment period with 5 - year grace period. The loan from the Clean Technology Fund (CTF) has a service charge of 0.75 percent per annum, a maturity period of 20 years and 10-year grace period./.
(CPV)
