Nhan Dan Online - Asian Development Bank (ADB) Country Director for Vietnam Ayumi Konishi and State Bank of Vietnam’s Governor Nguyen Van Giau yesterday signed a US$151 million loan to help the country expand and improve electricity services in poor and remote communities using renewable energy.

In 2008, the electrification rate reached 91% of households in 97% of the country's communes. The project will help the Government meet its long-term development strategy for rural electrification by increasing the number of electrified villages.

“Access to reliable and affordable power supplies is critical to promote pro-poor and balanced economic development of remote mountainous and poor communes”, said Mr. Konishi, adding that in remote mountain areas, availability of electricity will not only contribute to improving the commune’s economy for better incomes and living conditions of residents but also facilitate provision of social services, such as health and education, in a more efficient manner.

The Project consists of two components. The first component will develop about 5-10 grid-connected run-of-river mini-hydroelectric power plants in Lai Chau, Dien Bien and several other provinces in the northern and central regions of Vietnam. Electricity connections will be provided to 25-50 villages in remote poor, ethnic minority areas, and about 100 GWh of clean renewable energy to the national grid.

The second component of the Project will support the Government's ongoing special programme of supporting rural electrification of poor provinces inhabited by ethnic minorities. About 100,000 poor households in more than 1,000 villages are expected to benefit from this component.

The loan, in the form of Special Drawing Rights from the concessional Asian Development Fund, covers 76% of the project cost of US$197.6 million. Additional counterpart finance totaling US$46.6 million will be provided by three subsidiary companies of state utility, the Electricity of Vietnam (EVN). These three power companies will be the executing agencies for the project, which is expected to be completed by 2015.

ADB is also providing a technical assistance (TA) grant of US$2.5 million, financed from the ADB-administered Climate Change Fund and from the TA Special Fund to support development of a renewable energy law and for capacity building.

In addition, the Government and executing agencies will make in-kind contributions totaling US$400,000.

T.S