$231mn ADB loan for power transmission

                                                                 Photo: Duc Anh

Loan the third tranche from Power Transmission Investment Program and focused on power transmission network in the south.

The government has signed a $231.3 million loan agreement with the Asian Development Bank (ADB) to enhance the power transmission network in southern Vietnam.

The loan is the third tranche of the ten-year Power Transmission Investment Program, which was approved by the Manila-headquartered ADB in 2011.

“The inadequate supply of electricity is a key bottleneck inhibiting economic growth and adversely affecting all consumer groups, especially poor households in rural and disadvantaged areas,” said Mr. Eric Sidgwick, ADB Country Director. “ADB’s investment program is supporting the government to address this bottleneck by expanding transmission system capacity in time to cope with the increasing power demand driven by strong economic growth.”

Tranche 3 will add 60 km of 500 kV, 64 km of 220 kV, and 3700 MVA of transmission capacity in the south, complementing the additional transmission capacity provided in northern and central Vietnam under tranches 1 and 2, respectively.

The expanded capacity will enable electricity transmission from the power plant cluster in the Mekong Delta region to the national grid system and improve the reliability and stability of power supply to major economic centers in the south.

The final tranche, tranche 4, which is being prepared and is expected to be approved in 2017, will focus on a 500 kV transmission line and substations, also in southern Vietnam.

Including this investment program, ADB has assisted Vietnam in developing transmission systems throughout the country, with a total of around 1,200 km of 500 kV lines and 670 km of 220 kV lines, and around 10,000 MVA of 220/500 kV substations. ADB has also provided project management-related capacity building support to the National Power Transmission Corporation.

Upon completion in 2020, ADB’s Power Transmission Investment Program is expected to help Vietnam remove major bottlenecks in transmission systems in northern, central and southern Vietnam, promote the efficient utilization of existing and planned power plants, and increase power availability throughout the country to fuel its rapidly growing economy.

The Vietnamese Government has recently been encouraging the development of solar power, offering a range of incentive to investors. A temporary power price will be piloted in the 2016-2018 period for solar power projects connected to the grid and with development potential. Transparency is also sought in the bidding process for solar power projects so the price may fall.

For solar power projects not connected to the grid (i.e., those installed on roofs), the Prime Minister asked the Ministry of Industry and Trade (MoIT) to add regulations on certified emission reductions (CERs).

MoIT was also asked to complete regulations on license-exempt business registration and the waiver of taxes and fees for solar power roof panels where installed capacity does not exceed 50 kW. It is also to increase the localization rate of solar power projects in order to gradually cut the solar power price. 

In recent years Vietnam has attracted a lot of investors in solar power, such as Hanwha Solar from South Korea with a $200 million investment in central Thua Thien Hue province and Solar Park from South Korea with a $600 million project in north-central Ha Tinh province. India’s Tata Power Co., is also seeking investment opportunities in solar and wind power in the Mekong Delta’s Soc Trang province and south-central Ninh Thuan province.

by Quynh Nguyen / vneconomictimes