World Bank backs loans to improve energy in Vietnam

HA NOI (VNS)- The Word Bank yesterday signed an agreement with Electricity of Viet Nam to provide credit of US$449 million to the Electricity Distribution Efficiency Project in the country.

The project, which aims to improve electricity distribution networks across Viet Nam in an environmentally-friendly way, will upgrade infrastructure and install new transmission lines.

Under the project, smart grid technologies will be introduced to the Electricity Regulatory Authority of Viet Nam and five electricity corporations in the northern, central and southern regions, including in Ha Noi and HCM City.

The Vietnamese groups will be supported with capacity building to calculate reasonable power prices and design management programmes for effective electricity transmission.

Total project value amounts to $800 million, with $449 million coming from the World Bank, $30 million from the US's Climate Investment Fund, $8 million from the Australian Development Aid Agency and the rest from the State budget.

The 25-year credit loan from the World Bank will be provided through the International Development Association (IDA) with an interest rate of 1.25 per cent, service charge of 0.75 per cent and grace period of five years.

The project will partly contribute to meet targets of the national power development strategy by ensuring power security and minimizing the impact of climate change.

The World Bank country director Victoria Kwakwa said the successful implementation of the project would help improve Viet Nam's economic competitiveness.

Climate change

The World Bank on Thursday approved a credit of US$70 million for the second Viet Nam Climate Change Development Policy Operation, part of a series of three operations to support Viet Nam's institutional development.

The credit also provides parallel financing under a multi-donor budget-support programme for the Vietnamese government's Support Programme to Respond to Climate Change.

The Japanese International Co-operation Agency and L'Agence Francaise de Development will provide US$145 million; AusAID, an initial AU$8 million; and Korea Eximbank, US$30 million, bringing total support to about US$253 million.

"This operation includes five policy actions under the thematic pillars of climate-change adaptation, mitigation and cross-cutting issues.

They focus on the water and energy sectors and climate-change integration into development planning, as well as a more conducive environment for climate-change financing," a World Bank press release said.

The Policy Operation supports the development of a new Law on Water Resources and the adoption of regulations establishing the qualification and certification requirements for energy auditors and managers.

The operation also helps with the establishment of a National Climate Change Strategy, readiness for a national coordination platform for disaster-risk reduction and climate-change adaptation, and an institutional mechanism to promote climate-response financing sources.

The credit comes from the International Development Association, the World Bank's concessional lending resource for low-income countries.

These series of operations contribute to assisting Viet Nam with sustainable development, a key element in the World Bank's new Country Partnership Strategy with Viet Nam for the 2012-16 period. — VNS

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