ADB to fund Vietnam hydro project

The Asian Development Bank (ADB) is to loan Vietnam US$ 196 million to construct a hydroelectric project that aims to ease growing power shortages, which threaten the country's future economic growth.

The 156 MW Song Bung 4 hydropower project will be built on the Song Bung River in central Vietnam's Quang Nam province. Song Bung 4 is expected to be completed in 2013, and is the first hydroelectric project in Vietnam to receive funding from a multilateral financing institution.

Vietnam has an acute need for more power generation. Electricity demand has grown at an average rate of +15% per year and is expected to maintain a high growth rate until 2015.

The project also includes a 35 km long, 220 kV transmission line to Thanh My in Nam Giang district.

The total cost of the dam is US$ 267.3 million. The balance will be provided by the Viet Nam Development Bank and Viet Nam Electricity.

In a statement on its website the ADB said, four villages (206 households) will need to be relocated because of the project. Most belong to the Co Tu ethnic minority group, and are currently living below the poverty line.

Under the loan rules the project will provide affected families with new homes and "enhanced livelihood opportunities", including better schools and health services, as well as improved road access.

Commenting on the loans, ADB Energy Specialist Pradeep Perera, said, "Affordable and reliable electricity is essential to Viet Nam's continued economic growth and poverty reduction efforts. This project will improve the stability and reliability of the country's power network, and will further reduce its dependency on fossil fuels."

Extensive efforts have also been taken to minimize the environmental impact of the project. Though the project will affect migratory fish that use the river for spawning, there will not be any significant biodiversity implications.