Construction of two hydro power stations in Vietnam is being funded by loans from Japan’s Overseas Economic Co-operation Fund (OECF). The Fund is offering loans totalling ¥24,893M at a low (1.8%) interest rate. The loan is to be repaid over 30 years with a ten-year grace period.

The project involves construction of two power stations, Ham Thuan and Da Mi, which are located on tributaries of the Dong Nai river, around 150km northeast of Ho Chi Minh City. The plants will have outputs of 300MW and 175MW, respectively. The loan has been disbursed in several ranches since 1993, when the first tranche, ¥1m63M, was committed for engineering services.

Electricity demand in South Vietnam has been increasing rapidly — annual growth rate averaged 16.2% between 1990 and 1996 and is expected to grow by around 14% annually until 2010.

The demand gap is currently bridged by imports from the north, but demand in that region is also increasing rapidly. As a result, such power imports do not constitute a long term solution to the demand problem.