Since the 1990s, economic growth in Vietnam has been strong, achieving the national goal of becoming a lower middle income country by 2010 while reducing poverty from 37.4 percent in 1998 to 14.2 percent in 2010 ("Vietnam Living Standards Survey," General Statistics Office of Vietnam). As tariffs will be eliminated among ASEAN member countries in 2015 with the expected formation of the ASEAN Economic Community (AEC), the infrastructure must be improved to create a better investment environment and strengthen international competitiveness so that economic growth can be sustained.
With the economic growth, the demand for power is increasing, an annual average increase of 12.5 percent over the years 2007 to 2012, and going forward, the power demand is expected to continue growing. Given these circumstances, National Power Development Plan for 2011 to 2020 establishes a plan to develop new power sources of 50,000 megawatts in total, adding to the 26,926 megawatts of total installed capacity of generation (excluding home power generation) available as of the end of 2012, to meet the continuing growth of power demand.
The investment plan described in the plan above, however, has fallen behind schedule due mainly to a lack of funding, which makes the balance of power supply and demand in Vietnam more severe.
This project will construct a 600-megawatt coal-fired thermal power plant that uses locally produced coal and also construct 220-kilovolt transmission lines in Thai Binh Province in northern Vietnam, in order to meet the power demand in the region.
In addition to curbing fuel costs, this will reduce the power loss that occurs with long-distance power transmission and increase the power supply efficiency, alleviating the strained power supply and demand balance, and promoting economic growth and international competitiveness in Vietnam.
The project will also lower the high dependency on hydroelectric power, currently at 50.2 percent, providing power stability to Vietnam overall by avoiding the reduction in power supply that occurs in the dry season when less water is available for producing hydroelectric power.
Japan has provided a phase I ODA loan for the project (loan agreement signed in November 2009, loan amount: 20,737 million yen), and this is a loan for the second phase. The ODA loan is used for engineering works, material and equipment procurement and consulting services such as construction supervision required for constructing the power station and setting up power transmission lines, and is also used for constructing common facilities for the power station and adjacent power stations.
JICA will continue to provide active support to address Viet Nam’s development issues, while pursuing integrated implementation of a wide range of ODA assistance, such as ODA loan, technical cooperation and grant aid.
