Vietnam seeks loans for power transmission projects

Vietnam is seeking loans from international finance organisations and domestic commercial banks to fund power transmission projects.

Nguyen Manh Hung, general of the National Power Transmission Corporation under the  Electricity of VietNam, said capital shortage for power transmission projects could lead to more power outages in the southern key economic zone as well as Ho Chi Minh City in 2013.

Loans from finance organisation and banks would be crucial in developing transmission projects, he said.
Under the national power plan, the country will need a maximum of 210 billion kW per hour by 2015 and 362 billion kW per hour by 2020.

Vietnam needs to set up 350 transmission projects within 5 years, with an estimated capital of VND76 trillion or US$3.6 billion.

"We highly regard EVNNPT's reputation in making payments, so we have pledged to loan the corporation the maximum amount permitted by the State Bank," said Ta Minh Hieu, deputy director of An Binh Bank. Hieu also said his bank could help other commercial banks with capital to loan EVNNPT.

However, of the 20 banks represented at the forum, An Binh Bank was the only one that said it was willing to lend money to the EVNNPT for its power transmission projects.

Most of the banks are concerned about the capacity to make principal payments as well as interest-rate payments.
"Banks are concerned that effectiveness of investment would be low because of the low power tariffs in the country," said Vu Tran Nguyen, EVNNPT's deputy general director.

ADB said the domestic banks should not be worried because international finance organisations, including the ADB and World Bank, could back up EVNNPT transmission projects, said Anthony Jude, ADB's principal project specialist.

Hung said investment would become even more effective when a new power tariff is imposed next year. "The Government has committed to organisations like ADB and the World Bank to increase power tariffs. Our power rates are lower than those in other countries in Southeast Asia," he said.

He added that the cost for power transmission in Viet Nam was one of the lowest in the world, saying a kW per hour sold in Viet Nam for VND1,250 or six US cents. The cost for transmission of one kW per hour is 6 per cent of the selling price.

"Power tariffs must be increased to meet commitments we have made because we cannot delay power transmission projects," Hung said.

"They are needed to ensure an adequate power supply for the continued development of the country," he added.
ADB and the World Bank both require warranties from domestic banks when they offer loans.

Vietinbank has been authorised by the Government to chair a committee on the issuance of warranties as well as coordinate the mobilisation of capital for EVNNPT.

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Tags: project funding, power transmission projects, Vietnam electricity, electricity shortage