The Asian Development Bank said Friday it will lend Vietnam up to US$730 million for electricity transmission upgrades to support the country's fast growing economy.
The mutli-tranche loan facility has been approved by ADB's Board of Directors with a first payment of $120.5 million, the Manila-based development lender said in a statement.
The funds will be used to finance the construction of more than 860 kilometers of power lines and support the state-owned National Power Transmission Corp.
With electricity demand expected to rise 14 percent annually over the next four years, ensuring reliable power supply is a growing challenge for Vietnam, the ADB says.
Without the removal of transmission bottlenecks the proportion of people without electricity would increase, and economic growth would be negatively affected, said Daniela Schmidt, Energy Specialist in ADB's Energy Division for Southeast Asia.
"These network upgrades will increase power availability by reducing transmission system losses and other problems that are currently plaguing the system," Schmidt said.
The ADB funds are expected to be released in four tranches. The program, which is due for completion by June 2020, is expected to help boost Vietnam's per capita electricity consumption from 985 kilowatt-hours in 2010 to approximately 3,800 kWh in 2025.
Last month, the National Power Transmission Corp. said Vietnam will need to spend around $1 billion each year to develop power transmission facilities and that the country is dependent on foreign financing sources.