World Bank loan to improve electricity quality in Vietnam

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The World Bank and Electricity of Vietnam Thursday signed a loan agreement for a project to provide consumers in Vietnam with better-quality and reliable power supply and to reduce greenhouse gas emissions through improving efficiency.

The US$449-million credit was approved by the bank in September.

The Vietnam Distribution Efficiency Project will help meet the objectives of the National Energy Development Strategy by reducing investment needs in the power sector, strengthening energy security, and contributing to mitigation of climate change.

The project will include construction and improvement of electricity distribution networks, introduction of smart grid technologies in distribution and a technical-assistance and capacity-building facility for the Electricity Regulatory Authority of Vietnam and five power companies - NPC, CPC, SPC, HCMPC and HHNPC - to develop efficient electricity tariffs and design effective energy-demand programs.

The total cost of the project is estimated at $800 million.

The Clean Investment Fund (CTF) will provide $30 million to deploy smart grid technologies.

The Australian Agency for International Development will provide grants worth $8 million for technical assistance and capacity building.

The remaining $313 million will come from the Vietnamese government.

"The efficiency and modernization investments under this project will improve the reliability of energy supply to industries and households and contribute to Vietnam's socio-economic development," said Victoria Kwakwa, the bank's country director for Vietnam.

"Successful implementation of this project will contribute to strengthen Vietnam's competitiveness and environmental sustainability, which are also key pillars of the World Bank's strategy for Vietnam in the 2012 2016 period."

In Vietnam, access to electricity increased from 50 percent in 1996 to around 97 percent last year.

The bank, which has worked closely with the country, has now shifted its focus from providing electricity to improving the quality of services to consumers.

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