World Bank-supported Trung Son Project to generate clean energy and bring flood control, irrigation benefits to rural poor
Hanoi, June 28, 2011 – The World Bank and the State Bank of Vietnam today signed the financing agreement and related documents for US$330 million to Vietnam to support the Trung Son Hydropower Project (TSHPP). The project was approved by the World Bank Board of Directors on April 26, 2011.
The mid-sized multipurpose hydropower project will help meet growing domestic demand for electricity and bring flood control and irrigation benefits to rural and poor communities in Thanh Hoa province in Vietnam. It also marks the Bank’s return to funding energy generation in Vietnam.
Electricity consumption in Vietnam has been growing at 15 percent annually for the past several years and Trung Son’s 260 Megawatts project will help meet the increased demand. Through the project, the World Bank will also provide technical support to Vietnam Electricity (EVN) in improving the performance of its hydropower projects in dam safety and operations as well as in adopting international standards in social and environmental practices.
“Trung Son will help improve Vietnam’s energy mix and energy security as part of the least cost solution in meeting the country’s energy needs. Furthermore, it will also contribute to the climate change agenda by generating clean energy and avoiding an estimated 1 million tonnes of CO2 emissions per year,” said Victoria Kwakwa, World Bank Country Director for Vietnam.
“Hydropower –when done well—offers a clean, affordable and reliable source of electricity to help drive growth, poverty reduction and sustainable development,” Kwakwa said. “Through this project, we are expected to help provide technical support in improving the performance of its hydropower projects in dam safety and operations as well as in adopting international standards in social and environmental practices.”
The TSHPP includes a robust development program to address the social impact from Trung Son’s construction and provide support to people living in the project area. This includes the construction of infrastructure: roads, power supply, water service for households, health, irrigation, schools and housing in the resettlement areas. In addition, an environmental management plan has been put in place to address the preservation and mitigation measures of three natural reserves of high biodiversity surrounding the project site.
Hydropower is a vital source of clean energy for many countries and Vietnam is no exception. TSHPP is the first hydropower project the World Bank has financed in the country over the past decade. The financing is being provided through the IBRD* lending window—with 27 years maturity and 6 years of grace period for loan repayment.
*The World Bank’s IBRD (International Bank for Reconstruction and Development) lending window provides development financing for eligible middle-income countries.