World Bank Steps Up Support to Vietnam’s Power Sector Reforms and Climate Change Agenda

June 30, 2014

WASHINGTON, June 30, 2014 - The World Bank’s Board of Executive Directors today approved a US$200 million loan and a US$70 million credit for the Government of Vietnam to support power sector reforms, climate resilience, and lower carbon intensity development.

“These two operations will contribute to Vietnam’s efforts to move towards more environmentally sustainable growth as envisaged in the Socio-economic Development Plan for 2011-2015, by supporting the emergence of a more modern and efficient power market and helping Government to put in place policies across several sectors to enhance the country’s climate resilience,” said Victoria Kwakwa, World Bank Country Director for Vietnam.

Vietnam is one of the world’s most vulnerable countries to climate change. Natural disasters and sea-level rise already have significant economic and human costs, with natural disasters alone costing as much as 1.5 percent of global domestic product per year.

Of the total, a loan of US$200 million will support the Third Power Sector Reform Development Policy Operation, which supports six policy areas, including the full commercial operation of Vietnam’s competitive generation market; the entry of new generation companies in the market; turning power generation companies into independent companies; and the implementation of regulations to move into a more transparent and predictable electricity tariff system.

This operation is the last in a series of three supporting the Government’s power sector reforms which focuses on transparency and competition in the power market, and enhancing efficient use of electricity including through more market based tariffs.  With this operation the first phase of the reform program has been successfully completed.

The third Climate Change Development Policy Operation (US$70 million) aims to support the Government efforts to address climate change by adopting policies and strengthening institutional capacity to promote climate resilience and lower carbon intensity development. It is the third of a series of three operations of US$70 million each, supporting three pillars, covering policies in better water management, energy efficiency, and policy and institutional development.

The credit for the Third Climate Change Operation comes from the International Development Association, the World Bank Group’s fund for low-income countries. The loan for the Third Power Sector Reforms Operation is financed by the International Bank for Reconstruction and Development, the World Bank Group’s financing arm for middle-income countries.

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