The Asian Development Bank (ADB) will lend Vietnam up to $730 million for electricity transmission upgrades to improve the delivery of power needed to fuel the country’s fast growing economy.

“Without the removal of these 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.”

The multi-tranche loan facility for the Power Transmission Investment Program has been approved by ADB’s Board of Directors with a first payment of $120.5 million. The program supports the construction of almost 648 km of 500-kV lines and over 100 km of 220-kV lines, while upgrading associated substations. Funds will also be used to provide training and other support to the state-owned National Power Transmission Corp.

Vietnam has expanded household electricity access, with the percentage of those without power dropping from 22% in 1999 to just 3% in 2010. The availability of reliable electricity has helped drive the country’s booming economy and sharply reduced poverty.

With power consumption rising at double the annual economic growth rate since 2004, and with electricity demand expected to rise 14% per annum over the next four years, ensuring a reliable power supply is a growing challenge.

Since 2005 Vietnam has been working hard to increase power capacity, create a competitive power market and broaden ownership in the power sector with generating plants being gradually transferred to independent power producers. From 2011 to 2020, up to 46% of new generating capacity is expected to come from foreign and domestic private sector entities.

The investment program supports improvements expected to help boost per capita electricity consumption from 985 kilowatt hours (kWh) in 2010 to approximately 3,800 kWh in 2025.

ADB funds are expected to be released in four tranches, with the first loan from ordinary capital resources having a 25-year term. The program is due for completion by June 2020.