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Energy industries

Vietnam's Power Capacity Development: Consortium of Banks Offers $2.7 Billion Line of Credit to EVN

Strategic Insights

— 2 min read

As part of its effort to meet the country's rising power demand, Electricity of Vietnam (EVN) will receive a significant financial boost from a consortium of four domestic banks. EVN director general Dao Van Hung announced that the banks will provide a VND42 trillion (US$2.7 billion) line of credit to support power capacity development from 2006 to 2010. This move is a crucial step in enabling EVN to implement 32 planned projects, which are expected to add 16,805MW of additional capacity to the national grid.

Key Takeaways:

  • The consortium of banks, comprising Incombank, Vietcombank, BIDV, and Agribank, will provide a VND42 trillion (US$2.7 billion) line of credit to EVN for power capacity development from 2006-2010.
  • The loan package will be used to finance the construction of the Ban Ve Hydroelectric Power Plant, which will have a design capacity of 320MW and produce 1 billion kWh per year.
  • The plant is expected to begin operations in late 2008, and the preferential loan package comes with a 12-year term, a three-year grace period, and an annual interest rate pegged to the banks' average interest rates for 12-month deposits.
  • Total capital for the Ban Ve project is estimated to reach VND5.92 trillion (US$382 million), with the remaining funds coming from EVN, a fund for site clearance, and foreign loans for mechanical facilities.
  • Electrical demand in Vietnam is expected to grow by 16-17% annually between 2006-2010, and EVN needs up to VND250 trillion (US$15.7 billion) to meet the rising demand during this period.
  • Except for the Ban Ve project, EVN will finance the remaining projects with funding from official development assistance, preferential loans from the State, and corporate bond issues, as well as commercial loans.
  • During 2001-2005, domestic commercial banks loaned around VND10 trillion (US$625 million) to EVN for power projects.

Statistics:

  • VND42 trillion (US$2.7 billion): the line of credit provided by the consortium of banks to EVN for power capacity development from 2006-2010
  • VND1.77 trillion (US$114 million): the cost of the construction of the Ban Ve Hydroelectric Power Plant
  • 320MW: the design capacity of the Ban Ve Hydroelectric Power Plant
  • 1 billion kWh: the annual electricity production of the Ban Ve Hydroelectric Power Plant
  • 12 years: the term of the preferential loan package
  • 3 years: the grace period of the preferential loan package
  • 16-17%: the annual growth rate of electrical demand in Vietnam between 2006-2010
  • VND250 trillion (US$15.7 billion): the estimated funds needed by EVN to meet the rising demand during 2006-2010
  • 32: the number of planned projects that EVN needs to implement to meet the rising demand
  • 16,805MW: the additional capacity that the planned projects are expected to add to the national grid
  • VND5.92 trillion (US$382 million): the total capital estimated for the Ban Ve project
  • VND10 trillion (US$625 million): the loans provided by domestic commercial banks to EVN for power projects between 2001-2005

Sources:

  • Asia Pulse, "Bank Consortium Offers $2.7 Billion to EVN for Power Capacity Development" (April 25)
  • VNA, "EVN to Implement 32 Projects to Meet Rising Demand" (April 25)

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