A concessional loan worth EUR70 million (US$81 million) for the Hoa Binh hydropower plant expansion project that carries no government guarantee was granted on Wednesday to Vietnam Electricity (EVN) Group from the French Development Agency (AFD).

The VND9.22 trillion ($407 million) project includes two turbines with a combined capacity of 480MW.  

Seventy percent of the project’s investment comes from commercial loans, including the EUR70 million loan from the AFD and several other loans from domestic commercial banks.

Once completed, the expanded plant, located in the northern mountainous province of Hoa Binh, will help increase power generation for the northern region and reduce production costs. 

By optimizing water flows, the annual electricity output will be raised by about 495 million kWh, thus helping replace fossil fuel in power generation and cut down greenhouse gas emissions.

The new turbines will also ease the burden on the plant’s existing turbines, thus increasing the lifespan of the equipment and saving on maintenance expenses.

The project started in January this year and the first new turbine is scheduled to come on stream in the second quarter of 2024. 

The second new turbine is expected to come into operation in the fourth quarter of 2024.

Speaking at the signing ceremony of the loan agreement in Hanoi on Wednesday, AFD director in Vietnam Herve Conan said that following the success of bilateral cooperation in renewable energy in recent years, the AFD and EVN decided to expand their partnership in this key project in the Southeast Asian country’s energy transition.

He noted that the loan is in alignment with Vietnamese Prime Minister Pham Minh Chinh’s strong statements made at the 26th UN Climate Change Conference of the Parties (COP26), demonstrates the EVN’s trust in the AFD, and marks the group’s ambition to sustainably develop energy, all in line with the AFD’s strategy for its projects to be 100 percent compatible with the Paris Agreement.

Built in the Da River basin in Hoa Binh Province, the Hoa Binh hydropower plant was the largest in Southeast Asia when it was completed in 1979. 

The project was supported by the Soviet Union, now Russia, through designing, supplying equipment, supervising, and helping it go on stream.

The plant is in stable operation with an annual electricity output of nearly 10 billion kWh – a considerable contribution to the national electricity system and the provincial budget.

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