France, through AFD, commits €70 million to finance Hoa Binh Hydropower Plant Extension project

France, through AFD, commits €70 million to finance Hoa Binh Hydropower Plant Extension project

This agreement is in line with the announcements on Vietnam's climate commitments at COP26, this financing aims to support the country's energy transition.

During his recent visit to COP 26 in Glasgow, Vietnamese Prime Minister H.E. Phạm Minh Chính reiterated Vietnam's commitments to green and sustainable growth. Forecasting an increase in electricity demand of 6-7% per year over the period 2021-2030, the Vietnamese government is fully aware of the need to increase installed capacity, while promoting the development and optimization of renewable energy.

AFD has therefore granted a 70 million euro loan to Vietnam Electricity (EVN) to increase the current capacity of the Hoa Binh hydropower plant to 2 400 MV by installing two additional turbines of 240 MW each. The remainder of the project will be financed by EVN and local lending institutions.

The project aims to take advantage of water overflows to increase electricity production, but above all to improve the supply and stability of the electricity system. It will also help replace fossil fuel production (estimated at 488 GWh/year) and avoid 225kt of greenhouse gas emissions per year.

In addition, AFD is providing technical assistance in the form of a 1.3 million euro grant to EVN to strengthen its environmental and social management, and technical advice. The mission was entrusted to Artelia France.

Mr. Hervé Conan, Director of AFD Vietnam, said: "Building on the successes of recent years in the renewable energy sector, AFD and EVN have decided to extend their collaboration to this key project for Vietnam's energy transition. This signature, which is in line with the strong announcements made by the Vietnamese Prime Minister at COP 26, testifies to the confidence EVN has in AFD. It also marks EVN's ambition to develop sustainable energy in line with AFD's "100% Paris Agreement" strategy in Vietnam. I would like to sincerely thank EVN for trusting us and welcome our excellent cooperation.”

Mr. Nguyen Xuan Nam, Vice President of EVN said: "The Hoa Binh hydropower plant expansion project is in line with EVN's strategy for the development of green and sustainable energy, increasing not only EVN's hydropower capacity but also the resilience and performance of the power system. EVN highly appreciates AFD's support over the past 20 years, notably through loans and numerous technical assistance. Today's signature opens a new chapter in this collaboration.”

Cécile Vigneau, Economic Affairs Officer of the French Embassy in Vietnam, said: "During Prime Minister Pham Minh Chinh's visit to France from 3 to 5 November, the French and Vietnamese authorities reaffirmed their desire to strengthen their cooperation in the face of common challenges, including climate change. I am delighted with the signing of this financing agreement, which is a very concrete illustration of France's support for Vietnam's energy transition. This extension project is emblematic of Franco-Vietnamese cooperation, as we approach the fiftieth anniversary of the establishment of diplomatic relations between France and Vietnam in 2023.”