EVN inks non-Government guaranteed loan worth EUR80 million with AFD

The Vietnam Electricity Group (EVN) and the French Development Agency (AFD) on March 28 signed a agreement on a non-Government guaranteed loan worth EUR80 million to implement the southern Vietnam power distribution project invested by EVN's subsidiary - the Southern Power Corporation (EVN SPC).

The signing ceremony was attended by Ho Sy Hung, Vice Chairman of the Committee for Management of State Capital at Enterprises, representatives from the Ministry of Finance, the State Bank of Vietnam and the Party Committee of the Central Agencies' Bloc, and the State controller at the EVN.

Duong Quang Thanh, Chairman of the EVN's Member Board, and Tran Dinh Nhan, General Director of the EVN were present at the event.

The French side was represented by French Ambassador to Vietnam Nicolas Warnery and Director of the AFD in Vietnam Herve Conan.

Representatives from the European Union (EU), the EVN’s Member Board, its units and the EVN SPC, and EVN Deputy General Directors also participated in the event.   

To fulfill its important political tasks assigned by the Party and the State, the EVN and its units have rolled out investment activities to expand its electricity distribution network.

The EVN SPC is implementing power network projects in the southern region in an effort to improve the reliability, safety and quality of power supply services.

The completion of those projects' components help enhance the efficiency of power supply to the southern region, ease power shortage and overload in many areas, raise the quality and safety, reduce power loss on the network, and release the capacity of some renewable electricity projects in the region.

The southern Vietnam power distribution project comprises 33 sub-projects, located in Ben Tre, An Giang, Binh Thuan, Long An, Soc Trang, Tra Vinh, Ca Mau, Binh Phuoc, Dong Nai, Dong Thap, Bac Lieu, Kien Giang provinces and Can Tho city.

These sub-projects are included in the electricity planning scheme for 2016-2025 with a vision towards 2035, approved by the Ministry of Industry and Trade.

The EVN SPC has approved feasibility reports of all the sub-projects. With combined investment capital of over VND4.48 trillion (US$195.9 million), the sub-projects are scheduled to be implemented from 2022 to 2024.

Previously, electricity distribution projects mainly relied on official development assistance (ODA) or foreign preferential loans of the Government. However, over the past years, loans via the Government have been cut to ease the public debt burden.

To facilitate businesses’ access to non- Government guaranteed loans, the Government has issued Resolution No. 37/NQ-CP dated March 29, 2021 to remove legal obstacles.

The Government, therefore, has allowed the EVN to re-lend its loan from the AFD to EVN SPC to fund the sub-projects.

In his remarks, Conan said the power transmission project will help the EVN and Vietnam achieve the target of low-carbon emissions and sustainable development, implement the Paris agreement on climate change and fulfill its commitment of net zero emissions by 2050 made at the 26th UN Conference of Parties (COP26) in Glasgow.

The signing of the credit agreement will also pave the way for future cooperation between the EVN and the AFD, not only in the field of non-government guaranteed finance but also at the EVN’s member companies, in electricity transmission and distribution.

The AFD is committed to helping the EVN upgrade its grid and infrastructure in a smarter, more flexible and modern fashion, he stressed.

He told the Vietnam News Agency (VNA) that this project is special because it uses non –sovereignty loan with a five-year grace period and the duration of reimbursement is 15 years.

Conan expressed his hope for a long-term partnership with the EVN, in line with the group's transformation and energy trandition. 

For his part, Thanh highlighted the active cooperation and support of the AFD and European partners, which has helped the EVN fulfill its role as the driving force of the domestic energy sector, thus contributing to the national energy transition programme.

The EUR80 million loan is expected to expand the southern power grid and facilitate the use of renewable energy sources that are developing strongly in southern provinces, he added.

The EVN hopes to receive more support from the Government and ministries and agencies in electricity projects, he stressed, lauding the assistance of the AFD over the past more than two decades, especially through non-Government guaranteed loans and technical support.

Since 2000, the EVN and the AFD have maintained cooperation through guaranteed and non-Government guaranteed loans for electricity projects.

The AFD has paid due attention to enhancing cooperation with the Vietnamese Government in policy dialogues regarding climate change and clean energy to help Vietnam shift towards green, low carbon growth, and respond to climate change.

The agency has so far committed some EUR350 million worth of non-Government guaranteed loans to the EVN.
Since 2017, AFD loans have played a part in the Vietnamese group’s investment, meeting requirements for electricity supply in socio-economic development. The AFD has led the way in providing direct loans for the EVN's power projects without the government guarantee.