(EnergyAsia, December 2 2011, Friday) — The Asian Development Bank (ADB) said it has approved a US310 million loan for the construction of a 750MW combined cycle gas-fired power plant to supply much needed electricity to southern Vietnam.

The proposed US$793.5 million plant is one of four being developed at the O Mon thermal power complex in Can Tho province, about 250 kilometers south of Ho Chi Minh City. Germany’s KfW Bankengruppe will contribute US$370 million, with state-owned Electricity of VietNam (EVN) and the Vietnamese government together providing almost US$113.6 million.

When completed by June 2016, the O Mon IV will provide a more reliable supply of power to the Mekong Delta, support expanded industrial activity, spur new livelihood opportunities, and reduce dependence on hydroelectricity tapped from other regions, said the ADB.

The plant is aligned with the country’s power sector development plan including raising the national energy capacity from 18,500 MW in 2010 to 60,000 MW by 2020. It will save approximately 600,000 tons of carbon dioxide emissions a year compared to coal-based alternatives, possibly qualifying the facility for carbon credits.

A second plant at the O Mon complex is to be opened for bidding to private investors, while the Japanese government is funding two others in conjunction with EVN. When completed, the complex will have 3,600 MW of generating capacity, drawing natural gas from the Gulf of Thailand and supporting the development of Vietnam’s offshore natural gas reserves.

The ADB said the availability of electricity has fuelled the country’s economic expansion over the past decade, helping slash the number of people living in poverty from 58% in 1993 to 13% in 2009.

In recent years, however, the growing demand for power has put a strain on existing generating capacity, leading to power shortages and unstable supply during the dry season.

Anthony Jude, director of ADB’s Energy Division for Southeast Asia, said:

“Vietnam’s power consumption has been growing 15% a year over the past decade, and will continue rising at a double-digit pace for the foreseeable future. Vietnam desperately needs more electricity, and the additional power supply will support economic and social development in the Mekong Delta.”

ADB has played a leading role in developing Vietnam’s power infrastructure, with six sovereign loans totalling over US$1.7 billion, two private sector loans worth US$90 million, and associated guarantees of US$60 million.