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  Banking Finance

Banks agree to co-finance power plants

A consortium of four domestic banks will provide a VND42 trillion (US$2.7 billion) line of credit to Electricity of Viet Nam (EVN) to bankroll power capacity development from 2006-10, EVN director general Dao Van Hung said in Ha Noi last Friday.

The involved banks are the Viet Nam Industrial and Commercial Bank (Incombank), the Bank for Foreign Trade of Viet Nam (Vietcombank), the Bank for Investment and Development of Viet Nam (BIDV) and the Bank for Agriculture and Rural Development (Agribank).

The banks’ commitment was made at a signing ceremony for an agreement under which the banks will co-finance a VND1.77 trillion ($114 million) package for construction of the Ban Ve Hydroelectric Power Plant in the central province of Nghe An’s Tuong Duong District.

The Ban Ve plant will have a design capacity of 320MW and produce 1 billion kWh per year, Hung said, and is expected to begin operations in late 2008.

The preferential loan package will have a 12 year term with a grace period of three years, an annual interest rate pegged to the banks’ average interest rates for 12-month deposits, and a fee of 3 per cent per year.

Total capital for the Ban Ve project is expected to reach VND5.92 trillion ($382 million).

Remaining capital will come from EVN, preferential loans from a fund for site clearance, and foreign loans for mechanical facilities.

Electrical demand nationally is expected to post a solid annual growth of 16-17 per cent between 2006-10. To meet the rising demand, Hung said that EVN needs up to VND250 trillion ($15.7 billion) during this period for 32 planned projects with an additional capacity 16,805MW.

EVN will look to funding from official development assistance, preferential loans from the State, and corporate bond issues, as well as commercial loans.

During 2001-05, domestic commercial banks loaned about VND10 trillion ($625 million) for EVN power projects.

Vietnamnews - (25/04/2006)

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