Rapid economic development, increasing industrialization, and greater access to electricity in Viet Nam had led to an average 13.5% annual growth in electricity demand from 2002 to 2007. To meet this rising demand, the government had taken major steps to develop the energy sector and, since 2000, had embarked on harnessing more environmentally sustainable energy sources. Against this backdrop, it requested the Asian Development Bank (ADB) to finance the Song Bung 4 Hydropower Project, for which, ADB approved a loan of $196 million in June 2008.
The Song Bung 4 was the first hydropower project in Viet Nam that received financing from a multilateral financial institution. It was designed to address environmental and social impacts in a sustainable and socially manner while helping meet the country’s increasing energy demand. Its expected outcome was additional power generation capacity from the sustainable use of hydropower resources in Quang Nam province in central Viet Nam. Its planned outputs were (i) the construction and commissioning of a156 megawatt (MW) hydropower plant (HPP) and associated facilities, including a dam, a powerhouse, a transmission line, and an access road; and (ii) improvement of project-affected persons’ livelihoods.
The project’s main output, the Song Bung 4 HPP, was completed and commissioned in October 2014. It is located on the Bung River, a tributary of the Vu Gia River, and forms a cascade with the Song Bung 2 and Song Bung 5 hydropower projects. The plant’s actual generation of 363 gigawatt-hour (GWh) in 2015 and 440 GWh in 2016 were much lower than the estimated long-term average due to the low river flow associated with the El Niño. Nevertheless, its output under the the extreme weather condition in 2016 was deemed promising for future performance.
A total of 507 households were affected by the project. 269 of these households needed to be relocated permanently; but only 265 moved to the project-financed resettlement sites, which were provided with access roads, houses, schools, health centers, and meeting facilities. Livelihood restoration support was also given to project-affected persons to help them improve or at least maintain pre-project living standards and income generation capacity.
Song Bung 4 HPP’s operation had increased Quang Nam’s generation capacity from 210 MW in 2008 to 1,029 MW in 2016, an addition of 819 MW. Due to uncontrollable factors, the additional capacity was short of the 1,000 MW target set at appraisal.
Self-evaluation by ADB’s Southeast Asia Department rated the project successful. Project completion was delayed by18 months mainly because of management and quality of works issues in the construction of the dam and spillway and the late procurement of the electro-mechanical equipment package. The total actual project cost was $262.63 million, slightly lower than the estimated $267.28 million. ADB financing totaled $181.14 million.
Electricity Viet Nam, a 100% state-owned enterprise with monopoly of electricity distribution in Viet Nam, acted as the executing agency. The Song Bung 4 Hydropower Project Management Board, established in 2008, served as the implementing agency.
