VINACHEM

HA NOI — The State Bank of Viet Nam and the World Bank signed finance agreements worth US$682 million for five projects yesterday.

The projects included the First Power Sector Reform Development Policy Loan, the Second Northern Mountains Poverty Reduction Project, the Central Northern Region Health Support Project, HCM City Environmental Sanitation Project Additional Financing, and the Red River Delta Rural Water Supply and Sanitation Project.

The $312 million First Power Sector Reform Development Policy Loan is to support four main policy areas essential to the reform of Viet Nam's power sector. They include development of a competitive power market by reducing the existing monopoly, restructuring of the power sector to offer customers more choice in services, electricity tariff reform to attract new investors, and improving energy efficiency. The Government has already implemented seven policies relating to the reform of the power sector to qualify for first credit.

This loan is the first in a programmatic series of three. The second and third will continue to support the government's reform programme. Based on the current path, the second operation will help to put into place detailed rules required to implement design, restructuring and tariff actions. The third will be aimed at the startup of the Viet Nam Competitive Generation Market and moving to performance based rate regulations for power companies.

Targeted at some Viet Nam's poorest ethnic minority areas, the Second Northern Mountains Poverty Reduction Project will build on the success of its predecessor to enhance the living standards of poor people in 230 communes of the six provinces of Lao Cai, Yen Bai, Son La, Hoa Binh, Dien Bien and Lai Chau.

This is done through improving and diversifying their livelihood opportunities through better access to productive infrastructure, innovative businesses, improved agricultural productivity and local employment. It also helps to increase the capacity of local governments and communities to plan, manage and implement livelihood improvement programmes in their localities. The total funding for this project is $165 million, of which $150 million is from the WB's International Development Association (IDA).

The Central North Region Health Support Project is a continuation of two other regional projects supported by the IDA – in the Mekong and Northern Highland regions. Total funding for the Central Northern Region Health Support Project will be $75 million, of which $65 million is IDA financed.

The project will work to increase health insurance coverage among the poor; equip 30 district hospitals with basic technology; build and equip district preventive health centres in 30 of the poorest districts; train healthcare personnel to fill the shortage of skills; and upgrade medical educational institutions where they cannot meet local demand.

Another $90 million will be invested in the HCM City Environmental Sanitation Project, which will help construct a 335km drainage system for the city's business centre to control annual flooding and increase the collection of wastewater in an environmentally and financially sustainable manner. In addition to collecting wastewater, it will provide flood relief to over 240,000 households and prevent flood induced infrastructure damage of about $78 million annually, while at the same time reducing public health risks and creating an important economic stimulus to the area. Over a million people will benefit from the project.

Another $65 million will be spent on the Red River Delta Rural Water Supply and Sanitation Project to finance infrastructure for rural sanitation and water supply, benefiting over 800,000 people in the region. It will also support hygiene development in 120 targeted communities while helping the Government build capacity for sustainable rural water supply schemes, with tariffs set at a level sufficient to cover operations, maintenance and debt costs.

(Source: VNS)