AFD continues financing Vietnam’s sustainable development

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French Development Agency Director Rémi Genevey told VIR that the agency would provide financial support worth 100 million euros ($130 million) a year to Vietnam’s major state-owned enterprises (SOEs) for coming period.

The preferential loans would be given directly to SOEs without financial guarantees from the Vietnamese government.

“All the projects that would benefit from these loans would need to meet our standards and have good track records when it comes to their operation,” he said.

Vietnam faces infrastructure and energy shortcomings which are combined with a growing population and poorly operating SOEs.

“We’ve selected infrastructure, energy, climate change mitigation and sustainable development as areas to receive our support because they meet our objectives and chime with the country’s critical needs,” Genevey said.

For example in the energy sector, the French agency has made a concessional loan of 75 million euros ($97.5 million) to the National Power Transmission Corporation, a 100 per cent subsidiary of EVN, for the partial funding of equipment for a $428.57 million 437 kilometre high voltage line that runs through Gia Lai, Dak Lak, Dak Nong, Binh Phuoc, Binh Duong provinces and Ho Chi Minh City.

The line was connected to the national power grid in mid-May. However, civil engineering work remains underway and the line’s first circuit is expected to be commissioned in 2015. The second circuit will enable electricity to be imported from Laos and Cambodia by 2018.

The agency is also contributing 110.5 million euros ($143.65 million) funding to the Nhon-Hanoi metro line project expected to be commissioned by 2016. This 12.5km project will be extended to 21km by 2020 and 48km by 2020.

The metro will transport 157,000 passengers a day after commissioning, 428,000 by 2020 and 750,000 by 2030 following expansion.

Operating in Vietnam since 1994, the French agency has sunk $1.95 billion into the country. Vietnam continues to be one of agency’s leading partners, having funded 75 projects to date. Initial support for rural development has been further expanded to the development of major infrastructure projects in the fields of energy, transportation, clean water and sanitation.

The agency committed $189.8 million in Vietnam for projects in micro-finance, urban development, rural infrastructure, environment and climate change mitigation.

Genevey said agency had constantly endeavoured to tailor its strategy and tools to the new economic, social and environmental realities facing Vietnam. For instance, it was the only development agency making aid loans directly to SOEs without financial guarantees from the Vietnamese government.