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Northern Power Transmission Expansion Sector Project: Project Completion Report

sector: Energy | country: Viet Nam, Socialist Republic of

Establishment of the National Power Transmission Corporation (NPT) in 2008 led to unforeseen delays since new NPT staff were less familiar than the Vietnam Electricity (EVN) staff with ADB procedures. ADB supported the unbundling of the utility structure in Viet Nam. Based on experience in other countries where the electricity sector was restructuring, ADB could have anticipated that the executing agency might change during project implementation.

Loan effectiveness delayed by almost 1 year because of a lengthy government approval process. Executing agency did not commence procurement until the loan was effective although ADB approved advance actions.

The Northern Power Projects Management Board (NPPMB) initially prepared a large number of procurement packages, which placed an additional burden on the NPPMB for procurement and on ADB for approving a large number of bid documents, bid evaluation reports, and contract awards. ADB took action to package larger procurement packages in the last three subprojects. Large contract packages or turnkey contracts should be encouraged in future projects.

The NPPMB was not initially familiar with ADB safeguard policies. This contributed to project delays and placed an additional burden on ADB. ADB could have anticipated the need for early strengthening of the capacity of the executing and implementing agencies.

The monitoring of safeguards implementation should be more systematic; and projects should ensure that such arrangements are in place from project design through implementation, completion, and post-project monitoring.

The financial sustainability of the project depends on the continued increase in the transmission tariff payable to the NPT, or on the establishment of a cost recovery mechanism that addresses the NPT’s operational costs. In case of breach in financial covenants, ADB should conduct updated financial analysis to evaluate whether on-going reforms will have positive impact on the financial strength of the entity. The tariff reforms are expected to translate to full cost-recovery by 2024 of the power sector entities including the NPT.

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