The Asian Development Bank agreed Friday to loan Vietnam nearly US$1 billion to build a coal-fired power plant as the booming country scrambles to keep up with its surging demand for power.
The money will be used to help finance a 2,000-megawatt project in Mong Duong, a precinct in northern Quang Ninh Province, about 190 kilometers (120 miles) east of Hanoi, said John Cooney, the ADB's infrastructure director for Southeast Asia.
Like all coal-fired plants, the Mong Duong plant will add carbon dioxide to the atmosphere amid worrying signs that higher carbon emissions are raising global temperatures and damaging the environment.
But ADB and Vietnamese officials say the plant is necessary to help Vietnam avoid blackouts, promote economic development and continue lifting people out of poverty.
They say they will use state-of-the-art equipment to minimize pollution from the plant, which is located in the same province as Halong Bay, a major tourist attraction and one of Vietnam's greatest natural treasures.
The board voted unanimously Friday to release the first US$28 million (EUR20 million) toward construction of the US$931 million (EUR664 million) project. This is the biggest loan from the Manila-based ADB for a power plant.
The money will be used to finance one of two plants on the site. The second will be financed by a private company working with the Vietnamese government.
The Mong Duong plant is expected to begin generating power by 2012. It will be located in a corner of Halong Bay where coal mining and storage already common, away from the center of tourism activity.
Vietnam's demand for power is expected to grow by 16 percent a year until 2015, according to government projections.
If Vietnam doesn't meet its growing demand for power, the poor will pay the heaviest price, said Cooney of the ADB.