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WB provides loans for rural electrification and poverty reduction
The State Bank of Vietnam and the World Bank today signed two concessional credit agreements, under which the World Bank will provide a total of US$300 million to increase rural access to electricity, and to aid in the implementation of the 2nd phase of Programme 135.
As part of this package, the World Bank is providing US$ 100 million to the state budget in support of Government’s Programme 135 Phase 2 program which provides support to over 2,000 poor communes in 47 of 64 provinces throughout Vietnam. This funding will support Government and community efforts to reduce poverty in ethnic minority and other remote communities by equalizing access to social infrastructure and services and production support through a participatory, community driven investment approach. Programme 135 Phase 2 has funded thousands of kilometers of improved roads, rural schools, potable water supplies, improved seed and livestock, and boarding support to encourage primary school attendance.
The World Bank is also providing US$200 million in additional financing for the ongoing Rural Energy II project. The financing would allow the completion of the original project objective and scale up what has been shown to be a viable model for rural electrification. An estimated 550,000 additional households will benefit from good quality, affordable electricity thanks to this additional financing. Besides, about 2 million people will benefit from the original project. The benefits of electrification are well-demonstrated, both in economic terms and as direct and indirect social benefits.
“Both operations reaffirm the World Bank’s strong commitment to Vietnam’s growth and poverty reduction efforts at a time when the country is confronted with adverse effects from the global economic slowdown,” said Victoria Kwakwa, Country Director for the World Bank in Vietnam.
Apart from the fact that mostly rural communities have additional resources which they can use based on their own priority needs, Program 135 Phase 2 has also provided an important example of highly effective, Government-led partnership with donors. The program is supported through a partnership committee, led by Government, which coordinates financial support from the Governments of Australia, Finland, Ireland and the United Kingdom, as well as technical support from UNDP and IFAD. This innovative partnership arrangement ensures Government leadership at the national and local levels, while providing the basis to share relevant international experience in support of tangible and visible investments to reduce poverty on a broader scale than is possible through a single, externally-financed project.
“Going forward the World Bank is eager to work with Government and other donors to define and clarify the nature of program support to poverty reduction after 2010 when most of the existing targeted poverty programs are expected to close,” Kwakwa said.
According to WB director, The Second Rural Energy Project and this Additional Financing, is to improve access to good quality, affordable electricity services to about 1,500 rural communes. Once completed in 2014, about 4 million households will receive good quality and stable access to electricity.
Vietnam is considered as an example of successful electrification program. During the last 15 years, from 1993 to the end of 2008, the access rate of rural households has been steadily increased from about 14% to about 94%. On average, every day about 1,900 households have been connected to the national power grid during this period.
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