HANOI, Dec 28 (Reuters): Workers began blocking the Nam Non river in central Vietnam this week to build a dam for a $373-million hydro power plant, part of plans to boost the energy infrastructure needed to underpin economic growth.
The work on the 320-megawatt Ban Ve plant, slated to become operational in 2008, is the latest in a $7.6 billion investment to construct nearly two dozen power plants and help maintain economic growth of up to 8 per cent.
"Vietnam is now building 20 power plants at a combined investment of 120 trillion dong," Dao Van Hung, head of state utility Electricity of Vietnam (EVN), said on the state-run radio today.
Vietnam's gross domestic product rose 8.4 per cent in 2005, the government said Tuesday, the fastest rate since 1996 when growth was 9.34 per cent. The government has projected the economy will expand 8 per cent in 2006 and between 7.5 per cent and 8 per cent annually up to 2010.
Building infrastructure, including power plants, has become an essential part of improving economic growth, Deputy Prime Minister Vu Khoan told diplomats and aid donors at an annual gathering in Hanoi early this month.
His remarks were interrupted briefly by a power failure.
"It is obvious how important the power supply is," Khoan said when he resumed his speech.
Donors pledged $3.7 billion in aid to Vietnam for 2006, up from $3.4 billion this year.
Hanoi said the aid would be spent on improving infrastructure, education, reducing poverty and preparing for Vietnam's entry into the World Trade Organisation, which it hopes to achieve in the first half of 2006.
Vietnam's economic expansion in 2005 was led by 10.6 per cent growth in industry and construction, which included 12.2 per cent growth in the power generation and water supply sectors, government statistics show.
Power demand in Vietnam is forecast to nearly double to between 88-93 billion kilowatt hours (kwh) in 2010 from around 50 billion kwh now, the Industry Ministry said.
Electricity output from EVN's power plants rose 2.5 per cent in 2005 to 41.16 billion kilowatt hours. Overall power production rose 15.4 per cent to 53.32 billion kilowatt hours.
In the next five years, Vietnam will need $19.5 billion, to raise its electricity generation capacity to 21,000 megawatts from 11,200 megawatts now, Deputy Industry Minister Do Huu Hao has said.
Industry experts said the money was expected to come from foreign investment and the sale of international bonds, but Vietnam also plans to cut crude and coal exports to provide more feedstock for energy-hungry domestic industries.
Crude oil exports, the country's biggest foreign exchange earner, eased 7.3 per cent this year to 18 million tonnes and would be trimmed to 15.6 million tonnes by 2010, the Planning and Investment Ministry has planned.
It also plans to cut coal exports by 1 million tonnes per year from 2007. Vietnam earned $658 million from exporting 17.88 million tonnes of the fuel this year, up 85.2 per cent from 2004 in value and also a jump of 53.8 per cent in volume.