Japan lends Vietnam $761 mln mostly for energy

HANOI - - Japan, Vietnam's biggest single provider of aid, said recently it would extend up to 79.33 billion yen ($761 million) in yen loans to Hanoi this year for infrastructure projects, with the bulk going for energy plants.

The total is just a little smaller than the $872.1 million.

Tokyo is expected to dispense to Vietnam's large communist neighbour China, which has seen Japan lending decrease in the last three years.

Vietnam is in dire need of financing to ramp up energy supplies in order to meet demand that is growing at more than twice its annual GDP rate of seven percent.

Some $448 million of the yen loans will go toward engine construction at the O Mon thermal power plant and the building of the Dai Ninh hydropower station, a statement from the Japanese embassy in Hanoi said.

The rest will be divided among six projects that include upgrading bridges, improving the safety of Vietnam's main railway line and improving the water supply system in two provinces.

Japanese Ambassador Norio Hattori said the loan total for Vietnam this year was about the same as that in 2003 even though Japan's official development aid budget had shrunk. He said that showed the importance of Japan's relationship with Vietnam.

India is Japan's top recipient of aid in Asia. It is slated to receive 120 billion yen in loans this year to fight poverty and improve its infrastructure.

Tokyo has provided loans to Vietnam annually since 1992, with the amount remaining constant in the last 10 years. Hanoi has said it needs to build 60 more power plants by 2020 to meet its needs and that it requires energy investments of around $2 billion a year.

Some will come from foreign aid but it is also hoping for private bank loans. Around 73 percent of Vietnam's electricity is provided by hydropower and coal-fired plants; the rest comes from gas-fired plants. ($1

104.25 yen)