Vientiane Times, May 15, 2014
The half-day workshop held yesterday in Hanoi by the International Finance Corporation (IFC) highlighted that Vietnamese banks need to take into account the environmental and social impacts of the dams they are financing to ensure sustainable hydropower development in Laos.
The ‘Environmental and Social Risk Management’ workshop – which was also supported by AusAid and the Institute of Manpower, Banking and Finance – highlighted that sustainable development of hydropower projects would also ensure the banks secured a sizable return from their huge investment.
According to IFC, about 20 Vietnamese companies and banks are involved in about 20 hydropower projects in Laos, accounting for about 15 percent of its hydropower potential if it is realised.
More than 60 bank executives took part in the workshop, which was designed to help Vietnam’s banks better identify, assess, manage and mitigate environmental and social risks in hydropower development projects in Vietnam and other countries.
At the workshop, Vietnamese bank executives were introduced to tools including the Equator Principles, a set of voluntary guidelines helping banks to assess environmental and social sustainability in project financing.
The Equator Principles have been adopted by 78 financial institutions worldwide and are based on IFC’s performance standards, which define client’s roles and responsibilities in ensuring environmental and social sustainability in their projects.
Institute of Manpower, Banking and Finance Chief Executive Officer, Mr Dao Chan Phuong expressed hope that the workshop would provide the top decision makers of the Vietnamese banks a clear understanding of the risks is if environmental and social standards are not considered.
IFC Regional Manager for Vietnam, Cambodia, Laos, Myanmar and Thailand, Mr Simon Andrew, said “Investing in businesses that are economically sound, provides people with incomes and other benefits and treats the environment with care is strategically smart as it will support financial institutions’ business model.”
“If banks address environmental and social challenges of projects they finance, they will reduce their own risks and even up new business opportunities such as energy efficiency and renewable energy financing.”
IFC is helping the Lao government implement its sustainable hydropower policy. In 2013, IFC signed an agreement with the Lao Ministry of Finance to provide US$2.4 million financial support to enhance capacity building of the Lao government to ensure sustainable development of hydropower development in the country.
Under the partnership, IFC will also provide training and technical assistance to the Ministry of Natural Resources and Environment and the relevant people in select river basins to help them better anticipate, evaluate, and manage the water resources in support of sustainable hydropower investments.
Laos has potential to build nearly a hundred dams with combined installed capacity of about 28,000 to 30,000MW. At present, there are more than 20 hydropower plants with combined installed capacity of about 3,000MW to secure sustainable hydropower development in the country.