Coc San Hydropower launch

/Coc San Launch 2016/coc_san_dam_siteThe majority of the Singapore-headquartered InfraCo Asia team recently assembled in Hanoi, preparing to make the almost four-hour journey to Vietnam’s picturesque Lao Cai Province. A spacious, modern highway leads to Lao Cai—a symbol of the region’s growth. The traffic heading north from Hanoi to Lao Cai is a mixture of freight vehicles—the throb of daily commerce—as well as travellers and tourists making for the highlands of Sa Pa.

It was against this backdrop of tourism, heritage and natural beauty interwoven with expanding industrial activity, that InfraCo Asia stepped in to rescue the distressed 29.7MW Coc San Hydropower Project in 2012. The project reached commercial operation on 29 April 2016.

The plant will supply Vietnam’s fast-growing electricity demand, currently growing by 15% year on year and creating pressure to increase capacity of generation, transmission and distribution.

InfraCo Asia’s expertise and provision of US$7.54m in funding enabled the financing and completion of the US$49.9m Coc San Hydropower Project. InfraCo Asia’s role, alongside the work and commitment of plant owner, operator, Lao Cai Renewable Energy (LCRE) were celebrated on Wednesday 8 June 2016 at the project’s official inauguration.

“The Coc San launch represents success on so many levels for the InfraCo Asia model,” said InfraCo Asia CEO Mr Allard Nooy.

“We have demonstrated here our mandate to fund early-stage, high-risk infrastructure development activities by taking an equity stake in projects. This is a story we are proud to tell, because it represents our leadership in what is truly a new way of approaching infrastructure development in emerging Asia,” Mr Nooy said.

InfraCo Asia is a company of the Private Infrastructure Development Group (PIDG). It focuses on socially responsible and commercially viable, infrastructure projects to mobilise private sector investment in sustainable infrastructure to help boost economic growth and combat poverty.

/Coc San Launch 2016/Dam_and_hillsOn the day of inauguration, light cloud cover threw contrasting shadows over the Coc San dam site. Around 250 guests, officials, dignitaries, local community members and the LCRE and InfraCo Asia teams (including InfraCo Asia Chair, John Walker, and Non-Executive Director, Amy Lee) gathered for the launch. The higher surrounding hills were shrouded in wisps of mist.

Coc San bares none of the scars of construction that one might expect to see at the site of a recently completed hydropower project.

Set amid the longest continuous terraced rice paddies in the world, the Coc San project has been approached with the sensitivity required to develop a sustainable hydro plant with minimal disruption to the surrounding community and environment. Following rigorous environmental studies to World Bank standards, Coc San was established with little land lost to surrounding communities, and no displacement of people.

/Coc San Launch 2016/Red_DaoMembers of the minority Red Dao community watched shyly on the day of the launch—a reminder of the diverse spectrum of lives the project has touched. Coc San will benefit 130,000 people through better access to a more reliable and affordable power supply, and shareholders in the Coc San project have implemented two programs to support local people.

Coc San’s Community Development Program has so far achieved the rehabilitation of three schools and the construction of an access road, enabling easier movement of farm produce. Preparations have also been made for small-scale irrigation projects to assist crop diversification.

The Livelihoods Restoration Program has meanwhile been designed to assist people whose land was impacted by the project to reinstate income-producing activities. This includes the provision of training in construction, along with a project to improve crop yields, with support from local agricultural departments. Scholarships are provided to enable children to attend school and purchase books and uniforms.

The Coc San project will reduce carbon emissions by 76,000 tonnes per annum, and will reduce reliance on power imported from China.

“Small hydropower projects like Coc San is one among many solutions to the problem as we enhance private sector involvement in developing local energy sources at low cost, which in turn helps to reduce the scale of coal-based energy being used, and is more environmentally and socially sustainable,” Mr Tran Hong Ky, Project Leader of the World Bank’s Vietnam Renewable Energy Development Project, said of the project.

Mr Dang Xuan Phong, Chair of the Lao Cai People’s Committee, noted the importance of environmental responsibility as he addressed guests gathered for the Coc San launch.

“It is important to us that this project strictly follows approved reservoir operations procedure, and regulations around minimum ecological flow required for river health upstream and downstream of the plant,” he said.

Ms Ngo Thun Ha, Deputy General Director of the project’s major lender, the Saigon Hanoi Commercial Joint Stock Bank commended the “professional and transparent management” behind the successful project.

/Coc San Launch 2016/Coc_San_Lever_and_DelaporteInfraCo Asia is funded through PIDG by the governments of the UK, Switzerland and Australia. HE Giles Lever, UK Ambassador to Vietnam, and Mr Andrew Shepherd, First Secretary at the Australian Embassy in Hanoi joined InfraCo Asia CEO Allard Nooy during a media event held in Hanoi on Monday 6 June. Mr Lever joined Mr Miroslav Delaporte, Vietnam Director for Switzerland’s State Secretariat for Economic Affairs (SECO) for the 8 June Coc San launch.

“Many development goals critically depend on good infrastructure,” Mr Delaporte said. “Despite the importance of infrastructure, the limit for supply of private finance has always been a key challenge. Innovative financing mechanisms therefore play an important role to bring private investors in.” he said.

“The support here is a showcase that bankable deals can effectively be structured in complex markets in lower and middle income countries like Vietnam.”

Mr Lever agreed that the difference between viable and non-viable projects often comes down to project and deal structuring skills and overcoming a financial gap.

“The best thing about PIDG and projects that can be undertaken by InfraCo Asia is the way we can use relatively small amounts of donor capital to attract a much bigger amount of private sector investment,” he said.

Mr Shepherd said he hoped the global infrastructure community would learn from the successful model illustrated by the success of Coc San.

“We really hope that a project like this can provide a demonstration effect that can encourage further private sector investment in Vietnam,” he said.

/Coc San Launch 2016/coc_san_on_bridgeDuring the project launch, guests spread out across the dam wall to get a vantage of the run-of-river hydropower plant and the green peaks beyond. Local singing and dancing marked the beginning of the official ceremony, which culminated in the cutting of a ribbon held by local officials, guests of honour and InfraCo Asia’s Mr Allard Nooy. Plant staff and operators received recognition for their hard work bringing the Coc San project to commercial operation.

Following a celebratory lunch in Lao Cai City, many guests prepared to make the trek back to Hanoi, retracing the ribbon of highway that speaks so profoundly of growing industry, and the need for clean, renewable energy to power the sustainable growth of burgeoning northern provinces like Lao Cai.

View a gallery of images from the launch day here.