ADB sponsors $135-M climate financing package to accelerate e-mobility in Vietnam

MANILA: The first network of electric vehicle (EV) charging stations in Vietnam, along with a $135-million climate financing package, was mobilized by the Asian Development Bank (ADB) to VinFast Trading and Production Joint Stock Company (VinFast). The support will help Vietnam's initiatives to expand high-tech manufacturing sectors and attain net-zero greenhouse gas emissions.

The climate financing consists of seven-year tenor financings, including an ADB-funded $20-million loan, $87 million worth of parallel loans that ADB implemented as the authorized lead arranger, and up to $28-million concessional financing. The Climate Bonds Initiative, a scientifically based standard for certifying bonds, loans, and other debt instruments that contribute to tackling climate change, has approved the climate funding.

ADB has counterbalanced the project's risks through its managed trust funds, which include loans from the Australian Climate Finance Partnership (ACFP) funded by the Australian Government, the Clean Technology Fund (CTF), and a grant from the Climate Innovation and Development Fund supported by Goldman Sachs and Bloomberg Philanthropies.

Export Finance Australia, the Finnish Fund for Industrial Cooperation, Oesterreichische Entwicklungsbank AG, and responsAbility also mobilized parallel loans.

“This project delivers a high-impact, sustainable transport solution for Vietnam while helping it meet its climate goals and supporting the growth of climate finance in the region. Asia and the Pacific is the frontline of the global fight against climate change, and private sector projects like this one with innovative partners such as VinFast are crucial to help its countries decarbonize their economies,” ADB Private Sector Operations Department Director General Suzanne Gaboury stated.

The transport sector in Vietnam is responsible for 18% of the country's yearly greenhouse gas emissions, therefore, the government's goal of achieving net zero emissions by 2050 will be directly impacted by the industry's decarbonization through initiatives like e-mobility.

The project also includes $950,000 in technical assistance (TA) from the ACFP and the CTF, which is intended to raise consumer awareness of the economic, environmental, and social effects of e-mobility and support its market penetration. The TA will also promote the role of women who are pursuing careers in science, technology, and math-related fields.

“We are delighted to receive this extensive support and a long-term financing package from ADB and several esteemed international Development Finance Institutions. We see this as a vote of confidence in our efforts to become a global smart mobility company that offers environmentally friendly public transportation, and to advance Vietnam's transition to a low carbon economy,” VinFast Global Chief Executive Officer Thuy Le said.

Founded in 1966, ADB is committed to establishing a thriving, inclusive, and sustainable Asia and the Pacific while continuing its efforts to alleviate extreme poverty. It is owned by 68 members, 49 of them are locals.

VinFast, on the other hand, was founded in 2017. It is the first domestic manufacturer of electric passenger vehicles in Vietnam. The largest private company in Vietnam, Vingroup Joint Stock Company, owns VinFast as a subsidiary. To support the growth of its electric vehicle fleet in Vietnam, VinFast is investing in a countrywide network of fast-charging stations.

Photo from Vingroup Joint Stock Company

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