Published on October 26th, 2022 | by Sounder Rajen0
ADB Leads $135 Million Climate Financing Package
This shows ADB supporting electromobility in Vietnam
The Asian Development Bank (ADB) has just mobilized a $135 million climate financing package for VinFast Trading and Production Joint Stock Company (VinFast). This is for the company to manufacture Vietnam’s first fully-electric public transport fleet of buses and first National Electric Vehicle (EV) Charging Network.
Moreover, this climate financing plan comprises of a 7-year tenor financing which includes a $20 million loan funded by ADB and parallel loans of $87 million facilitated by ADB as the mandated lead arranger as well as concessional financing up to $28 million. This is to help Vietnam achieve net-zero greenhouse gas emissions.
On top of that, this climate financing is certified by the Climate Bonds Initiative, which is a scientifically-based standard for labelling bonds, loans and other debt instruments which contribute to addressing climate change. What’s more, ADB has taken measures to partially offset the risk of the project.
This is done using concessional financing via managed trust funds consisting of 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 funded by Goldman Sachs and Bloomberg Philanthropies.
Why is this important? Because the transport sector in Vietnam accounts for 18 percent of annual greenhouse gas emissions. Thus, decarbonization through e-mobility and the like will greatly impact the country’s aim to achieve net zero emissions by 2050. That is why ADB is going all in into this project.
Additionally, the project also includes a technical assistance (TA) fund of $950,000 from the ACFP and the CTF. This will be focused on raising consumer awareness about e-mobility’s economic, environmental, and social impacts to help advance its market penetration faster.
Thuy Le, Global CEO of VinFast, stated, “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.” He added.
This project is proof that ADB is committed to achieving a prosperous, inclusive, resilient and sustainable Asia while still sustaining its efforts to eradicate extreme poverty. The brand which was established in 1966 will continue to show commitment through its 68 owned members, 49 of which are from the APAC region and worldwide.