Vietnam Power Plant Built with ODA Funds Falls Far Short of Output Target; Audit Blames Factors Including High Oil Prices, Low Electricity Demand

The Yomiuri Shimbun

20:00 JST, October 17, 2025

The power output of two thermal power plants built in Vietnam with Japanese Official Development Assistance (ODA) funds has never gone above 30% of its target, and there have been times when they have even recorded zero annual output, an audit by the Board of Audit of Japan has revealed.

Concluding that the shortfall was due to overly optimistic projections by the Japan International Cooperation Agency (JICA), an independent administrative agency based in Tokyo, the board stated that “the aid has not been sufficiently effective.”

Based on a request from Vietnam to the Japanese government, JICA in fiscal 2002 began providing a series of low-interest loans, ultimately totaling ¥83.8 billion, for the construction of two thermal power plants. The plan was to use heavy oil until the plants could be supplied with natural gas from a gas field developed by private entities, including Japanese companies. Unit 1 began operating in 2009, and Unit 2 was completed in 2015.

However, the development of the gas field stalled due to factors including the withdrawal of some investors, and it has still not begun supplying natural gas. JICA had set an annual power transmission target of about 1,900 gigawatt-hours from the plants, but use rates remained low, partly due to high heavy oil prices. Over the ten-year period from 2015 to 2024, transmission never exceeded about 30% of the target, even at its highest. In 2021, when electricity demand plummeted due to the COVID-19 pandemic, neither unit generated any power.

A careful examination of JICA documents revealed that financing for Unit 1 was approved before the gas supply schedule was finalized. Also, the review for Unit 2 concluded before the Vietnamese government approved the gas field development plan.

Although repayments from the Vietnamese government are proceeding as scheduled, the board said that “verification and adjustments were insufficient.” JICA said construction of the gas field started in 2024 and that it is expected to start supplying gas by 2027.

“The completed power plant served as a catalyst for moving forward on the development of the gas field, which has also led to Japanese companies joining the project,” an JICA official said.

ODA supports developing countries’ development using public funds. Bilateral assistance, in which the target countries receive direct support, includes grants, loans and technical cooperation. ODA grants are financial assistance for which repayment is not sought, and ODA loans, which are often denominated in yen, come with favorable interest rates and repayment terms. Technical cooperation includes support such as bringing people to Japan to receive training. There is also multilateral assistance, which involves contributing to international organizations.