The bank said it would provide a US$196M loan for the 156MW scheme, which is to be built by 2013. ADB noted that the project is the first in Vietnam to receive funding from a multilateral finance institution.

In February, the bank rescheduled a planned review to August but has now undertaken the assessment and approved the funding. The sum cited for the loan has varied in a tight range around US$195M-US$196.5M.

The total budget for Song Bung 4 is US$267.3M, having been cited at US$254M from feasibility studies. At the pre-feasibility stage the estimated cost was approximately US$220M.

The balance of funding for the project will come from the national electricity company EVN and the Viet Nam Development Bank.

Song Bung 4 will have a 110m high RCC dam of 367m crest length. A 3.1km headrace tunnel is to be built to feed the powerhouse before the waters are discharged by tailrace canal to the river, about 5km downstream of the dam.

The project will be built in the Vu Gai-Thu Bon river basin in Quang Nam province, near the border with Lao PDR.

Through the Japan Fund for Poverty Reduction, the ADB will also provide a US$2M grant to help finance the livelihoods of 206 families to be relocated from the four villages affected by the project. The grant was approved alongside the main loan.

The plant is to be operated as a peak load facility, which could see fluctuations in water level of up to 1.5m near the station. Following studies commencing in 2005, the scheme was planned to be completed by 2011 but is now scheduled to be operational two years later.

Loan proposals for the Song Bung 2 and Song Bung 5 projects, to be built on the same river, are not due for decision by ADB until 2009 and 2010, respectively.