Representatives of IFC, Armstrong S.E. Clean Energy Fund, TTC Group  and Gia Lai Electricity Joint Stock Company (GEC) sign cooperation contract on June 30.— Photo VNS

IFC and Armstrong, with a combined stake of 36 per cent, will take a 16 and 20 per cent equity stake in GEC, respectively. For both investors, it is the first investment in Viet Nam's power sector. The investment will help the company expand its hydropower portfolio and invest in other renewable energy segments, such as wind and solar power.

Based in the central highland province of Plei-ku 1989, GEC then joined the Thành Thành Cong Group in 2013. With the charter capital VNĐ 715 billion ( US$ 34 million), GEC was one of the largest private sector hydropower players in Viet Nam, with 84.4 MW of installed capacity across 15 run-of-the-river small-scale hydro power plants.

Lê An Khang, CEO of GEC, said the investment will help them become a leading renewable energy company and provide sustainable alternatives to fossil fuel-based power generation in Viet Nam.

Khang added that it will boost local confidence in hydropower sector's potential and help attract more international investors.

Local electricity consumption has outpaced the country's economic growth rate by two-folds over the past few years.

With an expanding renewable energy portfolio, GEC will contribute to the government's goal of increasing Viet Nam's installed power capacity by 14 per cent per annum between 2015 and 2030.

Considering GEC well positioned to capture the strong growth potential in Viet Nam's renewable energy sector, Andrew Affleck, managing partner of Armstrong, said, through the fund, which is dedicated to the clean energy sector in South East Asia's emerging markets, Amstrong will share its knowledge and experience of developing and constructing multiple renewable projects in neighbouring South East Asian markets to help GEC to continue to build a leading position in Viet Nam.

By developing sustainable hydropower and other renewable energy sources, GEC will help the country meet its estimated 10 per cent annual increase in power demand, diversify its energy mix and reduce its reliance on imported fossil fuels.

Hyun-Chan Cho, IFC head for Infrastructure and Natural Resources for Asia Pacific said, "IFC's investment is an important step to encourage other investors to tap into the rich potential of Viet Nam's green energy sector, where participation by foreign investors is still modest."

He added that IFC's global industry knowledge will help transform GEC into a role model for other emerging renewable energy players in Viet Nam by showcasing best industry practices, while at the same time expanding supply of reliable and clean energy.

Hydroelectricity is the world's largest source of renewable energy and accounts for one-fifth of the world's electricity supply from all sources. Over the last decade, IFC has invested more than $1 billion in 75 hydropower projects in 25 countries across the world to promote hydropower's responsible and sustainable development in developing countries. — VNS