PROJECT DOCUMENT

Regarding
Benefits on Climate Change adaptation from Small and medium scale hydropower
plants: Synergies and trade offs with rural development

Embassy File No: 104.Vietnam.1.MFS.2-34

Date: 28 July 2006

1. Parties to the project/activity:

Institute of Meteorology and Hydrology, Ministry of Natural Resources and Environment

(hereafter referred to as the Institute)
5/62, Nguyen Chi Thanh
Dong Da, Ha Noi, Viet Nam
Tel. 8359540
Fax 8355993
Website: http://www.imh.ac.vn
contacts: Dr. Tran Thuc, Director
thuc@netnam.vn

and

The Embassy of Denmark (hereafter referred to as the Embassy)

19 Dien Bien Phu, Hanoi
Tel. 8231888
Fax. 8231999

2. Purpose code:

41010 (Environment Policy and Management)

3. Description of the project/activity:

Background and Justification

Small and medium scale hydropower plants have a considerable interest from a climate
change mitigation perspective, as they have the potential to limit the emission of greenhouse
gases and will be able to control flash floods as result of climate change.

An innovative possibility would be to explore the scope for small and medium scale
hydropower to generate win-win-win benefits, i.e. both rural development and CC
adaptation benefits in addition to the CC mitigation benefits. There are several potential CC
adaptation and human well-being benefits from small and medium scale hydropower plants,
since they can:
 • Serve as reservoirs for storing floodwater.
• Provide electricity for irrigation in agriculture and local businesses.
• Regulate low-flow season capacity, and thereby also;
• Prevent down stream salinity intrusion.
• Enhance rural water access and availability.

All of these potential benefits are associated with positive impacts on human well-being,
including increased farm productivity and income generation (both up - stream and down -
stream), improved health status due to access to water, local business development, and
decrease of adverse impacts on human well-being from floods.

50 percent of the electricity in Vietnam is currently generated from hydropower. Although

this percentage is projected to decrease in the future, reflecting both the rapid growth rates
in energy demand and constraints in expansion of hydropower production, hydropower will
remain one of the most important sources for generating electricity.

The total theoretical hydropower potential is about 70,000MW of output capacity and 308
billion kWh of yield. Technical potential is 17,566MW of output capacity and 72billion kWh
of yield. Taking into account the economic and environmental factors, the hydropower
potential that could be exploited till 2020 is 10,595MW and output is 51.8 billion kWh.

Use of small and medium scale hydro power

Vietnam has long used small and micro hydro for energy needs at the family and small
community level in rural and mountainous areas. The stations supply electricity to over one
million people in 20 mountainous and remote provinces. On a small scale, it is believed that
over 100,000 micro and family hydropower generators are now in use, especially in northern
mountainous regions, including Lao Cai province.

Some private companies are also active in micro hydropower. With a support from Danida,
privately owned Viet Phong Co. has teamed up with Den Elec. to consult on renewable
energy projects. They are helping Lam Dong province to construct a small hydroelectric
plant and providing consulting services on thermal electricity, wind energy, hydro energy,
solar energy, and improving the efficiency of electricity transmission and distribution.

Lao Cai Province

Lao Cai is a poor mountainous province situated 300 km north-west from Hanoi. The
elevation is from 300m to 1000m with Vietnam highest peak - Phan Xi Phang - 3143m
above the sea level. Annual rain fall ranges between 1800-2000mm. The population is
557,000 people, 70% of which are ethnic people. Concerning electricity, currently only 91
out of 164 commune centres are connected to the national power grid.

Institute of Meteorology and Hydrology

Institute of Meteorology and Hydrology is a research institute with experiences in:

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 • Climate change, tropical meteorology, climatology, atmospheric physics, applied
meteorology and climatology, meteorological and climate prediction;
• Agricultural Meteorology and Eco-Environment, Agro-meteorological Prediction,
Meteorology for Livestock, Aquaculture and Pest - disease Management,
• Agro-meteorological Experimental Station for Red River and Mekong Deltas;
• Applied Hydrology, Hydrological Prediction, Water Resources Assessment and
Planning, Deltaic Hydrology and Estuary;
• Weather Modification Technology, Hydro-Meteorological and Environmental
Measurement Automation, Information Technology and System Management,
Remote Sensing and GIS;
• Environmental Management, Environmental Engineering, Environmental Impact
and Risk Assessment, Environmental Prediction, Environmental Stations

4. Objectives and outputs of the project/activity:

An innovative possibility would be to explore the scope for small and medium scale
hydropower to generate win-win-win benefits, i.e. both rural development and CC
adaptation benefits in addition to the CC mitigation benefits. There are several potential CC
adaptation and human well-being benefits from small and medium scale hydropower plants.

Development objective

Win-win-win benefits from small and medium scale hydropower plants are under
implementation for the benefit of both rural development, climate change adaptation and
climate change mitigation.

Immediate Objectives

1. The benefits of small and medium scale hydropower plants in climate change
adaptation understood.
2. The benefits of small and medium scale hydropower in rural development is analysed
and understood on pilot area;
3. Mitigation measures to minimize impacts from small and medium scale hydropower
plants on environment and human well-being, especially to poor communities, are
recommended.

Project Outputs
1.1 Identification report developed, outlining general benefits for CC adaptation in small and
medium scale hydropower plants.
1.2 Synthesized report developed on specific measures to maximize CC adaptation at the
Lao Cai hydropower plant.
2.1 Documentation (feasibility report) developed on benefits in rural development in Lao
Cai (and potentially other provinces) as a result of adapting S&M hydropower plants to
climate change.

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3.1 Environmental Impact Assessment and Social Impact Assessment report (testing newly
developed guidelines) developed for the Lao Cai hydropower plant.
4.0 Workshop organized to disseminate of results and lessons learned from the project. This
output is common to all objectives.

Activities

1.1 To determine the potential for CC mitigation by small and medium hydropower;
1.2 To calculate reservoir capacities against flood scenarios for CC adaptation by small
and medium scale hydropower projects;
1.3 To assess contribution to the dry season flow in the main river system to prevent
down-stream salinity intrusion.

2.1 To compare and analyse competing water usages (i.e. for power generation, rural
irrigation, household water consumption, and other water use)
2.2 To identify options for reconciling or bypassing the trade-offs in conflicting water
usage;
2.3 To assess the potential of reservoirs to maintain flow during the dry season for
irrigation purpose.
2.4 To make quantitative and qualitative analysis of the impacts on human well-being of
the small and medium scale hydropower.

3.1 To develop measures to mitigate the negative impacts on human well-being of small
and medium scale hydropower;
3.2 To develop procedure for participation and ownership to the installation and
operation of hydropower plants;
3.3 To develop the report of Environment Impact Assessment for one small scale
hydropower project according to new guidelines of MONRE;
3.4 To disseminate the study results.

5. Indicators for measuring the achievement of objectives and outputs:

• Report on the hydropower potential of Lao Cai province.

• EIA report, integrating CC adaptation options for a small hydropower project.

6. Total budget:

Items ~USD DKK

Operation (office, communications...) 38,200 246,565
Workshops 12,600 78,851
Investment (equipment and survey) 102,000 638,316
TA national 122,600 767,231
TA international 160,000 1,001,280
Audit 6,000 37,548
Contingencies 25,000 156,450
Total 466,400 2,926,241

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Funds cannot be transferred between the above budget lines without prior written approval
from the Embassy. Expenditure beyond the total grant cannot be reimbursed to the
Institute.

7. Total input

Total input from DANIDA is DKK 2,926,241.

8. Previous Danida support:

Danida supported the Ministry of Natural Resources and Environment with a number of
projects and components. However, the institute has not received any Danida assistance.

9. Time schedule

1 July 2006 to 31 June 2008

10. Specific conditions to the project.

The Institute will contribute to the project by assigning senior staff as project coordinator
and providing office space for international consultants when they are in Viet Nam. Data
available at the Institute should be provided to the project free of charge. Contracting
Danish consultants will be facilitated by the Danish Embassy in Ha Noi.

11. General conditions:

11.1 Procurement of goods and services

Procurement of equipment of value higher than 15 million VND should be done through
Danida-appointed agent (currently the Crown Agents).

11.2. Transfer of funds

Upon the signing of the project agreement, 50% of the grant will be transferred from the
Danish Embassy in Hanoi to the project account which will be advised by the Institute in
the first request.

At a written request from the recipient, the remaining funds will be transferred to the project
bank account in accordance with the implementation of the project. The request must
include following information:

Accounts statement covering expenses from project start till the date of the fund request.
Budget for the period covered by the request, specified in accordance with the approved
budget.
(-) Liquidity available
+ Actual fund request
= Estimated liquidity at the end of the period, covered by the request for fund.

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Total fund approved for the entire project
(-) Fund received till today
(-) This fund request
Remaining fund available for future use.

The fund request must be signed by the responsible authority of the project.

The funds shall be kept separate from other funds covering other activities. The Institute
shall open a special bank account for this purpose only.

Any loss due to the variation of exchange rates between the grant in DKK and the national
currency must be covered within the grant.

11.3 Accounting requirements:

Accounts shall be kept in accordance with acceptable international practices.

The accounts shall be drawn up to the same level of detail as is done in the budget.

The total budget cannot be exceeded and shall be used for the agreed purposes only.

11.4 Financial reporting requirements.

Statement of accounts shall be submitted to the Embassy by 30 July 2008.

A final statement of accounts/audit (covering the entire project period) shall be submitted
30 October 2008.

Statement of accounts shall be drawn up to the same level of detail as is done in the budget
(reflecting any agreed changes made). The statements shall clearly state the disbursements
made by the Embassy as well as the outstanding balance at the time of reporting. The
statements shall be signed by the responsible authority and shall include a bank statement
and a bank reconciliation statement.

11.5. Unspent funds and interest

Any unspent balance or any savings of project funds shall be returned to the Embassy
together with any interest accrued from the deposit of Danish funds.

11.6. Obligation to report on changes and irregularities

The Institute is obliged to immediately inform the Embassy if any changes, incl.
overspending of budget lines, or irregularities in the management of funds are foreseen or
have occurred.

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11.7. Progress reporting requirements

Progress reports shall be submitted to the Embassy by 1 July 2007.

A Project Completion Report shall be submitted to the Embassy no later than 30 July 2008.

11.8. Audit requirements

The project vouchers and financial statements are subject to an independent auditor
appointed by the Embassy of Denmark.

11.9. Anti-corruption
No offer, payment, consideration or benefit of any kind, which could be regarded as an
illegal or corrupt practice, shall be made, promised, sought or accepted - neither directly nor
indirectly - as an inducement or reward in relation to activities funded under this agreement,
incl. tendering, award, or execution of contracts. Any such practise will be grounds for the
immediate cancellation of this agreement and for such additional action, civil and/or
criminal, as may be appropriate. At the discretion of the Embassy of Denmark, a further
consequence of any such practise can be the definite exclusion from any projects funded by
the Danish Embassy.

On behalf of On behalf of
The Institute of Meteorology and Hydrology The Embassy of Denmark

Place and date ----------------------------------- ------------------------------------------------

Signature ----------------------------------- ------------------------------------------------

Name/title ------------------------------------- ---------------------------------------------

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DETAILED BUDGET

Unit
No Item Unit Amount Price Total USD
Collect and edit topographic, cover and
1 landuse maps of the selected watershed 8000
Survey on population of communities in
2 the watershed 5000
Survey on Water usages in selected
3 watershed 9000
4 Survey flooding extent 16000
Survey for supplementary hydrologic
5 and meteorology data 12000
Survey existing Environmental situation
6 of the watershed 12000
7 Minor field equipment lumpsum 10000
8 Field transportation km 8000 1 8000
Accommodation & perdiem persons/day 200 42 8400
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Subtotal Data Collection and survey 88400

1 Project Coordinator (VN contribution) m.months 24 0 0

2 Hydropower Expert m.months 8 1700 13600

3 Hydrology Expert m.months 8 1500 12000

4 Socio-economy Expert m.months 8 1500 12000

5 International consultants m.months 5 25000 125000

6 Travel, accom., international TA m.months 5 7000 35000

Sub contract: Impact assessment on
7 hydrology regime of hydropower plant 11000
Sub-contract: Impact assessment on
8 environment in the selected watershed 10000
Sub-contract: Impact assessment on
9 water usages 10000
Sub-contract: Impact assessment on
human well-being of the hydropower
10 plant 11000

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 Sub-contract: Develop Hydrological
11 Maps of the selected watershed 9000
Sub-contract: Develop Flooding Maps of
12 the selected watershed 10000
Sub-contract: Compare benefits of
hydropower with the others power
13 source in the watershed 12000
Sub-contract: Develop procedure for
participation and ownership to the
14 installation pf Hydropower plant 12000
Subtotal Hydropower adaptation &
Socio-economic assessment 282600

1 Office equipment 13600

2 Secretary m.months 24 350 8400

3 Accounting/financial consultant m.months 8 1200 9600

4 Technical Workshop 1 2000 2000
Workshop for consultation between
5 stakeholders 1 4000 4000
Workshop for Dissemination of the
6 results 1 5000 5000
Materials and Documents printing and
7 publication lump sum 5000
Transportation for office staff month 24 250 6000
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Accommodation/perdiem for workshop persons/day 40
9 Participants 40 1600
10 Communication month 24 300 7200
11 Translation 2000
Subtotal Operation and workshops 64,400
Audit 6000
Contingencies 25000
Total 466,400