Work began on Oct. 20 on building a dam across the Song Bac River for a hydropower plant in northern Ha Giang Province's Quang Binh district.

This marks an important step in the provision of electricity for the north-western region and the easing of the national power shortage.

The plant, financed by the Song Bac Hydroelectric Co, will consist of two turbines with a combined capacity of 42MW that will be able to generate more than 166 million kWh a year.

It is expected to become operational in two years' time, a year ahead of schedule.

The Japanese Sumitomo Mitsui Bank provided a loan of 50 million USD for the project, about 80 percent of the total investment needed.

Speaking at the launching ceremony, general director of the company, Do Van Binh, said the loan had been provided at low interest rates.

"Several hydroelectric projects have had difficulties getting loans due to the world economic downturn," Binh said.

He said the company used its own capital to do primary work and the bank had disbursed 30 million USD of the total.

Work on clearing the land for the 1.29 trillion VND (64 million USD) project started in September last year. The first turbine is expected to be in operation by next October and the second by the end of 2012.

The plant, part of the Electricity Master Plan, was the first private project in Vietnam funded by the Export and Investment Insurance Overseas Untied Loan Insurance Programme (NEXI-OULI).

Statistics from the Ministry of Industry and Trade show that Vietnam has plans for about 890 small and medium-scale hydropower projects.

However, to date, only 100 projects have started generating power./.