Vietnam electric bus project receives $135 million in climate funding

Vietnamese automotive manufacturer, Vinfast has received a $135 million climate financing package from the Asian Development Bank (ADB) to build the country’s first fully-electric public transport bus fleet and its first electric vehicle (EV) charging network. 

The climate financing package from the ADB and other lenders will support Vietnam’s efforts to achieve net-zero greenhouse gas emissions and expand high-tech manufacturing industries. 

Established in 2017, VinFast is Vietnam’s first domestic car company and it is a subsidiary of Vingroup Joint Stock Company, which is the country’s largest private enterprise. 

VinFast is developing electric vehicles for the domestic and international market, and is also investing in a nationwide network of fast-charging units to support its EV expansion in Vietnam.

Vietnam’s transport sector accounts for 18% of annual greenhouse gas emissions, and its decarbonisation, through options like e-mobility, will directly impact the country’s ambition to achieve net zero emissions by 2050. 

“This project delivers a sustainable transport solution for Vietnam while helping it meet its climate goals and supporting the growth of climate finance in the region,” ADB private sector operations department director general Suzanne Gaboury says. 

“Asia and the Pacific is the frontline of the global fight against climate change, and private sector projects like this one with partners such as VinFast are crucial to help its countries decarbonise their economies,” she says. 

“We are delighted to receive this long-term financing package and we see this as a vote of confidence in our efforts to become a global smart mobility company that offers environmentally friendly public transportation,” VinFast global chief executive Thuy Le says. 

The climate financing comprises seven-year tenor financings, including a $20 million loan funded by ADB, parallel loans of $87 million facilitated by ADB as mandated lead arranger, and concessional financing of up to $28 million. The climate financing is certified by the Climate Bonds Initiative, a scientifically-based standard for labelling bonds, loans and other debt instruments which contribute to addressing climate change. 

ADB has partially offset the project’s risks by utilising concessional financing through its managed trust funds comprising loans from the Australian Climate Finance Partnership funded by the Australian Government (ACFP), the Clean Technology Fund (CTF) and a grant from the Climate Innovation and Development Fund, which is funded by Goldman Sachs and Bloomberg Philanthropies. 

Parallel loans were also mobilised by ADB from Export Finance Australia, the Finnish Fund for Industrial Cooperation, Oesterreichische Entwicklungsbank AG, and responsAbility. 

Additionally, the project includes a technical assistance (TA) of $950,000 from the ACFP and the CTF, focused on raising consumer awareness about e-mobility’s economic, environmental, and social impacts to help advance its market penetration. 

The TA will also help promote the role of women studying for or working in fields related to science, technology, and mathematics. 

ADB says it is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate poverty. Established in 1966, it is owned by 68 members—49 from the region.