The Asian Development Bank (ADB) and Vietnam on Monday signed a 196-million-dollar loan for a hydropower plant, the country's first major dam project to be backed by a multilateral development agency.

The 156-megawatt Song Bung 4 Hydropower Project will be built in the Vu Gia-Thu Bon river basin of central Quang Nam province, a remote and poor area home mainly to the indigenous Co Tu minority, the ADB said in a statement.

"Rapid economic growth and socio-economic development require reliable supply of electricity in both economically and environmentally sustainable manner," said ADB country director Ayumi Konishi at the signing ceremony.

"We are very pleased to work with the government and (Electricity of Vietnam) EVN to develop hydropower potentials, particularly paying close attention to environmental and social aspects."

The Vietnam Development Bank had lent another 22.3 million dollars and state-owned EVN would contribute 49 million dollars, said the ADB.

Konishi pledged the project would "set an example for environmentally sustainable and socially inclusive hydropower development" while helping to meet national power demand expected to grow by 16 percent a year through 2010.

The ADB said the project's designers had conducted environmental and social impact assessments and promised mitigation measures for residents and for impacts on the region's Song Thanh Nature Reserve near the Lao border.

The Manila-based bank in its statement promised the "restoration and improvement of lost livelihoods in a culturally-appropriate manner for project-affected persons, provision of social infrastructure and conservation offset to compensate for adverse impacts on the Song Thanh Nature Reserve."