Vietnam Environmental Technologies Export Market Plan

sewerage systems, contaminating the city’s basic water
supply.
A 1995 study conducted by the Hanoi Department of
Science, Technology, and Environment showed that the
unchecked exploitation of underground water in the city
has increased its subsurface water absorption capacity
from 40 percent to 80 percent over the last decade. A
1995 study of the underground water in Hanoi showed
levels in the aquifer falling by approximately half a meter
per year. The pumps for the city’s 120 pumping stations
were installed 25 meters below ground, but the 1995
study showed the water level had dropped to 27 meters
below ground, thereby rendering the pumps useless.
For Ho Chi Minh City, unpolluted source water comes
from the upper reaches of the Dong Nai and Saigon
Rivers, as well as from the Be and La Nga Rivers. The
density of organic matter and waste where treatment
plants obtain water from these rivers remains low at a
biochemical oxygen demand (BOD) of less than 3 mg/
liter, well within clean standards set by the World Health
Organization.
Current water treatment facilities in secondary cities
cover only 30 percent of the clean water demand. Rural
areas suffer the most because of their dependence on
surface water. Seventy-five percent of the rural population
get their water directly from natural sources, such as
rivers, streams, and underground aquifers, all of which
receive no treatment.
4.2—Urban Water Supply
Vietnam’s urban population is approximately 15
million, but only 50 percent of urban residents nationwide
are estimated to have access to piped water. In larger cities
(Hanoi, Ho Chi Minh City, Haiphong), it is estimated that
60 percent to 70 percent of residents are end-users of
piped water. In smaller cities it is estimated to be only
30 percent.
Those not using piped water receive their supplies
from shallow wells, rainwater, rivers, and ponds. In some
cases, urban residents obtain water from supplies
transported by truck by municipal water companies or
from public taps.
Most of Vietnam’s 192 water supply plants date from
the 1960s. The nation’s total capacity for supplying water
is estimated at 2.7 million cubic meters per day. The
biggest supply plants in Vietnam are Ho Chi Minh City’s
Thu Duc Plant (750,000 m 3 /day), the Hanoi Yen Phu plant
(80,000 m 3 /day), and the Haiphong An Duong plant
(85,000 m 3 /day). Dozens of other urban plants have an
average capacity from 10,000 to 30,000 m 3 /day and 500–
5,000 m 3 /day for smaller town plants.
Ho Chi Minh City
In 1999, the Binh An Water Treatment Plant, Vietnam’s
first water build-operate-transfer (BOT) project, began
supplying water to Ho Chi Minh City (see Case Study
4.1, page 14). The HCMC Water Company now supplies
750,000 m 3 of water per day to the city. However, demand
is estimated at 1.2 million m 3 per day, so that only about
50 percent of the population of HCMC have access to
potable water.
Two other BOT projects are being negotiated. One is
a $100 million project backed by France’s Lyonnaise des
Eaux (LDE). The company has not yet signed a price
agreement with the HCMC People’s Committee,
however. LDE is reportedly asking for a price of $0.24
per m 3 , a price that would be locked in for seven years.
The LDE plant would have a capacity of 300,000 m 3 per
day. The other project is backed by Grand Imperial Water
Company, a consortium of Malaysian companies. This
plant also has a scheduled capacity of 300,000 m 3 per
day.
Case Study 4.1 Being First Isn’t Easy
In August 1999, the Binh An Water Treatment plant began
supplying 95,000 m 3 of treated water per day to the Thu Duc
Reservoir. Binh An Water Co. is owned by a consortium of
Malaysian companies, including Masscorp, the investment arm
of the Malaysian government. The Binh An project is notable
because it is the first-ever BOT project implemented in Vietnam.
Achieving this feat was not easy.
According to executives familiar with the project, in order to
win the license Binh An gave a 10 percent stake to a silent partner
that had the connections in Hanoi to get the BOT approved by
the prime minister. Binh An obtained the land for the $35.8 million
project from the Vietnamese military, a factor that delayed the start
of operations by some 10 months as land transfer agreements took
longer than expected to complete. The project is entirely financed
by Binh An Water Co. Initially, the company sought financing
from the International Finance Corporation (IFC). In the end, the
IFC backed away from the deal because legal guarantees from
the government were considered insufficient. The Asian financial
crisis of the late 1990s also delayed construction, as financing
dried up for two years.
Binh An Water sources water from the Dong Nai River and
supplies it to one of Thu Duc’s four reservoirs. Once the water
leaves the property of Binh An Water, responsibility for its purity
lies with the HCMC Water Co. The capacity of the treatment plant
is 100,000 m 3 per day. HCMC Water Co. signed a take-or-pay
contract for a minimum of 85,000 m 3 per day through the year
2000. Binh An Water is charging a fixed price of $0.20 per m 3
and it has recently guaranteed the HCMC People’s Committee that
the price will not increase through the year 2000.
Despite the take-or-pay clause, there are still concerns about
whether the investment is viable. At the moment, HCMC Water
Co. is unable to use the capacity of water available to it because
a pipe network doesn’t yet exist to distribute it. Another concern
is that the HCMC Water Company is paying more for its water
than the government allows it to charge. Investors in Binh An
are betting that the local infrastructure and pricing will increase
before HCMC Water Co. goes under.
14 U.S. Department of Commerce, International Trade Administration