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OVERVIEW ONURBAN WATER SUPPLY,

SEWERAGE & WASTE WATER TREATMENT IN VIETNAM & NEED FOR INVESTMENT IN

THE PERIOD OF 2016 – 2020Tran Thi Ngoc LinhDeputy Director - Southeast Asian Utilities Network (SEAWUN)Administration of Infrastructure Vietnam Ministry of Construction (MOC)

Sarawak, December 2015

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LIST OF CONTENTS Part 1: Urban Water Supply 1. Current status of urban water supply 2. Current investment situation for water supply 3. Development Orientation for water supply in Vietnam4. Demand for clean water to 20205. Need for urban water supply investment in the period of 2016 –

2020 Part 2: Urban sewerage and wastewater 1. Current status of urban sewerage and wastewater 2. Current investment situation for sewerage and wastewater 3. Development Orientation for sewerage and wastewater 4. Forecast of urban sewerage and wastewater total capacity to

20205. Need for urban sewerage and wastewater investment in the

period of 2016 – 2020 Part 3: Policy and mechanism for attracting urban water investment

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LIST OF CONTENTS It is counted to have 779 urban of all grade in Vietnam to November 2015, in which:

1. 02 urban at special grade

2. 15 urban at grade I3. 23 urban at grade II4. 42 urban at grade III5. 77 urban at grade IV and

the rest is at grade V Current urbanization ratio is average above 35.5%

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PART I

URBAN WATER SUPPLY IN VIETNAM

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CURRENT STATUS OF URBAN WATER SUPPLY 1/ Capacity and Water supply ratio To October 2015, it is counted: - There have over 500 water supply systems nationwide: designed

capacity 7.4 million m3/day; operational capacity 6.3 million m3/day

- Water supply ratio: 81 – 81.5% (approx. 31.3 mil person); average consumption 108 liter/ person.day

2/ Raw water resource - Surface and ground water resource - Ground water: degrading rapidly in recent years, restrict using - Surface water resource: (i) increasing exploited capacity; (ii)

challenge and risks; (iii) Surface water resource preservation 3/ Water works – Water supply systems- Treated water quality meets the standard of QCVN 01:2009/BYT - 70% urban water supply systems ensure supply 24/24hours.

30% left is supplying 8 – 20hours/day

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CURRENT STATUS OF URBAN WATER SUPPLY 4/ Urban Water supply management- There are approx. 100 water supply utilities. Limited participation from

private companies.- Water price follow Circular No. 75, 88/2012- Management demand for clean water - Improving operation efficiency 5/ Water supply master planning - Having established and got the approval of water supply master

planning for approx. 20 urban. In which, the ones for Hanoi, Hochiminh city and 4 key economic regions were approved by the Prime Minister.

- Need to have water supply master planning for provincial region and for urban from grade 3 above.

6/ Legal documents on urban water supply or relevant ones - Decree No. 117, 124 in year 2007, 2011 - Decision No. 1929 in year 2009 (on water supply development

orientation), Decision No. 2147 on Non-revenue water reduction, Decision No. 1196 on mobilizing investment resources.

- Decree No. 15/2015 on PPP

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CURRENT INVESTMENT SITUATION FOR WATER SUPPLY

1/ ODA funding resources, Counterpart fund, private funding resource, …2/ Under project No. 1196 within 5 years (to 2012)- Total invested capital: approx. USD110 mil per year- Counterpart fund 87%, including:

+ CF: 12%+ Stated own enterprises: 9%+ ODA: 66%

- Private funding: 13%3/ Urban water supply is one of those fields to be encouraged PPP investment according to Decree No. 15/2015 on private – public partnership. 4/ Line Ministries and local government currently strongly support to implement PPP project for water supply under forms like BOO, BOT, BT.

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DEVELOPMENT ORIENTATION FOR WATER SUPPLY IN VIETNAM

1/ For urban grade IV and above: - Water supply service covered ratio: 90%- Water supply standard: 120 liter/ person. Day- NRW:below 18%2/ Water supply master planning - Water supply service covered ratio: 70%- Water supply standard: 100 liter/ person. Day- NRW:below 25%- Water supply continuity: 24/24 hour

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DEMAND FOR CLEAN WATER TO 2020

Basis, calculation and approaching method 1/ Decision NO. 1107/QD-TTg on Indistrial zones development master plan in Vietnam to 2020.2/ Decision No.445/QD-TTg on Adjustment of Urban system general development master plan in Vietnam to 2025.3/ Decision No. 1659/QD-TTg on National urban development program in the period from 2012 – 2020.4/ Decision No. 1929/QD-TTg on Urban water supply and industrial zones development orientation in Vietnam to 2025 and vision to 2050.5/ Decision No. 2174/QD-TTg on National program on Non- revenue water reduction.

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DEMAND FOR CLEAN WATER TO 2020

Demand for clean water to 2020

1/ Urban population : 44 Million2/ Concentrated industrial areas : 80,000 ha3/ Domestic water supply average norm: 115 liter/ person. day4/ Urban water supply average ratio: 85%5/ Water supply norm for concentrated industrial zone: 30 m3/ha.day 6/ Industrial zone filled ratio : 65%7/ Other demands : 25% for domestic 8/ Average NRW ratio : 20%9/ Total calculated demand : approx. 9.4 – 9.6 mil m3 per day

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NEED FOR URBAN WATER SUPPLY INVESTMENT IN THE PERIOD OF 2016 – 2020

1/ Water supply capacity development: approx. USD 1.6 bil 2/ Current system development (developing current assets, expanding service areas, NRW reduction, …): approx. USD 1.4 bil3/ Others activities (assets management, human resources development, capacity building on operation and management, communication, etc. ): approx. USD 0.3 bil4/ Total: approx. USD 3.3 bil, and USD 0.6 bil per year

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PART II

Urban Sewerage and Wastewater

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CURRENT STATUS OF URBAN SEWERAGE AND WASTEWATER

1/ Urban sewerage and wastewater management current status To July 2015, it is counted: - 30 WTP on operation, designed capacity 800,900 m3 per

day- Operational capacity: 50% designed capacity with collection

ratio 12%, sludge treatment 4%- 40 WTP in designed period or on-going construction with

capacity of 1.6 mil m3 per day 90% industrial zone have WT systems under operation or on-

going construction 50% hospitals have WT systems Most of 5,000 trade village nationwide don’t have WT systems Decentralized WT systems On-site septage tank Sludge management

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CURRENT STATUS OF URBAN SEWERAGE AND WASTEWATER

2/ Urban sewerage and wastewater collection system Coverage about 65% urban area Lack of tertiary network and household connection 3/ WT technology - Activated sludge technology is popular - Biological membrane, OD - Most of WTP’s products meet standard QCVN 40:20114/ Management Uititlies - Most of management utilities are stated own and

depend on government budget. Some of them are private companies.

- Wastewater price is set in complying with Decree 80/ND-CP, Circular 02/2015/TT-BXD

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CURRENT STATUS OF URBAN SEWERAGE AND WASTEWATER

5/ Urban sewerage and wastewater master plan Currently prepared for central cities Master plan on wastewater is available for 03 river valley and 04 key economic zones

Necessary to prepare Urban sewerage and wastewater master plan for each city or provincial region.

6/ Legal basis - Decree 80/2014- Decision No. 1930 in 2009 - Decision No. 1196 in 2014

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CURRENT INVESTMENT SITUATION FOR SEWERAGE AND WASTEWATER

1/ ODA funding resources, Counterpart fund, private funding resource, …2/ Under project No. 1196 within 5 years (to 2012)- Total invested capital: approx. USD230 mil per year- State budget (ODA 82%)- Private funding occupy a small part due to limited profit3/ Some cities have proposed wastewater treatment projects under PPP form like Hanoi, Hachiminh city, Bac Ninh, Thanh Hoa, etc. 4/ Assessment from Donors and Development Partners: - Lack of Information, Education and Communication

activites (IEC)- Need to carry out capacity building for project

management and operation- Lack of funding resource for system’s O&M activities

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DEVELOPMENT ORIENTATION FOR SEWERAGE AND WASTEWATER

Specific targets to 20201/ For storm water: - Absolutely reduce flood for urban grade IV and above

- Service area: 80%2/ For sewerage: in terms of collestion and domestic sewerage treatment ratio - Urban grade III and above: 60%- Urban grade IV, V and trade villages: 40%

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FORECAST OF URBAN SEWERAGE AND WASTEWATER TOTAL CAPACITY TO 2020

Demand for clean water to 20201/ Urban population : 44 Million2/ Sewerage standard : 80% of water supply standard 3/ Collection ratio : 80%4/ Non – domestic wastewater: 15% of domestic discharge flow5/ Wasewater average discharge flow: 3.2 mil m3 per day6/ Absorbed flow : 0.32 mil m3 per day7/ Go – together storm water (combined system) : 3.2 mil m3 per day 8/ Total wastewater flow to treatment plan: 6.7 mil m3 per day

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NEED FOR URBAN SEWERAGE AND WASTEWATER INVESTMENT IN THE PERIOD OF

2016 – 2020

1/ Developing collection and treatment systems: approx. USD 6.3 bil 2/ Others activities (assets management, human resources development, capacity building on operation and management, IEC, etc. ): approx. USD 0.6 bil3/ Total: approx. USD 6.9 bil, and USD 1.1 bil per year

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PART III

Policy and mechanism for attracting urban water investment

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POLICY AND MECHANISM FOR ATTRACTING URBAN WATER INVESTMENT A/ Current policy and legal basis for investment encouragement 1. Decree No. 117/2007/ND-CP and 124/2011/ND-CP

on clean water production, supply and consumption;

2. Decree No. 80/2014/ND-CP on urban and industrial zone wastewater;

3. Decree No. 38/2013/ND-CP on ODA management and use;

4. Decree No.15/2015/ND-CP on PPP investment; 5. Decree No. 75/2011/ND-CP and 54/2013/ND-CP

on national investment and export credit;

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POLICY AND MECHANISM FOR ATTRACTING URBAN WATER INVESTMENT A/ Current policy and legal basis for investment encouragement 7. Decree No. 69/2009/ND-CP on additional

assignment for land using master plan, land price, land revocation, compensation, support and resettlement;

8. Decision No. 29/2011/QD-TTg on sector portfolio which receive concessionary interest when re-borrow ODA from the Government;

9. Decree No. 25/2013/ND-CP on environmental protection fee for wastewater;

10. Decree No.19/2015/ND-CP on preference and support for environmental protection activities; etc.

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POLICY AND MECHANISM FOR ATTRACTING URBAN WATER INVESTMENT B/ Specific concessions1. Investment capital for water supply 2. Investment capital for wastewater 3. Landing 4. Land using, land borrowing expense 5. Ground clearing expense 6. Infrastructure system beside house’s fence 7. Financing 8. Clean water price 9. Wastewater service price 10. Corporate income tax

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POLICY AND MECHANISM FOR ATTRACTING URBAN WATER INVESTMENT C/ Decision No.1196/QD-TTg on “Mobilizing all funding resource to invest in water supply, wastewater system and solid waste treatment construction” strongly encourage all kind of economic resource to join investment, ensure harmonious interest of the government, legal profit of investors, benefit and responsibility of consumers. It is hoped to make breakthrough development ever for Vietnam water sector. Improving water supply and wastewater master

plan in cities

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POLICY AND MECHANISM FOR ATTRACTING URBAN WATER INVESTMENT Improving policies and legal basis for sector on:- Encourage private sector;- Study to apply hiring – management, operation

to water supply and wastewater works;- Improving standards system and cost norms;- Commitment and responsibility from local

government during project investment implementation process;

- Open ODA funding for private enterprises;- Adjust water price frame for 2020 there is no

subsidy from the government;

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POLICY AND MECHANISM FOR ATTRACTING URBAN WATER

INVESTMENT - Caculate wastewater service price and roadmap

to progressively fulfill O&M cost investment espense;

- Capacity building for water sector; - IEC development; Some big cities has sucessfully apply PPP form in

water sector as Hanoi, Hochiminh, Da Nang, Hai Phong, Can Tho, Binh Dinh, Dong Nai, Bac Ninh, Thai Binh, etc.

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THANK YOU!