HCM City lacks capital for flood prevention program

The Trung Nam Construction & Investment JSC plans to spend this huge sum of money to build dikes to prevent floods on an area of 570 square kilometers in the central area of HCM City and the left bank of the Sai Gon River. The project would be implemented from 2015 to 2018.

Trung Nam has suggested project development under the mode of BT (build, transfer), i.e. that it will build some items to fight floods and then transfer to the city, while the city’s authorities will pay in land and the money from the local budget.

The payment will be made within eight years. Fifteen percent of the value will be paid in land, with the remaining 85 percent in cash.

The items suggested by Trung Nam include six sluices to control tide, 7 kilometers of riverside dykes and 68 small sewers below the dykes.

The capital of VND9.85 trillion needed to develop the project, which includes VND1.79 trillion for the site clearance, would be sourced from BIDV, a commercial bank.

According to the HCM City People’s Committee, the project, once operational, will help ease direct and indirect damages caused by floods and high tide in the 570 square kilometer area, benefiting 6.5 million people.

The HCM City People’s Committee is awaiting the decision from the city’s People’s Council’s Steering Committee on the project.

An analyst commented that the project should be approved, because this is a feasible solution to the flooding in the large city.

“It is very difficult to call for private capital for public works, including anti-flooding projects,” he said.

Le Tuan, chair and general director of Khong Giang Ngam Investment & Development JSC noted that while PPP is hailed as a suitable investment mode to bring benefits to both the city and investors, very few successful PPP projects have been reported.

Tuan noted that the current mechanism does not attract investors to infrastructure projects. It is easier to treat river water into drinking water than turning waste water into river water. Meanwhile, the waste water treatment fee is now too low, which is not enough to run waste water treatment plants.

Lawyer Luong Van Ly from Viet Long Thang Law Firm, noted that the city’s authorities can only call for private investment if they offer profits high enough.

“Investors won’t show interest in the projects if the profit on investment capital is less than 15 percent,” he said.

TBKTSG