VietNamNet Bridge – A more transparent legal framework as well as additional incentive policies are needed to attract investment in wastewater treatment projects in HCM City, especially under the mode of Private-Public Partnerships (PPP), city authorities have said.

The daily capacity of the large-scale Binh Hung sewage treatment plant in Binh Chanh District, funded by ODA loans from Japan, will be expanded from 141,000 to 469,000 cubic metres. — VNS Photo Bo Xuan Hiep

The city is calling for investment in 12 wastewater treatment plants to treat three million cubic metres of wastewater per day in the city.

The Department of Planning and Investment is reviewing and preparing regulations for environmental projects, which will be carried out under the PPP mode.

A number of investors have offered suggestions on plans to develop wastewater treatment facilities.

Last April, a consortium of Phu Dien Construction Trading and Investment JSC. and SFC Viet Nam Investment Development for Environment Corp. invested nearly VND1.9 trillion (US$84.9 million) to build the Tham Luong-Ben Cat wastewater treatment plant in District 12 under the Build-Transfer (BT) model.

In mid-2014, a consortium of UE Newater (Viet Nam) Ltd. under Singapore's group UEL and DPD Investment and Construction Co. Ltd. was seeking approval to build the West Saigon plant with a daily capacity of 150,000 cubic meters and at a cost of some $80 million under PPP.

The plant is designed to treat household wastewater in the Tham Luong-Ben Cat-Nuoc Len canal basin in districts Tan Phu, Binh Tan and 12.

Last October, the Trung Nam Construction and Investment JSC. also proposed to build the North Saigon plant under PPP with an estimated investment of hundreds of millions of US dollars.

Meanwhile, the first phase of Nhieu Loc-Thi Nghe wastewater treatment plant is expected to be built this year with a capacity of 480,000 cubic metres per day and at a cost of $478 million.

Le Thanh, director of Phu Dien Company, said most wastewater treatment projects needed a high level of investment.

If the project was developed under the BT model, it would be difficult for the investor to earn a profit because while the Government offers clean land for the investor, the investor would have to pay for everything.

Besides, if the project was developed under the BOT model, it would take at least 20 years for the investor to recover capital as the income would come only from wastewater treatment fees, he added.

However, Vu Quynh Le, of the Ministry of Planning and Investment, said the city had no regulations on wastewater treatment fees, except for the regulation on environmental protection fees, which is 10 per cent of the clean household water price.

However, this fee would not be enough for the investor to recover capital.

Luu Van Tan, of the Steering Centre for Urban Flood Control, said treated wastewater currently accounted for only 13.2 per cent of the total amount of wastewater discharged in the city.

The city targets increasing this figure to 60-70 per cent by 2020 and 100 per cent by 2025.

According to Tan, of the 12 wastewater treatment projects calling for investment, each project has around 10 investors, both local and foreign, registered for investment.

The city is trying to choose the best investors to ensure mutual benefits for the city, investors and residents.

HCM City has only two operational wastewater treatment facilities, including Binh Hung (in the first phase) and Binh Hung Hoa wastewater treatment plants, with daily capacity of 141,000 cubic metres and 30,000 cubic metres, respectively.

The city has started expanding the daily capacity of the Binh Hung sewage treatment facility to 469,000 cubic metres from the current 141,000, according to the HCM City Urban Civil Works Construction Investment Management Authority.

The expanded capacity will be sufficient to meet wastewater treatment needs of about 1.4 million people, and will make the plant one of the largest sewage treatment facilities in Southeast Asia.

The package belongs to the second phase of a project to rehabilitate the HCM City water environment in a basin area of 2,150 hectares along Tau Hu, Ben Nghe, Doi and Te canals in districts 4, 5, 6, 8, 10 and 11.

The contract for the plant expansion was awarded to a three-company consortium represented by POSCO Engineering & Construction, Ltd., a major South Korean construction company; Hitachi; and OTV, a subsidiary of Veolia Water Solutions & Technologies, a French environmental services group.

The package worth VND2.8 trillion ($131.5 million) funded by ODA loans from Japan will be carried out within 54 months. The expanded treatment facility is scheduled for operation in August 2019.

Japan is one of the countries that provide the highest number of ODA loans to Viet Nam to develop projects in various fields, especially infrastructure and environment.

FDI investment

The number of FDI enterprises investing in the waste treatment field has increased over the years, from eight in 2005 to more than 40 this year, according to figures from the Ministry of Planning and Investment.

Policies and incentives for investment in the field have improved, while business demand for environmental services has also enhanced product quality.

The costs for investment, particularly low labour costs in Viet Nam, have helped to attract foreigners as well.

Experts said, however, that the country's legal framework was still not transparent.

According to Lai Van Manh, of the Institute of Strategy and Policy of the Natural Resources and Environment Department, FDI enterprises continue to complain about the lack of legal transparency. This makes it difficult to develop long-term plans.

The procedures for tax exemption, for example, are different in each locality and require many administrative procedures.

Most enterprises have proposed that laws and regulations be drafted in a simple, coherent manner.

The bidding for environmental protection projects, especially public projects, must be transparent, many companies have urged.

Businesses have also called for a reduction in corporate income tax, according to Manh.

To attract more FDI investment in the field, administrative procedures related to investment must be further simplified or eliminated.

Infrastructure around the country must be improved, especially technical facilities.

Manh said the population boom and an increase in the number of industrial zones had contributed to environmental pollution.

According to statistics, Viet Nam now has 15 urban areas, 298 industrial parks and 878 industrial complexes.

However, up to one-third of the export processing zones, industrial parks and industrial complexes do not have sufficient waste treatment systems.

A number of industrial parks and industrial complexes have wastewater treatment systems that do not operate efficiently.

More than 13 industrial complexes in HCM City do not have waste collection and treatment facilities.

VNS