Vietnam Water Supply Portfolio

Paving the way for greater private sector investment in Vietnam’s water supply infrastructure

Context

With over 90 million people, Vietnam is the third most populous country in southeast Asia. To meet the growing needs of the population, water supply and sanitation projects in Vietnam require more investment – with only US$1.0bn of the required US$2.7bn invested annually.

According to WHO and UNICEF estimates, 72% of the rural population uses non-piped water, as opposed to 55% of the national population and 20% of the urban population . These figures reflect the broader trend of a widening gap in the provision of water supply and sanitation services, between the rural poor and the urban non-poor.

Both increased effectiveness and more innovative financing are needed to close the gaps in the financing and provision of water supply and sanitation services. Access to private sector finance is currently limited due to low tariffs, which have proven insufficient to cover investment costs and the high volume of non-revenue water.

The Project

InfraCo Asia is co-developing a portfolio of water supply projects with Singapore-listed company Darco Water Technologies. Through the Vietnam Water Supply Portfolio, InfraCo Asia aims to increase private sector participation in water supply projects in Vietnam to help meet its water supply and sanitation-related development goals, including universal access to safe drinking water by 2030.

The Vietnam Water Supply Portfolio involves the implementation of one bulk water supply plant and two water distribution systems (or retail water supply plants) in the semi-rural regions of Vietnam.

The Kim Lien Bulk Water Supply project currently provides around 1,000 m3/day of treated water, on a take-or-pay basis, to an existing water distribution company that pipes water directly to households in rural communes. The project’s refurbishment and expansion of the Kim Lien plant is expected to result in an increased capacity of up to 10,000 m3/day of treated water.

The Portfolio’s two water distribution systems aim to provide 24/7, piped and treated water to 13 communes and one industrial area in Ben Tre province, and 9 communes in Hai Phong municipality, where individuals are highly dependent on the collection of rainwater for everyday use. Upon completion of the first phase of development for both water distribution systems, the projects are expected to see a combined increase of 30,000 m3/day of clean water supply, piped directly to rural households and industrial facilities.

Project Overview
Company
Darco Nghe An Company Limited Darco Ba Lai Company Limited To be established
Country
Vietnam
Region
Nghe An Province Ben Tre Province Hai Phong Municipality
Sector
Water & Waste Water
Size
Kim Lien Bulk Water 10,000 m3/day Ba Lai Distribution 15,000 m3/day Thuy Nguyen Distribution 15,000 m3/day
Status
Under refurbishment and expansion Under development Under development
Timeline

• Financial Close achieved for the Kim Lien Project in Q1 2019
• Expected completion of refurbishment and expansion in 2020
• Financial Close achieved for the Ba Lai Project in Q4 2019, expected start of Operations in 2021
• Financial Close for Thuy Nguyen expected 2H 2020, expected start of Operations in 2022

Total Project Cost
US$ 2.9M US$ 5M US$ 13.5M
Funding Committed
US$ 5M
IAI Investment
N/A
Other Shareholder(s)
Darco Water Technologies Limited
Suppliers

HaskoningDHV Vietnam Co. Ltd.

Development Impact

~120,000 people with improved quality of service

~49,000 additional people served ~58,000 people with improved quality of service ~100,000 additional people served

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