Believing that the underground water is getting depleted, Hanoi authorities are now thinking of exploiting the surface water by building the Song Duong surface water plant. However, the question of how to arrange capital for the plant remains answered.
In order to satisfy the people’s demand for running water, Hanoi has estimated that the water output needs to reach 1.6 million cubic meters per day by 2020, or triple the current level. The figures should be 2.4 million cubic meters by 2030 and 3.2 million cubic meters by 2050.
Le Van Duc, Deputy Director of the Hanoi Construction Department, said that new underground water plants are still being developed to provide the clean water to the city. It is expected that the new works would help raise the total capacity to 1 million cubic meters per day.
However, Duc said, as the underground water is decreasing, Hanoi would have to think of using surface water from the Red River, Da and Duong Rivers. Since March 2009, Hanoi has had a new supply source from the Song Da surface water plant, whose capacity is expected to increase to 1.2 million cubic meters per day by 2050.
However, the city would still need to exploit the surface water from the Red and Duong Rivers to improve the supply. Meanwhile, in 2012, Hanoi would focus on the Duong River water supply plant.
Nguyen Nhu Hai, General Director of the Hanoi Water Company, said the company and the consultancy firm are drawing up the plan to build the Song Duong water plant. It has the total estimated investment capital of 5562 billion dong, and once operational fully, it would have the capacity of 600,000 cubic meters per day.
The project would be implemented in three phases. In the first phase, the plant would run with the capacity of 150,000 cubic meters per day. During that time, the plant would provide water to Hanoi. In the second and third phases, the plants would provide water to Hanoi, Bac Ninh and Hung Yen.
However, how to arrange capital for the project remains a headache to the local authorities. The project will require a huge sum of investment, which means that this could be an “impossible mission” for the Hanoi Water Plant, an enterprise operating for public good.
Hai has said that Hanoi authorities are considering building the plant under the mode of PSIF (private sector investment finance) and the new investment modes with ODA (official development assistance) and PPP (private public partnership).
Deputy Mayor of Hanoi Nguyen Van Khoi has reportedly had a working session with the Japan International Cooperation Agency (JICA) to discuss the capital arrangement for the project.
It is possible that the Japanese side would make investment in the project under the mode of PSIF, and it would lend to the Bank for Investment and Development of Vietnam BIDV at the interest rate of 2 percent per annum in yen. Meanwhile, Hanoi would get the loan in dong at the interest rate of 11.45 percent per annum with the grace period of 25 years.
With the solution, the capital contribution ratio would be 80/20, which means the Japanese side would contribute 80 percent of capital. The expected clean water sale price is 6000 dong per cubic meter. JICA has proposed the city to commit to support the consumption of the plant’s water, and to grant the incentives applied to other BOT projects (build – operation – transfer)
However, according to Khoi, it is likely that the local authorities would come forward and borrow capital instead of borrowing from BIDV.
