ON THE WAY OF INTEGRATION. TRAN DINH PHU General Director / CEO Saigon Water Corporation (SAWACO)
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1 ON THE WAY OF INTEGRATION TRAN DINH PHU General Director / CEO Saigon Water Corporation (SAWACO)
2 Background of the Water Sector in VIETNAM The service coverage of urban water supply is higher than rural, still it is only at 70 80%. Beside of piped water, people still use water from drilled well, dug well, rainwater and from water vendors.
3 Macro changes of the Water Sector in VIETNAM The activities of water utilities are business activities Transform the Water Sector from public utility into business Socialization of water services Equitize public water companies, with governmental shares of > 51%.
4 The Water Sector in Hochiminh City In 2007 Households served rate: 87.97% - From Sawaco system:77.97% - Rural water system: 10% Water tariff: 4 m3/cap/mth Domestic > 4-6 m3/cap/mth > 6 m3/cap/mth Office Industrial Commercial VND 2,700 5,400 8,000 6,000 4,500 8,000 USD
5 The Water Sector in Hochiminh City In 2007 Total water capacity: 1,236,000 m3/day Total metered connections: 614,809 connections Non-Revenue Water rate: 40.39%
6 Profile on SAWACO 1874: Establishment of 1 st water entity in Saigon 1945: Total capacity at 120,000 m3/day, mainly underground water, serving 450,000 population 1959: Establishment of Saigon Water Authority 1966: Thu Duc WTP (450,000m3/day) first surface water treatment system brought into operation 1975: Establishment of Hochiminh City Water Supply Company 26/1/2005: Restructure into Saigon Water Corporation (SAWACO) as Mother Company Children Companies During 60 years, the capacity of water supply increased 10 times (120,000 m3 1.2 million m3) while the population increased more than 13 times (450,000 6 million)
7 Organization Chart of SAWACO
8 SAWACO Present Situation As at end of 2007 Total staff: 3,637 persons Turnover: VND1,112.7 billion # USD 69.5 million Profit: VND 84.6 billion # USD 5.3 million CAPEX: VND billion # USD 50.3 million
9 SAWACO facing the problem of Business Interest vs Social Interest The profit of the water joint stock companies must be sufficiently attractive to encourage the investors buying shares while the water tariff must be affordable to the inhabitants, including the poor Change the concept of Fixed Profit Rate by the concept of Reasonable Profit Rate. Making profit but simultaneously it has to supply water to people in remote areas and to the urban poor.
10 PLANNING BY 2010 & % of the old inner population, 80% of the new inner population and 60% of the rural population have access to piped water with the consumption from liter/capita/day Increase the capacity of the water treatment plants to 1,800,000 m3/day Expand about 1,300 km new pipelines of various sizes in the distribution network Reduce Non-Revenue Water: By 2015: 32% By 2025: 25%
11 WATER SUPPLY PROJECTS BY 2010 Water Treatment Plants Thu Duc BOO WTP: VND1,650 billion # USD 103 million undergoing, expected to be completed in 2008 East Canal BOO WTP: VND1,000 billion # USD 62.5 million undergoing, expected to be completed by 2010 Thu Duc WTP Stage 3: VND1,147 billion # USD 72 million joint venture, expected to be completed by 2010
12 WATER SUPPLY PROJECTS BY 2010 Network Expansion Primary & Secondary transmission network: VND4,451 billion # USD278 million Tertiary distribution network: VND615 billion # USD38.5 million Rehabilitation of existing network: VND1,536 billion # USD96 million
13 WATER SUPPLY PROJECTS BY 2010 NRW REDUCTION NRW Reduction Project: USD44 million, in which IDA World Bank loan fund: USD33 million undergoing for 2/6 zones of Hochiminh City NRW Reduction Study Project for the 4/6 remaining zones of Hochiminh City : USD 1.9 million, in which ADB grant: USD1.5 million Upon completion of ADB study, SAWACO will call for investment into NRW reduction in the 4/6 remaining zones of Hochiminh City
14 SOLUTIONS Financial Create funds Use funds economically and cost-effectively Own funds Full cost recovery of water Loan funds Local and foreign soft loans, ODA sources Budget funds Compensate while water tariff cannot recover full cost Fund mobilization Joint venture Selling shares
15 SOLUTIONS Financial Diversify the activities in other business Invest into real estates business (land, office buildings, commercial centers) Invest into other businesses Participate through tender into projects on constructions of water treatment plants and water networks, consultancy, design Trading of water equipment
16 SET UP PROGRAMS - GOALS 1. Program on Safe Water Production 2. Program on Non-Revenue Water Reduction 3. Program on Improvement of Water Service Quality 4. Program on Business Development 5. Program on Institutional Strengthening, Capacity Building and Modernization of the Corporation Motto: Quality Safety - Efficient - Modern
17 CALL FOR INVESTMENT 1. Improve the water quality aiming towards direct drinking from the tap 2. Expand the primary and secondary networks (replacing existing networks) 3. Manage leakage, reduce non-revenue water in the 4 remaining zones and develop other zones in the service area
18 JOINT VENTURE & ASSOCIATION 1. Increase the source of production after 2010 Saigon 2, Saigon 3 Water Treatment Plants Thu Duc 4, Thu Duc 5 Water Treatment Plants 2. Real Estates Business
19 THANK YOU
HE WBI PERPAMSI TWINNING PROGRAM APACITY BUILDING COMPONENTS FOR NRW REDUCTION
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