Water supply projects remain unattractive to private investors
By Van Nam - The Saigon Times Daily
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| Speakers at the seminar on private sector participation in water supply projects organized by the Ministry of Planning and Investment and the World Bank on Monday - Photo: Van Nam |
HCMC – Urban water supply projects will require around VND63.5 trillion from now to 2015 but a failure to attract private investors will hinder their development, speakers said at a seminar in HCMC on Monday.
Urban water supply projects are now mainly funded by official development assistance (ODA) capital and developed by local State-owned water supply companies, said Tran Tuong Lan, head of the Department for Infrastructure and Urban Centers under the Ministry of Planning and Investment.
ODA is an important source of capital, he noted but when Vietnam becomes a middle-income country, donors’ requirements will be changed, lending rates will pick up and local capital will become a major source.
“Therefore, the investment policy for urban water supply must be renewed towards encouraging the private sector to participate and develop infrastructure, gradually reducing the involvement of the State corporate sector,” said Lan at a seminar on private sector participation in water supply projects held by the ministry and the World Bank.
Given the huge capital demand in the next years, Vietnam has to promote other investment formats such as built-operate-transfer (BOT) or public-private partnership (PPP).
However, Lan stressed the mechanism must be attractive enough to lure private investors into urban water supply projects. Water prices should be revised to ensure profits of private firms involved in such projects, he said.
“The Ministry of Planning and Investment is working with the World Bank to establish a research office for pilot PPP projects, currently studying a number of projects like bridges, tunnels, expressways, hospitals, and power projects. In the coming time, water supply will be included in the list of PPP projects to be studied,” Lan told the Daily on the sidelines of the seminar.
The planning ministry forecast the demand for water use of urban areas and industrial parks would be some 8.8 million cubic meters per day by 2015. Until then, some VND27 trillion will be needed to build new water plants and expand the capacity of the current ones, VND32 trillion to develop the water supply pipeline network and VND4.5 trillion to replace old pipes and reduce water leaks.
The planning ministry is mapping out a circular on investment demand and promoting the participation of private investors in the projects.
According to the Ministry of Construction, there are some 15 large-scale urban water supply projects awaiting investors nationwide, with a total capital demand of US$500 million.