study on ha nam province moc bac water supply project in viet nam

Study on Economic Partnership Projects in Developing Countries in FY2014

Study on Ha Nam Province Moc Bac Water Supply Project

in Viet Nam

Final Report

February 2015

Prepared for:

Ministry of Economy, Trade and Industry Ernst & Young ShinNihon LLC

Japan External Trade Organization

Prepared by:

Kajima Corporation

Reproduction Prohibited

PREFACE

This report presents the result of the study undertaken as a part of Study on Economic Partnership Projects in

Developing Countries in FY2014 for which The Ministry of Economy, Trade and Industry assigned Kajima

Corporation to carry out the Study.

This study titled “FS on Ha Nam Province Moc Bac Water Supply Project” has been executed to investigate the

feasibility of the project which include construction, operation and the maintenance of the new Moc Bac water

treatment facility in order to resolve the issues of water supply services in Ha Nam province, Viet Nam, with the

total EPC cost of 10 billion Japanese yen.

We hope this report will contribute to the future development of water and wastewater facilities in Ha Nam

province and become a useful reference for the people concerned.

February 2015

Kajima Corporation

LOCATION MAP

Source: Prepared by the Study Team of the Study for Construction of Moc Bac Water Treatment Plant in Hà Nam

Province, Vietnam

RedRiver

International airport

Hoa Mac Industrial Zone

Phu Ly City

North South Rail Way

Duy Tien District

North South Highway 1

Moc Bac Water Plant

National Highway 1

Existing Dong Van I + II Industrial Zone

New Dong Van III Industrial Zone

Area Attracting 12 university

Ha nam province

LIST OF ABBREVIATIONS

Abbreviation Formal nomenclature

ADB Asian Development Bank

ASEAN Association of Southeast Asian Nations

B/C Benefit per Cost

BOD Biochemical oxygen demand

BOO Build Operate Own

BOT Build Operate Transfer

CIP Cast Iron Pipe

DARD Department of Agriculture and Rural Development

DBO Design Build and Operate

DCIP Ductile cast-iron pipe

DOC Department of Construction

DONRE Department of Natural Resources and Environment

DOT Department of Transportation

DPI Department of Planning and Investment

DSCR Debt Service Coverage Ratio

EIA Environmental Impact Assessment

EIRR Economic Internal Rate of Return

E/N Exchange of Notes

EPC Engineering, Procurement, Construction

EVN Vietnam Electricity

FIRR Financial Internal Rate of Return

FS Feasibility Study

FY Fiscal Year

GDP Gross Domestic Product

GPS Geographic Positioning System

HDPE High Density Polyethylene

HH House Hold

IEE Initial Environmental Examination

IMF International Monetary Fund

IPO Initial Public Offering

IRR Internal Rate of Return

ISO International Standards Organization

IWRM Integrated Water Resources Management

JICA Japan International Cooperation Agency

LA Loan Agreement

Lpcd Litter per capita per day

LSTK Lump Sum Turn Key

MARD Ministry of Agriculture and Rural Development

MOC Ministry of Construction

MOF Ministry of Finance

MONRE Ministry of Agriculture and Rural Development

MPI Ministry of Planning and Investment

MDGs Millennium Development Goals

NPV Net Present Value

NRW Non-Revenue Water

O&M Operation and Maintenance

PAC Poly Aluminum Chloride

PPIAF Public-Private Infrastructure Advisory Facility

PPP Public-Private Partnership

PVC Polyvinyl chloride

RAP Resettlement Action Plan

RC Reinforced Concrete

SCADA System Control and Data Analysis

SOE State Owned Enterprise

SPC Special Purpose Company

TA Technical Assistance

UPI Urban Plan Institute

USD United States Dollars

VAT Value Added Tax

VGF Viability Gap Funding

VND Vietnam Dong

WB World Bank

WTP Water Treatment Plant

WPA Water Purchase Agreement

TABLE OF CONTENTS

Preface

Location Map

List of Abbreviations

Executive Summary

(1) Background and Necessity of the Project .................................................................................................. 1 (2) Basic Policy in Deciding the Project Contents .......................................................................................... 2 (3) Outline of the Project ................................................................................................................................. 2

1) Project Objectives ...................................................................................................................................... 2 2) Project Outlines ......................................................................................................................................... 2 3) Type of Business ........................................................................................................................................ 3 4) Specifications of Facilities ......................................................................................................................... 3 5) Project Cost Estimation ............................................................................................................................. 3 6) Outline of Preliminary Financial and Economic Analysis Results ............................................................ 3 7) Examination of Environmental and Social Aspects ................................................................................... 5

(4) Implementation Schedule .......................................................................................................................... 6 (5) Implementation Feasibility ........................................................................................................................ 6

1) Necessity to be constructed water treatment plant ..................................................................................... 6 2) Preparation of business site........................................................................................................................ 7 3) Technical possibility .................................................................................................................................. 7 4) Necessity to be constructed surrounding infrastructure ............................................................................. 7 5) Adequacy of proposed water tariff ............................................................................................................ 7 6) Business schedule ...................................................................................................................................... 7 7) Conclusion ................................................................................................................................................. 7

(6) Technical Advantages of Japanese Companies .......................................................................................... 7 (7) Map showing the Project Site in the Target Country ................................................................................. 8

Chapter 1 Overview of the Host Country and Sector (1) Economic and Financial Condition of Vietnam ...................................................................................... 1-1 (2) Overview of the Water Sector in Vietnam .............................................................................................. 1-3

1) Institutional Framework of the Water Secor in Vietnam ......................................................................... 1-3 2) National Policies and Targets on Water Sector ....................................................................................... 1-3 3) Water Supply Status ................................................................................................................................ 1-5 4) Private Participation in Water Sector ...................................................................................................... 1-5

(3) Conditions in the Target Area ................................................................................................................. 1-6 1) Outline of the Target Area ....................................................................................................................... 1-6 2) Climate in the Ha Nam Province ............................................................................................................ 1-7 3) Economic Conditions .............................................................................................................................. 1-8

4) Relationship with Hiroshima Prefecture ............................................................................................... 1-10

Chapter 2 Study Methodology (1) Contents of the Study .............................................................................................................................. 2-1

1) Technical Feasibility Study ..................................................................................................................... 2-1 2) Environmental and Social Consideration Study ..................................................................................... 2-2 3) Legal, Financial, and Economic Analysis ............................................................................................... 2-2

(2) Study Methodology and Setup ................................................................................................................ 2-4 1) Basic Approach to the Overall Study ...................................................................................................... 2-4 2) Study Implementation Structure on the Japanese Side ........................................................................... 2-5 3) Study Implementation Structure in the Host Country ............................................................................. 2-6

(3) Study Schedule ....................................................................................................................................... 2-6 1) Outline of the Study Schedule ................................................................................................................ 2-6 2) Contents of field surveys ........................................................................................................................ 2-7

Chapter 3 Justification, Objectives and Technical Feasibility of the Project (1) Background and Necessity of the Project ............................................................................................... 3-1

1) Scope of the Project and Target Users .................................................................................................... 3-1 2) Current Condition of Water Supply Services in Hà Nam Province ........................................................ 3-2 3) Questionnaire for the Resident Enterprises in Industrial Zones............................................................ 3-11 4) Current Conditions, Future Forecast, and Problems in Case without the Project ................................. 3-14 5) Effects and Impacts of Project Implementation .................................................................................... 3-15 6) Comparison of the Proposed Project and Other Options ...................................................................... 3-15

(2) Examinations for Project Contents. ...................................................................................................... 3-16 1) Examination Flow for Technical Aspects ............................................................................................. 3-16 2) Preconditions for Forecasting Water Demand ...................................................................................... 3-17 3) Population Estimate .............................................................................................................................. 3-18 4) Water Demand Forecast ........................................................................................................................ 3-22 5) Summary of Design Water Supply........................................................................................................ 3-26 6) Raw water Quality ................................................................................................................................ 3-28 7) Conditions around the Planned Water Treatment Plant and Intake Facility Sites ................................. 3-35 8) Examination of Intake Facility ............................................................................................................. 3-37 9) Water Treatment Facilities .................................................................................................................... 3-48

(3) Outline of the Project Plan .................................................................................................................... 3-51 1) Outline of intake facility, raw water pumping station and raw water main pipeline (Specifications) .. 3-51 2) Outline of Water Treatment Facilities and Equipment .......................................................................... 3-52 3) Outline Examination of Water Distribution Pipe Network ................................................................... 3-57

Chapter 4 Evaluation of Environment and Social Impacts (1) Analysis on Current Conditions of Environmental and Social Aspects .................................................. 4-1

1) Environmental and social considerations relating laws and regulations in Vietnam and general context of

policy .............................................................................................................................................................. 4-1 2) Current situation of the survey sites........................................................................................................ 4-1

(2) Environmental Improvement Effects of the Project................................................................................ 4-2 (3) Environmental and Social Impacts of the Projects ................................................................................. 4-3 (4) Legal Framework on the Environment and Social Impact in Vietnam ................................................... 4-6

1) Laws and regulations relating to the environmental assessment............................................................. 4-6 2) Procedure relating to EIA reporting ........................................................................................................ 4-8 3) Regulations relating to the resettlement and land acquisition are organized as below: ........................ 4-11

(5) Work to be done by the Implementation Bodies for the realization of the projects .............................. 4-12

Chapter 5 Financial and Economic Evaluation (1) Estimation of project cost ....................................................................................................................... 5-1

1) Estimation of construction cost ............................................................................................................... 5-1 2) Estimation of project cost ....................................................................................................................... 5-2

(2) Outline of Preliminary Financial and Economic Analysis Results ......................................................... 5-2 1) Conditions for financial and economic analysis ..................................................................................... 5-2 2) Financial analysis conditions for feasible project ................................................................................... 5-4 3) Summary of financial analysis result for project .................................................................................... 5-5

Chapter 6 Planned Project Schedule

Chapter 7 Implementing Organizations 1) Implementing Organizations in Vietnam ................................................................................................ 7-1 2) Capacity Assessment of the Implementing Organizations ...................................................................... 7-1 3) Issues ...................................................................................................................................................... 7-2

Chapter 8 Technical Advantages of Japanese Companies (1) The Assumed Types of Participation for the Japanese Companies (Investment, provision of resources

and machines, operation and management of facilities, etc.) ............................................................................. 8-1 (2) Advantages of Japanese companies (in technologies and financing) in implementing this project ....... 8-2

1) Life cycle cost ......................................................................................................................................... 8-2 2) The supremacy of Japanese companies .................................................................................................. 8-4

(3) The Measures Required to Improve the Possibility of Getting Orders by Japanese Companies ............ 8-7 1) The status of the competitive environment ............................................................................................. 8-8 2) The financial aspects ............................................................................................................................... 8-8 3) The approach method to PPP project and legislative preparedness ........................................................ 8-9

Executive Summary

1

(1) Background and Necessity of the Project The Socialist Republic of Vietnam (hereinafter referred to as “Vietnam”) has so far developed mainly around

Hanoi in the north, however, due to the increase in labor costs and other various factors, investors are now

targeting the cities around Hanoi. Especially Hà Nam Province, which is located south of Hanoi in a

geographically advantageous position, is one of the new prospective targets for investment. Moreover, having a

Japan Desk in the provincial government, Hà Nam Province is very keen to attract Japanese enterprises to the

Province, and has deep links with Japan as demonstrated by the signing of a memorandum with Hiroshima

Prefecture. Therefore, Hà Nam Province has extremely high potential as a destination for Japanese enterprises

wishing to locate in Vietnam. Hà Nam Province has been proceeding the construction of the Dong Van III, a

dedicated industrial park for Japanese enterprises, as well as the development of national universities and national

hospitals based on decisions made on the central government. However, with such a radical industrial growth, Ha

Nam Province is also confronted with the following issues regarding the water sector:

• Limited capacity for water supply at the existing facilities;

• Deterioration of public water quality due to contamination in raw water;

• Concerns over ground settlement due to overuse of groundwater; and

• Shortage of water supply for industrial zone.

Having an adequate supply of low-cost labor, low land prices as well as a good transport infrastructure, Hà Nam

Province is a promising area for future industrial development in Vietnam. However, the above mentioned issues

have been a barrier for the development and there is an urgent need to realize the quantitative and qualitative

improvement of current water supply situation in order to attract Japanese enterprises.

Aiming to resolve these issues, the Government of Ha Nam Province established a policy to switch water source

to surface water and developed “The Planning on orientation to supply clean water in Ha Nam Province by 2030.”

The Plan provides several infrastructure development plan, including the Moc Bac Water Treatment Plant

(hereinafter, referred to as “WTP”), as the future largest water treatment plant in Ha Nam province, which obtain

water from Red River with abundant water flow.

This Project intends to contribute to the achievement of targets established in the Ha Nam Province Plan for Waste

Sector, and eventually to achieve the target specified in the “Trends and Guidelines for Water Supply

Development in Vietnamese Cities and Industrial Cities up to 2025,” which was compiled by the Government of

Vietnam, and to aid the sound and sustainable development of Ha Nam Province. In addition, the Project aims to

extend economic effects for Japan through promoting the location of Japanese-affiliated enterprises, and to

accumulate water infrastructure know-how in Vietnam. Moreover, through constructing a high quality water

treatment plant, it will contribute to the improvement of the business environment for Japanese-affiliated

enterprises that enter industrial zone in Ha Nam Province.

2

(2) Basic Policy in Deciding the Project Contents This study was implemented to examine the potential of the Project to be implemented as a business. Considering

that it was still the stage of preliminary determining Project feasibility, the Study was conducted based on the

following basic policies, as well as utilizing the experience of the Feasibility Study on the Da Nang Public Water

Supply PPP Project

• Firstly focused on the technical examination to foster trust with the Ha Nam Province side.

• Since this is a long-term operation in the public service sector of a foreign country, cooperation with

local enterprises will be indispensable. Care will be taken in uncovering and reviewing local

enterprises that can cooperate with the Project.

• Concerning project risk, since it would be difficult to have negotiation with the public sector prior to

formulation of a concrete project plan. Therefore in this study, the Study Team put effort on to identify

associated risks and secure the understanding of Hà Nam Provincial Government concerning the risks

that need to be borne by the public side in undertaking PPP project.

• Examination will be conducted with the focus on technical review items, which will have a major

impact, such as location of water intake, raw water quality and evaluation of water resource etc.

• Balance will be sought between required specifications, the local water supply situation, market

expectations and economy, and concerning items with room for technical concession, a flexible

approach will be adopted and the optimum water treatment method for Hà Nam Province will be

examined.

(3) Outline of the Project

1) Project Objectives

With a view to resolving the numerous qualitative and quantitative problems facing Hà Nam Province public

water supply utility, the Project has the objective of constructing Moc Bac Water Treatment Plant; moreover,

through having a Japanese enterprise take initiative in participation, it is intended to sell the waterworks

technology of Japanese enterprises that features long-term stability and thereby promote the export of

waterworks infrastructure system.

2) Project Outlines

The Project, having the objective of realizing proactive participation of Japanese enterprises in the water

infrastructure utility and improvement of the business environment on an industrial zone for Japanese

enterprises based on the PPP approach, will entail establishing an SPC centering on a Japanese enterprise for

conducting the design, construction, operation and maintenance of Moc Bac Water Treatment Plant in Hà Nam

Province.

3

3) Type of Business

Construction of Moc Bac Water Treatment Plant and Intake facility abstracting Red river (public water supply

and industrial water supply).

4) Specifications of Facilities

Moc Bac Water Treatment Plant Design treatment capacity:60,000 m3/day

Intake facility Design intake flow: 66,000 m3/day

The treatment method and intake method will be selected upon conducting comparative examination in this

study.

5) Project Cost Estimation

Total Project cost: Approximately JPY 10 billion.

6) Outline of Preliminary Financial and Economic Analysis Results

a) Possible financing plans

Potential lenders for this Project include local Vietnamese banking institutions, international banking

institutions, export credit agencies (ECAs), ADB and JICA, as the project site is in Vietnam. From the

evaluation in terms of practicable financing, the most plausible lenders can be international financial

institutions such as JICA. However, it should be noted that loan needs to go directly to SPC since, if the

loan is made via local bank, there will be additional loan interest which will adversely affect the

feasibility of the Project.

b) Foreign exchange rate

The following exchange rate between the currencies is assumed:

USD 1 = VND 21,388

USD 1 = JPY 119.50

c) Comparison of water tariff in some cities in Vietnam

It is very important to understand the water tariff presently practiced in Vietnam and its adjustment

mechanism for the assessment of the project feasibility.

Only the People’s Committee is authorized to revise the water tariff in Vietnam. On the other hand, the

water tariff has been set at so low, since it is the fee for the public service, that the initial investment cost

and operational cost has not been able to be recovered by the water tariff and the operation has been

subsidized by the due local government. The Central Government issued the decree No. 117/2007/ND-CP

that requests local governments to set the appropriate water tariff to recover all the costs in order to

improve the critical financial condition in the public service sector.

4

Under these circumstances, the water tariff in Ha Nam Province in 2014 is currently as follows:

VND 5,700 /m3 for domestic use

VND 5,700 /m3 for Nam Cao University area

VND 11,500 /m3 for factories in industrial zones

d) Financial analysis conditions for feasible project

This Project is to sell the treated water produced at the water treatment plant to some water distribution

service company. In making the financial analysis for this Project, the conditions which enables the

project feasible are set first and, then, the water sale price under these conditions are evaluated. Main

conditions for the feasible project are summarized below.

Figure 1 Conditions for Feasible Project

Project Scheme 20 year-BOT

Equity/debt ratio 30%/70%

Project IRR 10.5％

Minimum DSCR 1.95

Average DSCR 2.30

LLCR 2.38

e) Summary of financial analysis result for the Project

The water tariff in Ha Nam Province would be VND 10,617, provided it increases with an inflation rate of

5%.Cash flow was computed under the conditions above and those in Chapter 9. In result, the water sale

price was computed at the almost same value at the commencement of the project operation in July 2020.

f) Influential economic effects by the Project

Considering the characteristics of the both methods, the individual measurement method is chosen to

evaluate EIRR in the present analysis, since limited information causes large errors in the results by the

integrated model method, since the scale of the proposed project is small and its effects are limited, and

since it is easy to identify the beneficiaries for this particular project.

On the other hand, this Project is a long term water supply project in the public sector to be implemented

by the private sector. The feasibility in terms of profitability is the most important estimation in any

projects by the private sector. In the assessment of profitability of the project not only construction cost

and operational cost but also future water demand which is related to the social development and practical

water tariff which local community can afford are considered. The latter factors are already reflection of

social and economic effects by this Project.

Hence, when financial feasibility of the Project is good, the economic influential effects are necessarily

high. In addition if the financial feasibility is low, this Project will not be a target by the private sector

5

even if the economic influential effects are high. Considering these circumstances of the projects by the

private sector, only qualitative assessment was made for the influential economic effects in the society,

which may be used for assessment of the importance and/or priority of ODA projects, in general.

Social and economic impacts, which are possibly caused by the Project, are as follows:

a Supply of good quality treated water to factories in industrial zones

b Promotion of factories and colleges to Ha Nam by good quality treated water supply

c Supply of good quality treated water to local residents who have no service now

d Termination of water supply service which uses ground water as raw water

e Improvement of water environment by wastewater and sludge treatment by project

f Increase of employment

7) Examination of Environmental and Social Aspects

Legal framework of the project resettlement policy and entitlements have been developed from the laws of the

Government of the Socialist Republic of Viet Nam, Law on Environmental Protection、No. 55/2014/QH13,

dated June 23, 2014, and Law on Land No. 45/2013/QH13 dated November 29, 2013.

Contributions of the Project to environment are expected as below:

• Problem of arsenic pollution and excessive pumping of groundwater in Hà Nam Province can be

resolved by conversion of water source from groundwater to surface water.

• In the current areas where tap water is not supplied, residents are using filtered or boiled well water and

rainwater. Therefore, by supplying clean water to households where current tap water is not supplied,

the project can contribute to health of citizens.

• By supplying good quality and stable industrial water, business environment in industrial park can be

improved.

It is quite possible to mitigate or reduce by appropriate countermeasures for pollution occurred during

construction (noise, vibration, turbid water, dust, exhaust gas, waste, etc.)

The planned water source of this Project is Red River. In general, it is necessary to consider the impact of water

intake on the river environment, but considering the design intake flow of 1.53m3/s for this Project, and the rich

drought flow of Red River, 440m3/s, it is believed not to cause a significant impact to the river. Therefore, it is

supposed that there is no impact to water use of residents living in downstream region.

In addition, the People's Committee has already secured the lot for water treatment plant. There is neither house

nor people living in the project site, therefore it does not cause any impact on local economy such as means of

livelihood and employment, as well as any involuntary resettlement.

6

(4) Implementation Schedule Table 2 shows the planned schedule of the Project. After completion of this study, a detailed feasibility study is

expected to be implemented in fiscal 2016, followed by the negotiations for operating rights and signing of the

PPP/BOT contract and other necessary procedures. The operation of the plant is planned to be commenced in

fiscal 2020.

Table 2 Implementation Schedule

Source: Prepared by the Study Team

(5) Implementation Feasibility According to execution of this investigation, the results below was obtained in terms of business possibility

1) Necessity to be constructed water treatment plant

What the plan in terms of this project in Ha Nam province is existed and necessity to be built water treatment

plant with social development was confirmed. Besides, in the way of water demand of supplied area on this

project, demand which is predicted to anticipate with certainty (around 40,000m3/day) and demand which is

predicted by Ha Nam province has gap

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

This study by METI :6months

JICA FS : 1 year

First refusal right

Cotract negotiation :6months

PPP/BOT contract

Water purchaseagreement

Establishment of SPC :3months

Negotiation of PrivateSector InvestmentFinance : 6months

Agreement of PrivateSector InvestmentFinance : 6months

Detailed design :6months

EIA : 1year

Costruction of WTP :3years

O & M : 20years

Activity 2014 2015 2016 2017 2018 2019 2020 2023 ・・2021 2022 2040

Moc Bac WTPand Intakefacility(PPP/BOTscheme)

Costruction of Distribution network

7

2) Preparation of business site

The site for water treatment plant has completed inhabitant relocation and business site provision. Also, in

teams of intake facility, our conclusion is that the most prompt area is different from the area proposed by Ha

Nam province. However, Ha Nam province has insisted the other area could be potential facility.

3) Technical possibility

Our investigation has confirmed to be used general treatment method in the water treatment plant as the result

of water quality in the Hong River. Planed treatment facility is possible to be built on the proposed area by Ha

Nam province. However, long term water quality investigation is necessary in the stage of detail design.

4) Necessity to be constructed surrounding infrastructure

The scope of our project is selling the water after taking, supplying and treating to the distribution service

company. Therefore, the company who will be constructed the distribution network and distribution service

must be existed in order to be realized this project. This will be considered including to be obtained ODA.

5) Adequacy of proposed water tariff

Ha Nam province water tariff in 2022 is calculated VND 10,617 in the base of 5% inflation per annual. As the

result of calculation of Cash flow, proposed water tariff is almost the same value. (At the point of July 2020) In

the way of adequacy of this proposed water tariff, further negotiation with Ha Nam province is essential to be

evaluated with current water tariff in Ha Nam province, our calculated business cost and the range of the project

etc.

6) Project schedule

Operation start will be on 2020 if business constitution and procedure is at a good rate. On the other hands, Ha

Nam province has requested earlier start of operation of this Moc Bac water treatment plant. It is necessary to

discuss with them continuously how this business plan could be speed up.

7) Conclusion

As mentioned above, it seems to be business possibility is quite high. However, still action assignments above

is existed and it is necessary to study the business possibility further in detail after Ha Nam province accept

with this pre-FS result.

(6) Technical Advantages of Japanese Companies Assuming that the Project will be implemented under a PPP or BOT scheme, the SPC mainly comprising this

proposing corporation will select the EPC operator. The highly reliable, precise, and long-life equipment provided

by this Japanese waterworks enterprise underpins the high reliability of Japanese water supply systems, and this

8

technical superiority can be displayed in competition with other countries. On the other hand, in PPP undertakings,

because of the need to reduce initial investment cost as much as possible, Japanese equipment is placed at a

disadvantage due to its poor price competitiveness.

However, this is true if only the initial investment is considered. In this Project, which entails long-term operation

over 20 years, it will be important to select equipment based on comparison that includes the lifecycle cost, not

just the initial cost. Judging from performance at other water treatment plants in Vietnam, since it is estimated that

the cost of electricity for plant operation accounts for approximately 50% of operation and maintenance cost, there

is a strong possibility that Japanese products will be introduced for their high energy saving effect. Moreover, on

conducting comparative examination of total cost comprising initial cost and running cost (power cost, repair cost,

equipment replacement cost), there is a strong possibility that the SPC would aim to secure Project profitability

through adopting long-lasting Japanese products. In particular, as a result of investigating the actual service life of

equipment at existing water treatment plants, since it was found that equipment can be used far beyond its service

life through conducting appropriate maintenance, further reduction in total cost can be anticipated in the Project.

When it comes to operating the water treatment plant, it will be essential to secure Project profitability through

reducing maintenance costs by introducing Japanese know-how (strength) for safe and stable operation of the

water supply utility and efficient operating methods that make use of private sector know-how. It is anticipated

that introduction of efficient operating methods based on public-private collaboration, which is becoming more

widespread in the domestic public water supply utility, can contribute to profitability in this PPP undertaking.

(7) Map showing the Project Site in the Target Country Figure 2 below shows the Project implementation site.

9

Figure 2 Map of the Project Implementation Site

Source: Prepared by the Study Team of the Study for Construction of Moc Bac Water Treatment Plant in Hà Nam

Province, Vietnam

RedRiver

International airport

Hoa Mac Industrial Zone

Phu Ly City

North South Rail Way

Duy Tien District


Moc Bac Water Plant

National Highway 1

Existing Dong Van I + II Industrial Zone

New Dong Van III Industrial Zone

Area Attracting 12 university

Ha nam province

Chapter 1

Overview of the Host Country and Sector

1-1

(1) Economic and Financial Condition of Vietnam The general situation of the Socialist Republic of Vietnam (hereafter called Vietnam) is described based on the

2013 country-based data book of the Ministry of Foreign Affairs. Table 1-1, Table 1-2 and Table 1-3 show the

brief history, development plans, and trends of main economic indicators, respectively.

Table1-1 Brief History of Vietnam

Source: Prepared by the Study Team from the Ministry of Foreign Affairs homepage

Table1-2 Development Plans of Vietnam Main Policies Outline

10-year Socio-Economic

Development Strategy (SEDS,

2011~2020)

The basic strategy for national development, this was adopted as the next

strategy at the Eleventh National Congress of the Communist Party of

Vietnam in January 2011. This aims to accelerate industrialization of the

nation by 2020 based on the three pillars of establishment of the

socialist-oriented market economy, development of human resources, and

construction of infrastructure (centered on transport and urbanization).

5-year Socio-Economic

Development Plan (SEDP,

2011~2015)

Concrete plans are established according to the SEDP, aiming to promote

transition to an industrial nation and economic reconstruction by 2020.


Year History 1945,

September 2 Declaration of independence of the Democratic Republic of Vietnam by Ho Chi Minh – leader of the Communist Party

1946 Outbreak of the First Indochina War

1954 Independence from France under the Geneva Accords

1965 Outbreak of the Vietnam War following military intervention by the United States of America

1973 Establishment of diplomatic relations with Japan

1976 Establishment of the nation based on north-south unification, and renaming of the country to the Socialist Republic of Vietnam

1978 Isolation from the international community following invasion of Cambodia

1986 Staging of the Sixth National Congress of the Communist Party of Vietnam, at which the Doi Moi policy entailing transition to a socialist-oriented market economy and omnidirectional foreign policy was launched.

1991 Establishment of peace with Cambodia, followed by resumption of aid from the international community

1995 Membership to ASEAN and normalization of relations with the United States of America

2006 APEC chairmanship

2008 Selection as a non-permanent member of the U.N. Security Council

2010 Appointment as chair of ASEAN

1-2

Table1-3 Main Economic Indicators of Vietnam


Thanks to its integration with the world economy through its membership to ASEAN in 1995, normalization of

diplomatic relations with the United States in the same year, its official membership to the WTO in 2007 and other

factors, Vietnam achieved high economic growth of 7.3% per year on average (calculated from figures of the

Vietnam Statistics Bureau) between 2000 and 2010, and its per capita national income in 2009 exceeded

US$1,000 (according to the World Development Indicators, World Bank), enabling it to become a (lower) middle

income country in 2010.

However, in recent years problems have emerged in the shape of opaque macroeconomic situation such as high

inflation, an immature investment environment, inefficiency of state enterprises, income and regional differentials,

and so on. In response, the Communist Party of Vietnam and the government formulated a new 10-year strategy

and 5-year plan in 2011, laying down a policy aimed at achieving further economic growth geared to becoming an

industrial nation by 2020 and shifting to a growth model that places greater emphasis on the quality and

sustainability of development. In future, attention will focus on whether or not Vietnam can strengthen its

international competitiveness, address its vulnerabilities, and reach the next level of development.

So far, development in the northern part of Vietnam has advanced around Hanoi and areas to the east and north of

this city, however, because industrial estates in these areas have become saturated and labor expenses are high, Hà

Indicator Remarks

Main industries Agriculture, forestry, fisheries, light industry

GDP Approximately US$170 billion, 2013, IMF estimate

Per capita GDP US$1,896, 2013, IMF estimate

Economic growth rate 5.4% 2013

Price inflation 6.6% 2013 average

Unemployment rate 2.2% (cities: 3.58%, rural areas: 1.58%)

Trade value Exports: US$1,323.5 Imports: US$132.13 billion

Main trade commodities Exports: Mobile phones and components, needlework, PC

and electronic devices and components, footwear,

crude oil, etc.

Imports: Machine equipment and components, PC and

electronic devices, cloth, mobile phones and

components, petroleum products, etc.

Trade partners Exports: US, Japan, China, South Korea, Malaysia

Imports: China, South Korea, Japan, Taiwan, Singapore

Currency Dong

Exchange rate US$1＝21,036 Dong February 2014, State Bank

Investment from overseas US$21.7 billion, 2013 Vietnam Foreign Investment Agency

1-3

Nam Province to the south of Hanoi has emerged as an area with extremely high development potential as a new

investment destination.

(2) Overview of the Water Sector in Vietnam 1) Institutional Framework of the Water Sector in Vietnam

The figure below illustrates the institutional framework for the water sector in Vietnam. Basically, water supply

business is under the jurisdiction of the Ministry of Construction (MOC). However, water supply in the small

villages with less than 5,000 populations comes under the jurisdiction of the Ministry of Agriculture and Rural

Development (MARD). The development plan for the water supply infrastructure and water price setting

requires the approval of a corresponding People’s Committee. The standard of water quality is managed by the

Ministry of Public Health (MOH).

Figure 1-1 Institutional Framework of the Water Sector in Vietnam

Source：The Report on the Study of International Cooperation in Water Supply Sector, 2009

(Translated into English by the Study Team)

2) National Policies and Targets on Water Sector

a) The 10-year Socio-Economic Development Strategy (SEDS, 2011~2020)

The Government of Vietnam formulated the 10-year Socio-Economic Development Strategy (SEDS,

2011~2020) in January 2011, which declares the goal of becoming a modern and advanced industrial

Primary Ministry Establish policies Provide final approval on major investment projects Provide approval on plans for investment, water infrastructure, and

b i

Ministry of Construction

Manage water supply in urban cities and major industrial zones at the national level

Supervise the water supply business that provide water to 5,000 people or more

Research on system and policies in foreign countries to establish a national policies and plans, prepare guidelines,

Ministry of Agriculture and

Rural Development

Manage water supply in rural areas at the national level

Supervise the water supply business that provide water to 5,000 people or more

Research on system and policies in foreign countries to establish a national

Ministry of Health

Manage public

sanitation Establish and

manage a national standard on water quality

Ministry of Planning and Investment

Study the

policies to stimulate domestic/foreign investment

Attract ODA capital to the priority projects in Water Sector

Ministry of Finance

In

collaboration with MOC, and MARD, establish and publish the price setting framework, and its management

Provincial People’s Committee Develop a construction plan for water

infrastructure

Water Supply Company Conduct water supply businesses

1-4

nation by 2020. It also sets the goals in the environmental sector, which includes applying clean

technologies, reducing pollution, and installing waste treatment equipment in 100% of factories and

business establishments, ensuring compliance with environmental standards at 80% or more of factories

and business establishments, establishing concentrated wastewater treatment systems in Level-4 (or

higher) cities and all industrial estates and export processing zones by 2020.

b) Trends and Guidelines for Water Supply Development in Vietnamese Cities and Industrial Cities up to

2025

Concerning the public water supply utility, the “Trends and Guidelines for Water Supply Development in

Vietnamese Cities and Industrial Cities up to 2025” have been formulated, and concrete targets and

achievement deadlines have been set according to each class of city.

Table 1-4 Urban System Classification in Vietnam

Grade Type Population Number of cities

Spcieal Metropolis Above 1,500,000 Hanoi, Ho Chi Minh

I Centrally-controlled cities 500,000~1,500,000 Hai Phong, Da Nang, Can Tho

II Provincial cities 250,000 ~ 500,000 Hue, Nha Trang, and 10 more cities

III Prefecture-level cities 100,000 ~ 250,000 16 cities

IV Towns 50,000 ~ 100,000 58 towns

V Townships 4,000 ~ 50,000 612 townships

Source: Extracted from the Report on the Study of International Cooperation in Water Supply Sector, 2009

(translated by the Study Team)

Table 1-5 Development Targets of Water Supply

City Grade By 2015 By 2025

Unit Water Supply

(Service Coverage)

Grade I ~ IV 120L/ person /day (90%) 120L/ person /day（100%）

Grade V 120L/person /day (90%)

Non-Revenue Water Grade I ~ IV Below 25%

Below 15% Grade V Below 30%

Service Stability

(hours)

Grade I ~ IV 24 hours 24 hours

Grade V Satisfy actual demand

Source：Ministry of Construction (2009) ”Draft Orientation on Water Supply Development of Urban

areas and Industrial zones in Vietnam up to 2025”

c) Target on Water Sector in Ha Nam Province

In line with the National Policies, Ha Nam Province developed its own target in the “Prime Minister

Decision on Approving the Master Plan on Socio-Economic Development of Ha Nam Province to 2020

(No.1226/QD-TTg),” which was approved in July 2011, which aims to increase the total water supply

capacity of the water treatment plants in the Province up to 250,000 m3/day to cater to the demand of the

entire population in the province by 2020. The Master Plan includes several private investment projects to

1-5

be implemented between 2011 and 2020 including the construction of a water treatment plant with water

supply capacity of 100,000 m3/day in the Northern Red River area, which corresponds to the proposed

Moc Bac WTP project.

3) Water Supply Status1

According the Vietnam Water & Sanitation Association (VWSA), there are 70 water supply companies and 430

water treatment plants in operation in the whole country. The total water supply capacity has been significantly

improved since 1998, to increase from 2.1 million m3/ day in 1998 to 6.4 million m3/ day in 2011. Water supply

coverage reached 85% to 90% in the big cities fall into Grade I and II, with the average water supply of

110L/person/day, while the other smaller cities stand at 50 to 60% water coverage, with average water supply of

90L/person/day.

Surface water is a major water source in Vietnam, representing 65% of the total raw water for treatment plant,

while groundwater accounts for 35%. The national average non-revenue water rate was 30% in 2010, with the

maximum rate of 38% and the minimum rate of 12%. NRW rate tends to high in large cities such as Ho Chi

Minh City and Hanoi City, which stands at 32% to 38%.

The infrastructure finance for urban water supply largely relies on the ODA.

4) Private Participation in Water Sector

Water supply companies in Vietnam are mostly “state owned one member limited companies.” However, the

Government of Vietnam established the Decree on Clean Water Production, Supply and Consumption (No.

117/2007/ND-CP), which require the local governments to: i) privatize public-own water supply companies; ii)

set water price to secure funding for all the cost involved in water supply activities; and iii) utilize private

investment to develop water supply infrastructure. As of 2012, 35 water supply companies have been

undertaking the process of privatization.

There are two legal frameworks in Viet Nam that may be applied to this project. The one is new BOT law

(Decree No.108/2009/ND-CP) enacted in November 2009 and enforced from January 2010, and the other is

Prime Minister Decision on PPP project approved in November 2010 and enforced from January 2011

(Decision No.71/2010/QD-TTg). Currently, integration and revision of Decision No.71 and Decree No.108

have been promoted by the MPI. As this stage is before enactment and enforcement of new legal framework,

the PS Team makes a study to apply either Decision No.71 or Decree No.108.

1 Vietnam Water & Sanitation Association, Overview of the urban water supply and sewerage systems in Vietnam: current status and Issues associated with expanding demand

1-6

(3) Conditions in the Target Area 1) Outline of the Target Area

Hà Nam Province is located south of Hanoi, and has a population of approximately 800,000. This Province is a

long-established area, having existed from the Van Lang Era when the legendary King Hung is said to have

unified the north.

Ha Nam Province borders with Hung Yen Province and Thai Binh Province to the east, Ninh Binh Province to

the south, Nam Dinh province to the southeast, and Hoa Binh Province to the west. The Province is in a

geographically advantageous position being located 60 kilometers from Hanoi, 80 kilometers from Noi Bai

International Airport, and 100 kilometers from Hai Phong. Moreover, having Route 1 and the north-south

railway that run through the center of the province, it has a good access condition. Using national Highway 1A,

one can reach the industrial estates of Ha Nam Province from the south of Hanoi in 30 min, which clearly

demonstrates the excellent position of this province as a base of exporting and importing and domestic

distribution.

Geological strata over the whole of Hà Nam Province primarily consist of limestone, much of which is

concentrated over hilly land on the right bank of Dai River that runs through the city. Ravines and limestone

caverns that are surrounded on all sides by mountains can be found in the area that contains Luon Cave and

Dong Lake in the village of Lien Son, Kim Bang County. Luon Cave, which extends for a total distance of

approximately 400 meters, can be entered by boat, and it is possible to see the local scenery and fish swimming

in the clear waters from nearby Dong Lake. Since this area is also accessible from Hanoi, there are plans to

develop it as a tourism center of the province.

Table 1-6 Outline of Hà Nam Province

Area 860km2

Population Approximately 800,000

Administrative divisions 1 city, 5 countries

Provincial capital Phu Ly City, Duy Tien County, Ly

Nhan County, Kim Bang County, Than Liem County,

Binh Luc County

Ethnic composition Viet (Kinh), Thais, Muong, Chinese

Source: Prepared by the Study Team from the Vietnam General Information Site Homepage

Figure 1-2 shows the map of administrative divisions in Hà Nam Province.

1-7

Figure 1-2 Hà Nam Province Administrative Divisions

Source: Prepared by the Study Team for Moc Bac Water Treatment Plant Construction Project in Hà Nam

Province, Vietnam

2) Climate in the Ha Nam Province

Ha Nam Province belongs to the tropical monsoon belt and has four seasons. It also has rainy season lasting

from May to October and a dry season lasting from November to April. The annual mean temperature is 23~24

degree C, however, between May and September the mean temperature reaches approximately 33 degree C with

high humidity of 85%. The annual mean precipitation is 1,900 millimeters, however, due to marked disparity

between the dry season and rainy season, water level and water flow are subject to major changes at the planned

intake point on Red River, meaning that care will be needed when selecting the intake point and method.

Figure 1-3 shows mean temperature and precipitation in Hà Nam Province.

Duy Tien

Ly Nhan

Binh Luc

Thanh Liem

Phu lyKim Bang

1-8

Figure 1-3 Weather Conditions in Hà Nam Province

Source: Prepared by the Study Team from the Vietnam General Information Site Homepage

3) Economic Conditions

The main industries of Hà Nam Province are manufacturing, handicraft, construction materials (cement, etc.),

and textiles. It also has a traditional crafts village where more than 40 crafts are practiced including silk

weaving, drum making, rattan craftwork, horn craftwork, ceramics, wood products, and embroidery.

In recent years, as Hanoi City and its peripheral areas has rapidly developed to saturate the industrial estate in

these areas and the labor expenses have been elevated, Hà Nam Province, for its geographical advantages, has

emerged as a new investment destination with extremely high development potential. Amid this circumstance,

Hà Nam Province is shifting the focus of industry from agriculture to manufacturing and is placing priority on

the development of industrial infrastructure and attraction of investment from Japan. It is also striving to

establish vocational training colleges and attract universities for developing human resources.

In particular, Hà Nam Province conducts the following activities referred to as “10 commitments” geared to

attracting Japanese enterprises and investment:

• Provision of stable electricity supply

• Attraction Japanese company after construction of infrastructure (implementation of wastewater

treatment and construction of access roads, etc.)

• Free provision of land for employee dormitories

• Simplification of work for obtaining investment licenses and undergoing administrative procedures

(no longer than three days)

• Plans to attract 14 universities and supply excellent human resources

• Support following investment (reporting of issues to local government and implementation of swift

solutions)

• Building of the living environment and comfortable communities for employees (general hospitals,

homes for the elderly, golf courses, etc.)

• Securing of safety

050100150200250300350400

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10

15

20

25

30

35

JAN FEB MAR APR MAY JUN JULY AUG SEPT OCT NOV DEC

Am

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Ave

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Average temperature ℃ Amount of precipitation mm

1-9

• Prohibition of strikes

• 24-hour hotline (also in Japanese) system (establishment of the Japan Desk)

As a result, many Japanese enterprises that seek inexpensive and high quality labor have located in Dong Van

Industrial zone in the north of the province. Consequently the economic activities in Hà Nam Province are

boosted, as reflected in the province’s GDP that is growing at a rate of 13% on average between 2008 and 2012.

Figure 1-4 Economic Conditions in Hà Nam Province

Source: JETRO Data Compendium on Industrial Estates in North and Central Vietnam (July 2013)

Moreover, as the industrial estates around Hanoi become saturated and face increasing labor costs, other areas

in the north of Vietnam have relatively lower wage inflation. In particular, Hà Nam Province is classed in the

lowest wage category according to current law and ranks as having the third or fourth lowest wages among

areas 1~4. Moreover, as is shown in the following table, Hà Nam Province has high GDP growth rate and low

utility tariffs on industrial estates compared to other areas in the north.

Table1-7 Comparison of Industrial Estate Conditions for Location between Hà Nam Province and

Neighboring Cities

Source: Prepared by the Study Team based on the JETRO Data Compendium on Industrial Estates in North

and Central Vietnam (July 2013)

Averageland reasecost

Averageadministration cost

minimumwage

Averagewatercharge

Averageseweragecharge

USD/m2 USD/m2/yrsr

USD/month

USD/m3 USD/m3

Ha Nam Average 67 0.28 87 49 120 0.44 0.37 7,333 13.6Ha Noi Average 106 0.61 113 153 253 0.43 0.36 15,000 9.4Bac Ninh Average 41 0.41 101 44 261 0.40 0.23 9,688 12.4Hai Duong Average 62 0.48 94 15 15 0.49 0.49 8,333 8.2Hai Phong Average 66 0.69 107 12 12 0.66 0.53 9,140 10.2Hung Yen Average 65 0.32 97 12 27 0.35 0.35 11,000 10.1

City name

Number ofjapanesecompany

Number ofverseascompany

Average ofminimumlendingarea

GDP average ofthe past fiveyears

Averageland reasecost

Averageadministration cost

Minimumwage

Averagewatercharge

Averageseweragecharge

USD/ｍ2 USD/m2/yeas

USD/month

USD/m3 USD/m3

Ha Nam Average 67 0.28 87 49 120 0.44 0.37 7,333 13.6Ha Noi Average 106 0.61 113 153 253 0.43 0.36 15,000 9.4Bac Ninh Average 41 0.41 101 44 261 0.40 0.23 9,688 12.4Ha Noi Average 106 0.61 113 153 253 0.43 0.36 15,000 9.4Hai Duong Average 62 0.48 94 15 15 0.49 0.49 8,333 8.2Hai Phong Average 66 0.69 107 12 12 0.66 0.53 9,140 10.2Hung Yen Average 65 0.32 97 12 27 0.35 0.35 11,000 10.1

City name

Number ofJapanesecompany

Number ofOverseascompany

Average ofminimumlendingarea

GDP average ofthe during fiveyears

24.0 22.6 21.0 21.0 15.5

44.0 46.4 47.0 48.4 53.3

32.0 31.0 32.0 30.6 31.2

0.010.020.030.040.050.060.070.080.090.0100.0

0.0

5.0

10.0

15.0

20.0

2008 2009 2010 2011 2012

Other % GDP growth rate %

Service businessIndustrial and building industryAgriculture, forestry and fisheries industryGDP growth rate

1-10

4) Relationship with Hiroshima Prefecture

As has already been mentioned, numerous Japanese enterprises are considering Hà Nam Province as a potential

site for locating their factories. Concerning the environment-related field including water infrastructure,

Hiroshima Prefecture takes the lead in building a relationship with Ha Nam Province to have mutual

cooperation. The following table shows the past record of exchange between Hà Nam Province and Hiroshima

Prefecture.

Table1-8 History of Exchange between Hiroshima Prefecture and Hà Nam Province

Source: Prepared by the Study Team from “Concerning Formation of Environmental Cleanup Industrial Clusters”

(April 2014, Hiroshima Prefectural Government)

This agreement mainly entails a technical cooperation by Hiroshima Prefecture, and initiatives geared to

realizing projects including BOT undertakings are being conducted under it.

Photograph 1-1 Signing of the Agreement on Cooperation in the Environmental Industrial Field

(Governor Yuzaki of Hiroshima Prefecture and Governor Dung of Hà Nam Province, November 2013,

in Hiroshima Prefecture)

Source: Photographs taken by the Bureau of Commerce, Industry and Labor, Hiroshima Prefectural Government

January 2013 The Governor of Hà Nam Province visited the Governor of Hiroshima Prefecture and they

agreed to strengthen exchange in the environment-related industry field.

<The Governor of Hà Nam Province has visited Hiroshima Prefecture every year since 2011.>

March 2013 Hà Nam Province requested cooperation from Hiroshima Prefecture for three water-related

projects (construction of Moc Bac Water Treatment Plant, expansion of the existing No. 1

water treatment plant, and construction of a concentrated wastewater treatment plant in Dong

Van III industrial estate).

July 2013 The Director General of Bureau of Commerce, Industry and Labor, Hiroshima Prefecture

visited Hà Nam Province and agreed to cooperate in implementation of the three projects.

November 2013 Signing of a cooperation agreement in the environment-related industry field

Chapter 2

Study Methodology

2-1

(1) Contents of the Study 1) Technical Feasibility Study

The following items will be surveyed in order to grasp the current conditions and future plans of public water

supply and industrial water supply in Hà Nam Province, and to examine the measures for ensuring the technical

feasibility of Moc Bac Water Treatment Plant. Local consultants will be utilized to improve accuracy in parts of

the study. The specific contents of the study will be as follows.

a) Background and necessity of the Project

・ Grasping of socioeconomic conditions

・ Confirmation of city plans, master plans, other infrastructure facilities plans, etc.

・ Grasping of plans concerning expansion, consolidation, and new construction of facilities

・ Confirmation of plans to remedy non-revenue water

b) Population trends

・ Collection of statistical surveys over the past 10 years and future forecasts of population

・ Analysis of natural increase and social increase and confirmation of validity of the future estimated

population

c) Conditions of existing facilities

・ Grasping of capacity and specifications of existing water sources, water treatment facilities, and

water transmission and distribution facilities

・ Sorting of issues in existing facilities

d) Forecast of water demand

・ Forecast of water demand comprising domestic water, business water, industrial water, and

development water

・ Hearing survey on improvement of operating environment at the existing Don Van I and II and Hoa

Mac industrial zones (water quantity and quality, etc.)

・ Assessment of validity of water demand forecast

e) Water source survey

・ Water quality survey (implement for Vietnamese surface water quality standard items)

・ Examination of potential intake flow

・ Red River water quality survey

・ Assessment as a new water source

f) Survey of the scheduled construction sites

・ Survey of the intake point site, scope of the treatment plant premises, owners, situation regarding

2-2

acquisition of land, and land rental fees

g) Technical standards

・ Survey of potable water quality standard and industrial water quality standard

・ Survey of design standards for intake facilities, water treatment facilities, water transmission and

distribution facilities

h) Technical applicability review and facility planning

・ Examination of intake method, water treatment method, and maintenance method

・ Grasping of the water treatment plant system and water distribution zone

・ Grasping of existing water transmission and distribution plans, hydraulic review, examination of

capacity and layout of facilities, grasping of phased development plan

・ Sorting of supply conditions

・ Examination of the effects of introducing Japanese technology and products

・ Project schedule, works cost estimate

i) Maintenance

・ Examination of personnel distribution and maintenance items

・ Calculation of maintenance costs

2) Environmental and Social Consideration Study

The following study will be implemented on the natural, social and environmental items that need to be taken

into account when constructing and operating facilities, and measures that need to be taken in readiness for

Project implementation will be sorted. Also, information will be collected through conducting hearings with the

Government of Hà Nam Province, university professors and so on.

a) Systems and standards

・ Survey of JICA guidelines and environmental and social consideration systems, etc. in Vietnam

b) Survey of case studies and confirmation of procedures

・ Survey of current conditions in the Project target area

・ Confirmation of environmental procedures that need to be taken for Project implementation and

continuation

c) Exploration of mitigation measures, etc.

・ Survey concerning the method of environmental impact assessment and impact mitigation measures

3) Legal, Financial, and Economic Analysis

Based on the Project contents that are derived as a result of the technical feasibility and the environmental and

social consideration study, legal, financial and economic analysis will be conducted in order to evaluate the

Project feasibility and profitability.

2-3

a) Legal affairs related to the Project

・ Sorting of legal systems and regulations related to the water supply utility

・ Sorting of the PPP/BOT legal systems and sharing of awareness with Hà Nam Province

・ Survey of legal systems, etc. pertaining to the achievement of cheap water tariffs, for example,

investment law, corporate accounting law, tax law, preferential tax system, etc.

b) Grasping of current tariffs and business conditions

・ Grasping of current tariff system, water supply cost items, and water supply cost

c) Project scheme

・ Examination of the Project model

・ Form of the operating organization (SPC) and sorting of related agencies

・ Sorting of the Project implementation schedule and total Project cost

d) Funding plan

・ Sorting of fundraising methods (overseas investment and financing, VGF, sector loan, etc.) and

feasibility

・ Sorting of loan conditions, financing institutions, scale of investment, investment conditions, and

returns

e) Risk analysis

・ Extraction of expected risks concerning Project implementation and operation

・ Examination of risk countermeasures (aversion, mitigation, transfer, holding) and risk sharing

f) Financial analysis

・ Sorting of preconditions such as Project income and expenditure balance, risks, scenarios, etc.

・ Cash flow analysis and comparison of water tariff patterns

・ Analysis of financial indicators based on IRR, etc.

・ Sensitivity analysis regarding the expected scenarios

g) Technical advantages of a Japanese company

・ Examination of the form of participation of a Japanese company, sorting of the technical advantages,

examination of measures for encouraging orders from Japanese companies

h) Assessment of Project feasibility

・ Assessment of Project feasibility

・ Project profitability assessment and proposal of water tariffs

・ Ripple effects on the Japanese economy and Japanese-affiliated enterprises in Vietnam

・ Significance of the Project for expansion of Japanese water infrastructure overseas

2-4

(2) Study Methodology and Setup 1) Basic Approach to the Overall Study

This study will be implemented on the assumption that, from the viewpoint of the Project implementer, all work

from construction to operation following completion will be conducted as a private sector activity. Considering

that it is still the initial stage of investigating overall Project feasibility and that the feasibility study of the Da

Nang public water supply PPP project will be utilized, this study will be implemented based on the following

basic policies.

• First the technical examination will be conducted, thereby fostering trust with the Hà Nam Province side.

• Since this is a long-term operation in the public service sector of a foreign country, cooperation with

local enterprises will be indispensable. Care will be taken in uncovering and reviewing local enterprises

that can cooperate with the Project.

• Concerning Project risk, since it will be difficult to conduct frank discussion with the public sector prior

to formulation of a concrete Project plan, in this study, effort will primarily focus on identifying

associated risks and securing the understanding of Hà Nam Provincial Government concerning the risks

that need to be borne by the public side in the PPP undertaking.

• Examination will be conducted with the focus on the future bearing of risk and technical review items,

which will have a major impact on the design of facilities, such as location of water intake, raw water

quality and quantity, flood depth and so on.

• Balance will be sought between required specifications, the local water supply situation, market

expectations and economy, and concerning items with room for technical concession, a flexible approach

will be adopted and the optimum water treatment method for Hà Nam Province will be examined.

Watertight study items and precision of study necessary for Project implementation are extremely important

activities that will determine the success of the business for the Project implementing corporate group.

Concerning the study items, as the basic policy, priority will be given to reviewing the following items: i) There

is no doubt about the need for technical study, but conduct this from the viewpoint of participating in a

long-term undertaking, ii) Fundraising and economy, iii) Project implementation setup that is stable and attracts

public cooperation from the local government, etc., iv) Cost assessment and appropriate risk bearing between

the public and private sectors that will directly link to Project feasibility, and v) Conformance to legal systems,

etc. of Vietnam.

Since the following three master plans relating to the Project have been formulated, first the study will be

advanced with the emphasis on confirming the contents of these master plans and updating the latest

information.

• Prime Minister Decision on Approving the Master Plan on Socio-Economic Development of Hà Nam

Province to 2020:1226/QD-TTg

2-5

• Planning on orientation to supply clean water in Ha Nam Province by 2030

• On provision of information in service of the Construction Investment Project of Moc Bac Water Plant,

Duy Tien District, Hà Nam Province

2) Study Implementation Structure on the Japanese Side

Figure 2-1 shows the structure of the Japanese Study Team for this study.

Figure 2-1 Study Implementation Structure


KAJIMA CORPORATION

Project managerKozo Bando

KAJIMA CORPORATION/Civil Engineering Management Division

◎Management of Fieldactivities

Hiroki SatoPham Dac Loi

KAJIMA CORPORATION

◎Research of water sourceand water demand prediction

Hiroshi ObataORIGINAL ENGINEERINGCONSULTANTS CO.,LTD.

◎Design of WTP, plan ofO&M

Yasuaki MatsumotoORIGINAL ENGINEERINGCONSULTANTS CO.,LTD.

◎Collection of Legalinformation

Masamitsu HondaKAJIMA CORPORATION

◎Financial analysisShuichiro Kato

KAJIMA CORPORATION

◎ Risk analysisTamotsu Murachi

KAJIMA CORPORATION

◎Appraisal of feasibilityKunihiko Iinuma

Global water Recyclingand Reuse System

Association, Japan

◎Cost estimationMasashi Kutsumi

ORIGINAL ENGINEERINGCONSULTANTS CO.,LTD.

◎Analyst on environmentand Social impact

Etsuko KaimiChugai-technos Corporation

◎Legal work, finance andeconomic analysisMasato Takeuchi

KAJIMA CORPORATION

◎Analyst on environmentand Social impactSumihide Tsuru


◎Technical studyShinsuke Suzuki


◎Analysis and collection ofbasic informationToru Takahashi

KAJIMA CORPORATION

◎Economic analysisYoshio Sato

Hiroshima PrefecturalGovernment

2-6

3) Study Implementation Structure in the Host Country

The study counterpart agency is the Hà Nam Province Department of Planning and Investment (hereinafter,

referred to as “DPI”). Concerning the detailed technical examination, discussions were held with related

agencies concerning each issue as indicated below.

Table 2-1 Study Implementation Structure in Vietnam

Name Position Work Area

Mr. Nguyen Van Oang Director of Department of

Planning & Investment

Representative of

counterparts in the study

Mr. Trinh The Manh Head of partnership

investment

Vice representative for

liaising with the Japanese

Study Team

Mr. Duy Ngoc Dinh Department of Planning &

Investment

Person in charge of

collecting materials and

accompanying visits to

facilities

Mr. Pham Trong Khoi Department of Planning &

Investment

Person in charge of

collecting materials and

accompanying visits to

facilities

Mr. Ta Duc Thanh

Deputy Manager of the Ha

Nam Clean Water

Management Center

Provision of information

on waterworks in the

entire province

Mr. Nguyen Quang

Khang)

Japan Desk of Ha Nam

Province Staging of meetings, etc.


(3) Study Schedule 1) Outline of the Study Schedule

The study was implemented via five field surveys having the aim of collecting information on public water

supply facilities in Hà Nam Province and items related to construction of Moc Bac Water Treatment Plant

(water quantity, water quality, water pressure, tariff, transaction location), conditions of existing facilities, water

demand forecast, and survey of water sources. At the same time, discussions were held with Hà Nam Province

and related agencies to fully explain the process up to PPP project implementation (necessity, advantage,

decision-making) and decision of the Project specifications (scope, scale, capacity, effects) and discuss steps

geared to concrete realization of the Project. The final debriefing session is scheduled on 5th February in 2015.

2-7

Analysis and technical review of the materials, hearing contents and data collected in the field surveys, and the

legal, financial and economic analysis were implemented in Japan.

A) First field survey (September 17~September 23, 2014)

B) Study in Japan 1(First field survey~ Second field survey)

C) Second field survey (October 26~November 5, 2014)

D) Study in Japan 2 (Second field survey~ Third field survey)

E) Third field survey (November 16~November 20, 2014)

F) Study in Japan 3 (Third field survey~ Fourth field survey)

G) Fourth field survey (December 15~December 20, 2014)

H) Study in Japan 4 (Fourth ~ fifth field survey)

I) Fifth field survey (January19~January 24, 2015)

J) Study in Japan 5 (After the fifth field survey)

Table 2-2 shows the detailed schedule of the study.

Table 2-2 Detailed Schedule of Study

Source: Prepared by the Study Team m

2) Contents of field surveys

A) First field survey (September 17th ~September 23rd, 2014)

September 18th

The kickoff meeting was held between Hà Nam Province representatives and the Japanese Study

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

・Environmental social impact assessment

Activity2014 2015

September October November December January February

・Determination of Project Implementation Scheme

・Economic analysis ・Risk analysis ・Technical Competitiveness of Japanese Companies

・Evaluation of feasibility

(Activity in Japan) ・Project outlines and objectives ・Issues analysis / Data collection ・Water demand projection ・Technical study

Draft final reportFinal report

(Activity in Vietnam) ・Issues analysis / Data collection ・Current Water Supply Situation ・Questionnaire survey on Industrial Water

・Reporting to Hanam

・Raw water analysis ・Geological and Topographic survey ・Survey on current situation of construction sit　・Technical study　・Environmental social impact assessment

1st site survey

Ist survey in Japan

2ndsite survey 3rd site

survey 4th site survey

2ndsurvey in

Japan3rd in Japan

5thsurvey in Japan

5th site survey

4th survey n Japan

2-8

Team to discuss the Project contents, explain the FS, and ascertain the items in need of confirmation.

[Persons in attendance: Mr.Mai Tien Dung, Chairman of the People’s Committee; Mr.Pham Sy Loi,

Vice Governor of Ha Nam; Mr.Nguyen Van Oang, Director of Department of Planning & Investment;

Mr.Trinh Van The, Director of the Department of Finance; Mr.Pham Manh Hung, Director of the

Department of Construction; Mr.Vu Huu Song, Director of the Department of Resources and

Environment; Mr.Nguyen Duc Vuong, Chairman of the Duy Tien District People’s Committee;

(Mr.Dang Thanh Son and Mr.Nguyen Quang Khang, Japan Desk of Ha Nam Province ]

September 19th

At the invitation of the Hà Nam Province People’s Committee, the Team conducted an observation

tour of sites planned for location of a university, Don Van I & II industrial zones and the industrial zone

water treatment plants, Moc Nam Water Treatment Plant, Moc Bac Water Treatment Plant, and Phu Ly

No. 1 Water Treatment Plant.

September 20th

Simple tests (pack tests) were implemented in order to investigate the water quality of Red River,

which is planned as the intake source for Moc Bac Water Treatment Plant. Also, samples of river water

were obtained for use in detailed analysis aimed at obtaining more detailed water quality data.

In order to determine the intake point, reconnaissance of the surrounding area was implemented and

hearings were conducted with local residents around the intake point proposed by Hà Nam Province

(local fishermen who operate in Red River) and also employees of a brick plant and sand quarry in the

upstream area.

September 21st

The team members toured one water treatment plant in Bac Ninh Province and two in Hai Duong

Province. They also attended a technical explanation meeting at the office of the water supply company

that manages the water treatment plants in Hai Duong Province. [Persons in attendance: Mr.Duong Bac,

Ms. Nguyen Van Anh, manager of Bac Ninh Water Treatment Plant, manager of Hai Duong Water

Treatment Plant]

September 22

The team visited the Japanese Embassy and JICA to explain the Project and report on the findings of

the first field survey.

[Persons in attendance: Japanese Embassy in Vietnam: Second Secretary Atema; JICA Office in Hanoi:

Mr. Katsurai]

B) Study in Japan 1 (First field survey~ Second field survey)

Based on the current conditions of public water supply facilities in Hà Nam Province, geographical

conditions around the water treatment plant and intake facility construction sites, results of the PAC at the

intake source, etc. gathered in the first field survey, confirmation was carried out on the future technical

2-9

review methods and schedule. In particular, formulation of the water quality survey plan and quantity

surveying plan necessary for deciding the water treatment flow was promptly implemented by a local

company, the water quality in the water source and soil conditions on the planned construction sites were

gauged, and examination was conducted on the target substances for removal from raw water, the water

treatment method, and the facilities layout plan.

Also, based on population trend data that has been consigned to Hà Nam Province for collection

(statistical survey over the past 10 years or so and collection of future forecast materials), a start was made

on forecasting the water demand. In forecasting the water demand, a questionnaire survey targeting

resident companies was started in order to gauge industrial water supply in the existing Don Van I & II and

Hoa Mac industrial zones.

Also, the JICA guidelines and environmental and social consideration systems of Vietnam required for

conducting the environmental and social consideration survey were collected, the contents were confirmed,

and the site study plan was compiled.

C) Second field survey (October 28th ~November 3rd, 2014)

October 26th (Sunday)

In the afternoon, Mr. Matsumoto of the Study Team and two members of IET, which has been

consigned to implement water quality analysis, mutually confirmed the water quality analysis and

jar-test sampling points, sampling method, and method of managing and carrying water samples for the

second water quality survey, and they also conducted final confirmation of the analysis parameters,

jar-test method and water quality survey laboratory. Having confirmed that there are many survey items,

there is not enough equipment in Hanoi to conduct the work, and it isn’t possible to conduct ample

survey in a short time, it was decided to conduct the jar-tests in Hanoi and investigate the surface water

standard items and related items at the laboratory in Da Nang. [Person in attendance: Mr. Long]

October 27th (Monday)

Water samples were taken from two potential intake points on Red River, which will be the intake

source for Moc Bac Water Treatment Plant. Red River on this day displayed a dry season flow regime,

and the river banks were roughly 100 meters further back than they were in the first field survey on

September 20 and 21. Samples were taken close to the center of river flow (Intake point No.1) and

around 70~80 meters from the right bank (Intake point No.2), and following immediate refrigeration,

the samples were carried to IET for jar-tests and Da Nang IET for analysis of the water quality

parameters. The jar-tests were immediately commenced at Hanoi and revealed coagulation settlement

characteristics (Pac concentration: 5mg/l~150mg/l). [Person in attendance: Mr. Long]

October 28th (Tuesday)

Turbidity and total nitrogen analysis was carried out on samples of raw water and chemically

precipitated supernatant at the Hanoi laboratory. On the same day, the Team members moved to Da

Nang to supervise the water quality analysis conducted at that laboratory.

2-10

October 29th (Wednesday)

Meeting with local quantity surveying company (TESUCO)

The surveying and boring locations on the scheduled site of Moc Bac Water Treatment Plant

were confirmed and discussions were held concerning contract revisions in line with them.

[Persons in attendance: Mr.Trinh Dinh Chung and two others]

Meeting with local consultant (VEEC)

Discussions were held concerning the water treatment method, design of facilities, standards for

use, etc. at Moc Bac Water Treatment Plant and also the cost estimation method. [Persons in

attendance: Mr. Bac, Mr. An and others]

Meeting with IET Da Nang Branch

After confirming the analysis devices and apparatus and ability of sampling staff, the Da Nang

branch of IET was instructed to conduct analysis on 63 parameters in samples taken from sampling

site Nos. 1 and 2. [Persons in attendance: Mr. Long]

October 30th (Thursday)

Meeting with Hà Nam Province Department of Planning & Investment (DPI)

The current conditions of existing water supply facilities (existing water sources, water treatment

facilities, and issues in the public water supply sector) were confirmed.

Discussions were held concerning methods and data used for forecasting the water demand and

population. [Persons in attendance: Mr. Manh, Mr. Duy, Mr. Khoi and one other]

Meeting with Hà Nam Province Department of Health (DOH)

Because this department manages water quality data from water treatment plants with capacity

of 1,000 m3/day or more, problems concerning water quality were discussed based on the quality of

raw water and treated effluent at existing water treatment plants. [Persons in attendance: Mr.Hung,

Manager of Community Health Section, one other member, DPI: Mr. Manh, Mr. Duy]

Meeting with Hà Nam Province Department of Construction (DOC)

Since this department carries out forecasting of water demand in Hà Nam Province, it was

requested to confirm the methods used for forecasting water demand and to collect data. It was

agreed to conduct detailed discussions with the department that conducts water demand forecasting

at a later date. [Department of Construction: Manager of City Planning Section and one other

member; DPI: Mr. Manh, Mr. Duy and one other member]

Discussions with the management company for Phu Ly No. 1 & No. 2 Water Treatment Plants (Ha

Nam Clean Water Joint Stock Company, hereafter referred to as Han Waco)

Discussions were held with Ha Nam Clean Water Joint Stock Company, which operates Phu Ly

No. 1 & No. 2 Water Treatment Plants. After giving an outline explanation of the Project, talks

were held on the possibility of future cooperation. [Persons in attendance: Mr.Pham Trong Khoi,

President of Ha Nam Clean Water Joint Stock Company, and one other; DPI: Mr. Manh, Mr. Duy

and one other member]

2-11

October 31st (Friday)

Discussions with the Manager of DPI concerning the Project

Report was given on the contents of the first field survey (results of water quality pre-sampling,

explanations on the candidate intake points, etc.). Also, cooperation was requested regarding

confirmation of the methods and data used in the water demand forecast prepared by Hà Nam

Province, and it was confirmed that, from now on, water demand forecasts will be scrutinized

together with the Director of DPI. [Persons in attendance: Mr. Oang, Director of DPI, Mr. Manh,

Mr. Duy and one other member]

Survey of Moc Bac Water Treatment Plant construction site

Accompanied by members of DPI and Duy Tien District People’s Committee, survey of the Moc

Bac Water Treatment Plant scheduled construction site was conducted and authorization to conduct

boring and quantity surveying was obtained.

Chuyen Ngoai Water Treatment Plant (2,000 m3/day, under construction), which will obtain water

from Red River, was observed.

Discussions with DPI

Hearing on social and environmental impact analysis items was conducted at DPI. [Persons in

attendance: Mr. Duy and one other]

Discussions with DOC

The methods and data used in the water demand forecast prepared by Hà Nam Province were

confirmed. [Hà Nam Province Department of Construction: 5 members; DPI: Mr. Duy and one

other]

November 1st (Saturday)

Accompanied by members of the boring and quantity surveying company TESUCO, survey was

conducted and surveying and boring locations were selected around the scheduled construction site of

Moc Bac Water Treatment Plant.

November 2nd (Sunday)

Talks were held with the Da Nang branch of IET to confirm the progress of the water quality survey.

The results of jar-tests conducted in Hanoi were confirmed and discussed. The surveying and boring

progress report was confirmed and IET was instructed to continue the boring survey.

November 3rd (Monday)


[Person in attendance: Mr. Long]

The surveying and boring progress report was confirmed and IET was instructed to continue the

boring survey.

November 4th (Tuesday)

2-12


[Person in attendance: Mr. Long]

D) Study in Japan 2 (Second field survey~ Third field survey)

Based on the results of the water quality survey, quantity surveying and geological survey conducted in

the second field survey, examination was conducted on intake and water treatment methods, treatment

plant system and water distribution district, water transmission and distribution plans, hydraulic review,

capacity and layout of facilities, phased development plans, and sorting of supply conditions (water flow

and quality), and work was started on the cost estimation.

Moreover, concerning water demand, population was estimated and development plans were sorted and,

based on the findings, water demand was forecast for a number of cases.

E) Third field survey (November 16th ~November 20th, 2014)

November 17th


Discussions were held mainly concerning the water demand forecast. The scenario calculated by

the Japanese team, and the water demand forecast calculated by Hà Nam Province were confirmed.

Also, the sorted results from the questionnaire on industrial water supply that was conducted with

resident enterprises on existing industrial zones were reported, and it was confirmed that numerous

enterprises are not satisfied with the current supply of industrial water. The treatment process based

on the results of water quality testing, and the preferred water intake point, were reported and

accepted. [Persons in attendance: Mr. Manh, Mr. Duy, Mr. Khoi, Mr. Hoan]

Discussions with Ha Nam Clean Water Management Center

Having confirmed that the data used in the water demand forecasting in Hà Nam Province was

prepared by Ha Nam Clean Water Management Center, it was confirmed that discussions from

now on will be conducted with Ha Nam Clean Water Management Center.

The scope of water supply by Moc Bac Water Treatment Plant that is envisaged by Hà Nam

Province was confirmed, and it was ascertained that the districts being considered for water supply

are not yet served by public water supply. [Persons in attendance: Mr.Thanh, Deputy Manager of

the Ha Nam Clean Water Management Center; DPI: Mr. Manh, Mr. Duy]

Discussions with Han Waco

Following on from the second survey, the water demand forecast prepared by the Study Team

was discussed. Since this water supply company has conducted its own water demand forecast

separate from that conducted by Hà Nam Province, it was recommended that various scenarios

should be considered when holding discussions with Hà Nam Province in the event of Project

implementation.

It was agreed to continue examining the feasibility of cooperation by this company when

implementing the Project. [Persons in attendance: Han Waco：Mr. Fam, DPI：Mr. Duy]

November 17 th

2-13

Field reconnaissance of a development planning district

Field reconnaissance was carried out with attendance by DPI at a site being planned for

development by Hà Nam Province and a development district currently under construction. Survey

was conducted with emphasis on the Nam Cao University development district that is included in

the water demand, and the district planned for relocation of Hà Nam Province administrative

district, and it was confirmed that construction is progressing more or less as planned.

November 18 th


Numerous water demands forecast scenarios prepared by the Japanese Tam so far were

explained, and the understanding and consent of the local side regarding the Team’s forecasting

methods was secured.

Concerning the population forecast that provides the basis for the water demand forecast, the

department director himself has been involved since the time of master plan creation, and it was

agreed to hold detailed discussions at the time of the next field survey.

Explanations were given to the department director concerning the other water intake points too.

It was confirmed that there will be no problem in changing the intake point from the location that

was initially planned by Hà Nam Province. [Persons in attendance: Mr. Oang, Director of DPI, Mr.

Manh, Mr. Duy, Mr. Khoi, Mr. Hoan]

November 19 th

Discussions with JICA Vietnam Office

Talks were held with Mr. Yamamoto, Vice Director of the JICA Vietnam Office, and report was

given on the study situation. [Persons in attendance: Mr. Yamamoto, JICA Vietnam Office]

Talks with SEI Co. (former development of Moc Bac Water Treatment Plant)

SEI was the developer at the time of the feasibility study for Moc Bac Water Treatment Plant

conducted in 2009, and the conditions at that time were confirmed.

F) Study in Japan 3 (Third field survey~ Fourth field survey)

Based on the contents that were confirmed by the Study Team and the Hà Nam Province side in the third

field survey, detailed examination was carried out on the Project scope, the scope of water supply, the

phased construction plan, and implementation plan (water treatment plant and intake facility), and the

pursuant works cost estimation was implemented.

Concerning environmental and social aspects, examination was conducted on the environmental

improvement effect and impacts on environment and society resulting from Project implementation.

G) Fourth field survey (December 15~December 20, 2014)

December 16 th

Discussions with VEEC

Contents of the outputs (drawings and works cost estimate) submitted by the local consultant

2-14

VEEC were confirmed. Queries concerning the source of unit rates and basis for quantities, etc.

were discussed and the validity of the rough works cost estimate was confirmed. [Persons in

attendance: Mr. An, Mr. Pham Van Hung, Mr. Truong Duy Loi], Mr. Pham Van Tuan, and two

others]

December 17 th


Report was given to Hà Nam Province Department of Planning & Investment on the study

contents so far (boring and quantity surveying surveys, water treatment flow, water demand

forecast, comparison of candidate intake sites, industrial zone questionnaire, scope of water

supply, etc.), and discussions were held on the contents. In particular, concerning the water demand

forecast, Hà Nam Province and the Japanese Study Team reviewed the latest water demands,

seeking understanding for the methods and contents of their latest water demand forecasts and

discussing queries. [Persons in attendance: Mr. Oang, Director of DPI, Mr. Manh, Mr. Duy, Mr.

Khoi]

December 18 th

Discussions with DPI (December 18 th, morning)

Discussions were held on the latest water demand forecast that was remade by the Study Team

following the discussions on the previous day. Upon holding discussions with DPI, the data used in

the water demand forecast was checked and corrected, and a number of water demand forecast

scenarios were prepared. Also, discussions were held regarding examination of environmental and

social aspects. [Persons in attendance: Mr. Manh, Mr. Duy, Mr. Khoi]

Discussions with DPI (December 18, afternoon)

The latest water demand forecast that was prepared based on the contents discussed and agreed

with DPI in the morning was explained to the Director of DPI. The water demand of 60,000 m3/day

envisaged by Hà Nam Province was deemed to be appropriate, however, it was explained that for a

private sector enterprise to implement the Project, since it is necessary to correctly ascertain the

risk, water demand in the minimum case where demand doesn’t grow was also examined. Facilities

with enough capacity to handle 60,000 m3/day will be constructed, however, because the business

will not be viable if the water demand doesn’t grow, this scenario was carefully explained to Hà

Nam Province and it was agreed to discuss and coordinate measures for addressing such a case if it

occurs. [Persons in attendance: Mr. Oang, Director of DPI, Mr. Manh, Mr. Duy, Mr. Khoi]

Implementation of field reconnaissance [Bao Sao tourism district, Hanoi Industrial University No.

2 Campus]

An observation tour of Bao Sao tourism district and an already constructed university was

conducted.

December 19 th

Field reconnaissance (Don Van I and II industrial zones, Duy Tien Country, Kim Bang Country,

2-15

Hoa Mac industrial zone, water treatment plant scheduled site, intake facility scheduled site)

Survey was conducted in the area around the scheduled Moc Bac site and the planned water

supply area.

Progress report to the Japanese Embassy in Vietnam

Interview was held with Second Secretary Atema to report on the study contents and progress and

discuss the future issues and approach.

H) Study in Japan 4 (Fourth field survey onwards)

The Project cost combining the construction cost and maintenance cost of the water treatment plant and

intake facility was estimated; cash flow analysis was conducted; financial and economic feasibility was

examined and the finance sourcing and the fundraising plan were reviewed. Also, the form of participation

(funding and supply of equipment) of a Japanese company was reviewed and the necessary measures for

securing an advantage and promoting orders from Japanese companies were examined.

Also, environmental and social impacts of implementing the Moc Bac Project were examined based on

the contents of the field surveys. The findings were compiled into the draft final report and were

submitted.

I) Fifth field survey (January 19th ~24th, 2015)

A final report meeting with representatives from the counterpart agencies and Hà Nam Province was

held to sum up the contents of the study so far. Discussions were held on the schedule and the items that

need to be implemented by the related government offices and agencies on the Vietnamese and Hà Nam

Province side for realization of the Project, and the two sides confirmed the items that they need to tackle

from now on.

J) Study in Japan 5(Fifth field survey onwards)

A final report meeting with representatives from the Ministry of Economy, Trade and Industry, the

Project managing corporation and other related agencies was held to receive advice on the Project validity

and need for additional detailed analysis, and confirm the items that need to be addressed from now on

geared to concrete Project formation.

The Final Report was prepared and submitted.

Chapter 3

Justification, Objectives and Technical Feasibility

of the Project

3-1

(1) Background and Necessity of the Project 1) Scope of the Project and Target Users

Moc Bac Water Treatment Plant will mainly supply domestic water to residents and industrial water to Dong

Van industrial zone in the north of Hà Nam Province. It will also covers the 12 universities scheduled to be

constructed in the north of Phu Ly (Nam Cao university attraction area), as well as a National Sports Stadium

and related facilities. Figure 3-1 and Table 3-1 show the planned water service area and facilities.

Figure 3-1 Hà Nam Province Planned Water Supply Area


Table 3-1 Moc Bac Planned Water Supply Area and Facilities

Breakdown No. District

Domestic

water supply 1

Duy Tien County

10 communes as follows: Moc Bac, Chau Giang,Bach Thuong,Duy

Hai,Duy Minh,Dong Van,Hoang Dong,Yen Bac,Tien Ngoai,Tien Noi

2 Phu Ly City

2 communes: Lam Ha,Tien Tan

3-2

Breakdown No. District

3

Kim Bang County

7 communes as follows: Tan Son, Nguyen Uy, Le Ho, Ngoc Son, Thuy

Loi, Tuong Linh , Dai Cuong

Attraction of

universities 4 Nam Cao university area

Industrial

water supply

5 Existing Dong Van I Industrial Zone

6 Existing Dong Van II Industrial Zone

7 New Dong Van III Industrial Zone

8 Existing Hoa Mac Industrial Zone

9 New Kim Bang Industrial Zone

Other 10

Population migrating from nearby cities in line with growth of

industrial zones and development plans

11 Small factories in the water supply area (Cau Giat, Hoang Dong,Tien

Tan)

12 National sports stadium

13 Small enterprises (shops, etc.)

14 Industrial zone workers who haven’t registered as residents

Source: Prepared by the Study Team based on Data Provided by DPI

2) Current Condition of Water Supply Services in Hà Nam Province

Public water supply in Hà Nam Province is well advanced in urban areas, however, the water supply serving

rate over the entire province as of 2014 is only around 60%, while in suburban and rural parts the water supply

system has hardly been constructed and there are many areas that have no public water supply at all. In such

areas, residents depend on rainwater and groundwater to meet their water needs.

According to the Planning on Orientation to Supply Treated Water in Ha Nam Province by 2030, the current

serving rates and conditions of public water supply services in each district are as shown in the following table.

This mainly indicates conditions of public water supply services in urban parts, however, the quality of water

supplied by existing water treatment plants in urban areas does not satisfy standards, while supply capacity does

not completely satisfy the demand. Accordingly, improvements are anticipated in the public water supply

service over the entire province.

Table 3-2 Outline of Existing Public Water Supply Services in Cities of Hà Nam Province

City Outline of Existing Public Water Supply Services

Phu Ly City The provincial capital of Phu Ly has Phu Ly No. 1 Water Treatment Plant and Phu Ly

No. 2 Water Treatment Plant, which are the largest in the province with supply capacity

of 10,000 m3/day and 15,000 m3/day respectively.

3-3

The public water supply serving rate on the east side of Dai River, which runs through

the center of Phu Ly, is approximately 95%, and the total length of water distribution

pipes is 218,709 m (pipe diameters φ100 mm~φ300 mm). The water leakage rate is

approximately 30%.

Ly Nhan County In Vinh Tru Town in the urban part of Ly Nhan County, there is only a small water

treatment plant that is fed by surface water and has supply capacity of 900 m3/day.

There are plans to expand supply capacity to 3,600 m3/day. The distribution pipe

network is small with pipe diameters of φ76~φ200 mm.

There is no detailed data concerning the serving rate and length of the pipe network.

Binh Luc County In Binh My Town in the urban part of Binh Luc County, there is a small water treatment

plant that obtains water from Sat River and has treatment capacity of 2,000 m3/day.

There is no detailed data concerning the distribution pipe network, however, as is also

the case in Ly Nhan County, the distribution pipe network is small with pipe diameters

of φ76~φ200 mm.

The public water supply serving rate in Binh My Town is around 80%.

Thanh Liem County In Kien Khe Town in the urban part, there is a small water treatment plant that has

treatment capacity of around 700 m3/day and a small distribution pipe network with

pipe diameters of φ76~φ110 mm. The public water supply serving rate in Kien Khe

Town is around 80%.

Dong Van Town

(Duy Tien County)

In Dong Van Town, there is a water treatment plant that is fed by groundwater and has

supply capacity of 3,000 m3/day. The public water supply serving rate is around 60%.

Hoa Mac Town (Duy

Tien County)

There is a water treatment plant that is fed by groundwater and has supply capacity of

3,000 m3/day. The public water supply serving rate is around 60%.

Que Town (Kim

Bang County)

In Que Town in Kim Bang County, there is a small water treatment plant that has

treatment capacity of around 300 m3/day and a small distribution pipe network with

pipe diameters of φ76~φ110 mm.

Ba Sao Town (Kim

Bang County)

In Ba Sao Town in Kim Bang County, there is a small water treatment plant that is fed

by spring water and has treatment capacity of around 480 m3/day and a small

distribution pipe network with pipe diameters of φ76~φ110 mm.

Source: Prepared by the Study Team based on the Planning on Orientation to Supply Treated Water in Ha Nam

Province by 2030

a) Existing Water Treatment Plants

In Hà Nam Province, water supply services are carried out by 29 water treatment plants of various sizes,

comprising 10 plants in urban and industrial areas and 19 plants in rural areas. Each water treatment plant

is managed and operated not by the province but by the water supply company that has jurisdiction, and

water distribution pipes are also installed and operated separately according to each water treatment plant.

Table 3-3 and Table 3-4 outline the existing water treatment plants in urban areas and rural areas

respectively.

3-4

Table 3-3 Existing Water Treatment Plants in Urban Parts of Hà Nam Province


Province by 2030

Table 3-4 Existing Water Treatment Plants in Rural Parts of Hà Nam Province

No. Water Treatment Plant Facility Capacity (m3/day) Water Source Supply Destination

A Ly Nhan County 7,300

1 Hoa Hau WTP 2,000 Cau River Hoa Hau, Tien Thang

2 Phu Phuc WTP 1,000 Red River Phu Phuc

3 Nhan Binh WTP 3,000 Cau River Nhan Binh, Nhan Chinh, Nhan Nghia

4 Nhan My WTP 1,000 Cau River Nhan My

5 Xuan Khe WTP 300 Cau River Xuan Khe

B Binh Luc County 10,000 6 Hung Cong WTP 3,500 Cau River Hung Cong, Ngoc Lu, Boi Cau 7 An Ninh WTP 2,000 Cau River An Ninh, An Noi, Vu Ban

8 An Do WTP 3,000 Sat River An Do, Trung Luong, La Son, My Tho

9 Tieu Dong WTP (3 locations) 500 Sat River Tieu Dong

10 Bo De WTP 1,000 Cau River Bo De C Duy Tien County 3,000 11 Moc Nam WTP 3,000 Red River Moc Nam, Hoa Mac D Thanh Liem County 7,350 12 Thanh Thuy WTP 850 Dai River Thanh Thuy 13 Thanh Hai WTP 1,500 Dai River Thanh Hai, Thanh Nguyen 14 Thanh Nghi WTP 1,300 Dai River Thanh Nghi

15 Thanh Nghi WTP 200 Spring water Thanh Nghi (Thanh Bong and Thanh Son hamlets)

16 Thanh Phong WTP 2,500 Dai River Thanh Phong, Thanh Ha, Thanh

Tuyen, Thanh Binh, Thanh Huong

17 Thanh Luu WTP 1,000 Kinh Thuy River Thanh Luu

E Kim Bang County 1,490

No. Name of urban area Name of Water Plant Capacity (m3/day) Water Source

1 Phu Ly City Phu Ly No. 1 WTP 10,000 Dai River 2 Phu Ly City Phu Ly No. 2 WTP 15,000 Dai River 3 Kien Khe Town Dong Ha and Tay Ha WTP 700 Dai River 4 Que Town Que WTP 300 Dai River 5 Ba Sao Ba Sao WTP 480 Spring water

6 Vinh Tru Town Vinh Tru WTP 900

(Scheduled for expansion to 3,600)

Cau River

7 Binh My Town Binh My WTP t 2,000 Sat River 8 Hoa Mac Town Moc Nam WTP 3,000 Red River 9 Dong Van Town Dong Van I WTP Plant 3,000 Groundwater 10 Dong Van Town Dong Van II WTP 2,000 Groundwater

Total 37,380

3-5

18 Lien Son WTP (3 locations) 450 Dai River Lien Son Commune

19 Nhat Tan WTP (4 locations) 190 Groundwater Nhat Tan Commune

20 Dong Hoa WTP (3 locations) 850 Groundwater Dong Hoa Commune

Total 29,140 Source: Prepared by the Study Team based on the Planning on Orientation to Supply Treated Water in Ha Nam

Province by 2030

The total water treatment capacity of water treatment plants in urban areas is 37,380 m3/day, and the total

in rural areas is 29,140 m3/day, giving a combined capacity of 63,520 m3/day. This represents the

maximum current supply capacity in Hà Nam Province.

Because the water treatment plants with large capacity are concentrated around Phu Ly City, as was

mentioned earlier, there are large disparities in supply conditions between districts. In particular, in the

largely rural Project target areas of Duy Tien County and Kim Bang County, although public water supply

systems are constructed in parts occupied by industrial zones, there is no domestic water supply system in

rural areas and almost all citizens there utilize rainwater and groundwater. Figure 3-2 shows the location

map of existing water treatment plants.

3-6

Figure 3-2 Location of Existing Water Treatment Plants


-legend-

2015 2020 2030

1 Moc Bac WTP - 60,000 120,000

2 Dao Ly WTP - 30,000 60,000

3 Hoa Hau WTP - - 4,000

Main Existing WTP Capacity

Now 2020 2030

1 Phu Ly No.1 10,000 10,000 10,000

2 Phu Ly No.2 15,000 30,000 30,000

3 Dong Van No.1 3,000 3,000 3,000

4 Dong Van No.2 2,000 2,000 2,000

5 Binh My 2,000 2,000 2,000

6 Nhan Binh 3,000 3,000 3,000

7 Hong Cong 3,500 3,500 3,500

8 An Do 3,000 5,000 5,000

9 Moc Nam 3,000 3,000 3,000

10 Thanh Phong 2,500 10,000 10,000

Industrial Zone

　Main Existing WTP

　New Pipe(2020)　New Pipe(2030)

　City Zone

　New WTP

　Existing WTP

Listunit：m3/d

New WTP Capacity

List

unit：m3/d

N

N

Hanoi City、International airport

3


National Highway 1

Day river

7 6

9

8

5

2

D400

Moc Bac WTP

Supply water center

＜Duy Tien district＞New Dong Van

III Industrial Zone(336ha)

Existing Dong Van I + II (500ha)

Ha nam Province

National Highway 491

Industrial Zone(Planing Site)

10

21

＜Phu Ly city＞

Red river

Hoa Mac Industrial Zone(200ha)

1

Area Attracting 12 university(900ha)

Hai Phong Port

3-7

b) Existing Water Distribution Network

As was described above, management companies and conditions of water supply service differ greatly

between water treatment plants in Hà Nam Province. Moreover, water distribution systems are also

independently established under each water treatment plant, with each management company using its

own funds to install distribution pipes to contract customers. Accordingly, there is no single department

that centrally manages detailed data concerning the installation conditions, serving rates, leakage rates,

etc. of existing water distribution networks, and it is difficult to grasp current conditions. However, the

leakage rate in the water distribution networks attached to Phu Ly No. 1 and No. 2 Water Treatment Plants,

which are the biggest in the province, is around 30%. Considering that the water distribution networks of

other existing water treatment plants are badly deteriorated and face issues regarding non-revenue water,

it is guessed that leakage rates are generally the same, leaving aside minor disparities between each

individual plant and network.

Hà Nam Province also hopes to unify the independent water distribution networks attached to the existing

water treatment plants, but there are numerous issues to be addressed regarding the current situation.

c) Main Existing Water Treatment Plants in Hà Nam Province

In order to grasp the current conditions of water treatment facilities in Hà Nam Province, the Study Team

visited and observed four treatment plants with large treatment capacity, namely Phu Ly No. 1 Water

Treatment Plant, Dong Van I Industrial Zone Water Treatment Plant, Dong Van II Industrial Zone Water

Treatment Plant, and Moc Nam Water Treatment Plant.

i. Dong Van I Industrial Zone Water Treatment Plant

This adopts the rapid filtration method to remove manganese. It obtains water from groundwater which is

red in color and thought to have a high concentration of iron and manganese. The basic water quality

inspection implemented by the Study Team also revealed the quality of treated water to be poor.

According to the management company, this plant supplies water to factories in both Dong Van I and

Dong Van II industrial zones.

Photograph 3-1 Conditions of Dong Van I Industrial Zone Water Treatment Plant (Left: Receiving tank. The water is red-brown due to iron content. Right: Filtration equipment)

Source: Taken by the Study Team

3-8

ii. Dong Van II Industrial Zone Water Treatment Plant

This adopts the rapid filtration method, however, because the quality of the water source (groundwater) is

poor, it also uses limestone for adjusting pH and the ammonia stripping method (whereby ammonia is

converted to ammonia gas) for removing ammonia. For this reason, there is a strong smell of ammonia in

parts of the water treatment plant.

Photograph 3-2 Van II Industrial Zone Water Treatment Plant

(Left: Regulating tanks. The white color is caused by limestone. Right: Treatment process after ammonia

stripping)


iii. Moc Nam Water Treatment Plant

The Team was told that this plant obtains water from Red River, but in reality it uses groundwater

obtained through 20 wells having diameter Φ200 and depth of 60 m. As the treatment method, it adopts

rapid filtration, and it also conducts membrane filtration of the treated water and manufactures bottled

water.

Photograph 3-3 Existing Moc Nam Water Treatment Plant

(Left: Filter tanks, Right: PET bottle manufacturing plant)


3-9

iv. Phu Ly No. 1 Water Treatment Plant

This plant adopts the conventional rapid filtration method of treatment. According to water quality

information obtained from Hà Nam Province, the water source of Dai River becomes polluted by sanitary

sewage from Hanoi during the dry season, however, the Study Team found the treated water quality not to

be as bad as expected in basic water quality inspection. However, concentrations of NO3-N and NH4

were high and there was a smell of sulfur in tap water in a hotel located close to the plant.

Photograph 3-4 Phu Ly No. 1 Water Treatment Plant

(Left: Coagulation and sedimentation tanks, Right: Sludge removal pipes)


d) Water Quality Results at Existing Water Treatment Plants in Hà Nam Province

When observing the water treatment plants, the Study Team obtained permission from the managers to

conduct water quality inspections. The results are as shown in Table 3-5 below.

Table 3-5 Water Quality Inspection Results at Existing Water Treatment Plants

National Standard Values Existing Water Treatment Plant

Dong Van I influent

Dong Van I treated water

Dong Van II influent

Dong Van II treated water

Moc Nam influent

Phu Ly 1 influent

Phu Ly 1 sedimentation treated water

Surface water standard QCVN 08: 2008/BTNMT

Potable water standard QCVN 01: 2009/BYT Sampling date: 2014.7.19

pH (－) 6.5-8.5 6-8.5 7.1 7.2 7.3 7.7 7.8 6.0 6.5 NH4-N (mg/L) 0.2 1.56 8 9 10 7 0.2 1.0 0.5

NO3-N (mg/L) 5 11.29 10 3 0.3 10 0.3 8 5

PO4-P (mg/L) 0.2 - 0.03 0.02 1 0.1 0.03 0.05 0.05

COD (mg/L) 15 - 7 7 8 8 6 7 8


3-10

As a result of the survey, a number of existing water treatment plants were found not to be meeting water

quality standards. In particular, it was found that ammonia levels far higher than industrial water

standards exist in the treated water supplied to Dong Van I and II industrial zones.

e) Summary

As a result of the observations, it was found that many of the existing water treatment plants in Hà Nam

Province conduct general treatment methods such as rapid filtration. However, concerning Dong Van

Industrial Zone that will be targeted by Moc Bac Water Treatment Plant, it was found that tap water is

poor quality and doesn’t satisfy standards. The following table gives an outline of the existing water

treatment plants that were visited and inspected.

Table3-6 Survey Sheets from Existing Water Treatment Plants in Hà Nam Province

Water Treatment

Plant (Company)

Water Treatme

nt Capacity (m3/day)

Actual Supply Flow

(m3/day)

Water Treatment Flow

Water Quality Problems

Supply Unit Rate

(VND/m3) Other Points

Dong Van I industrial

zone Water Treatment

Plant

3,000 2,000

Groundwater → Receiving tank → Sedimentation tank → Rapid filtration unit (manganese removal) → Sterilization → Treated water reservoir → Water distribution

Raw water (groundwater) has red color due to iron and manganese content.

12,000

Water quality standard: QCVN02 for domestic water is applied. Treated water undergoes inspection once every 3 months. Water distribution pipes are owned by the supplier.

Dong Van II Industrial Zone Water Treatment

Plant

2,000 1,000

Groundwater → Receiving tank → Chemicals mixing tank (slaked lime injection) → Ammonia stripping → Coagulation and sedimentation tank → Rapid filtration tank → Sterilization → Treated water reservoir → Water distribution

The groundwater has high ammonia concentration.

12,000

Water quality standard: QCVN02 for domestic water is applied. Treated water undergoes inspection once every 3 months. Water distribution pipes are owned by the supplier.

Moc Nam Water

Treatment Plant

3,000 500

Groundwater →Receiving tank →Sedimentation tank → Rapid filtration tank →Sterilization →Treated water reservoir →Water distribution

Water is obtained from deep wells close to Red River

Industrial water:

10,000 Domestic

water: 5,250

Deep well φ200 x H60m x 20 wells Bottled water is manufactured using RO membrane. Water distribution pipes are owned by the supplier.

Phu Ly No. 1 Water

Treatment Plant

10,000 10,000

Dai River surface water→ Receiving tank → Coagulation and

No problems in particular 6,000

This is a 100% private company. Technology is Russian. Expansion is

3-11

Water Treatment

Plant (Company)

Water Treatme

nt Capacity (m3/day)

Actual Supply Flow

(m3/day)

Water Treatment Flow

Water Quality Problems

Supply Unit Rate

(VND/m3) Other Points

sedimentation tank → Rapid filtration tank → Sterilization → Treated water reservoir →Water distribution

planned in future.


3) Questionnaire for the Resident Enterprises in Industrial Zones

Moc Bac Water Treatment Plant will not only supply water for domestic use, but industrial water supply to

Dong Van Industrial Zone and so on in the north of the province is also a primary objective. Therefore, when it

comes to operating Moc Bac Water Treatment Plant, grasping the water supply needs of resident companies in

the industrial zones will be very important for compiling Project plans based on demand. Doing so will also

make a contribution to improving the operating environment on industrial zone that is intended for use by

Japanese enterprises. Accordingly, in the Study, a questionnaire survey was implemented with the goal of

grasping the needs of resident enterprises in industrial zones regarding quality and quantity of industrial water

supply and reflecting the contents in the water treatment plant construction project.

i. Purpose of the questionnaire

To grasp the current conditions regarding quality and quantity of industrial water supplied to enterprises

and factories resident in industrial zones of Hà Nam Province.

ii. Targets of the questionnaire

Enterprises that are located in Dong Van I and II and Hoa Mac industrial zones, etc. (Questionnaires

were distributed to 150 enterprises).

iii. Results of questionnaire responses

Table 3-7 shows the collated findings of the questionnaire as of December 2014.

3-12

Table 3-7 Results of Questionnaires to Resident Enterprises in Industrial Zones

Question Number

Company which response

to our questionnaire by 27th Dec

Number of valid response

Response rate

Q1

Q1-1 How do you get the industrial water? If you get the industrial water from some water supply company, please name the water supply company.

company 26

33

30 91% Ground water 4

Q1-2 How do you get the industrial water? If you get the industrial water from some water supply company, please name the water supply company.

Yes 22

32 97%

No 10

Q1-3 When you use the industrial water, what water quality parameters do you usually check? Please choose all the parameters in the right table and write the values for those parameters you can accept. Please list any Water Quality Standards you refer to in the space on the right hand side, if any.

Maximum 9

29 88% Minimum 0

Average 3.3

Q1-4 Is there any operational problems caused by the industrial water quality?

Yes 12

28 85% No 16

Q1-5 In order to make the supplied industrial water acceptable for your factory operation, do you have your own water treatment facilities?

Yes 11

31 94%

No 20

Q2

Q2-1 Is the industrial water supply volume to your factory stable and satisfactory?

Yes 23

30

91%

No 7

Q2-2 How much daily water do you need for the factory operation? (unit is m3/d＆n)

Max 1000

25 76% Min 2.5

Average 106.3

Q2-3 Are there any fluctuations in the industrial water volume used at your factory in a year?

Yes 14 29 88%

No 15

3-13

Question Number

Company which response

to our questionnaire by 27th Dec

Number of valid response

Response rate

Q2-4 Do you have any additional water supply source at your factory such as wells drawing groundwater?

Yes 4

29 88% No 25

Q3

Q3-1 How much do you pay for 1 m3 of the industrial water ?

Maximum 13,000VND

23 70% Minimum 7,000VND

Average 11,284VND

Q3-2 Do you have any complaints about the water tariff ?

Yes 8

24 73%

No 16

Q4

Q4-1 The industrial water supplied now is produced according to the national technical regulation on drinking water quality (QCVN01) or the national technical regulation on domestic water quality (QCVN02). Do you think that any other standard should be used to regulate industrial water quality?

Yes 5

28 85%

No 23

Q5

Q5-1 Does the industrial zone where your factory is located have any advantages regarding water supply, wastewater treatment, electricity supply, management system, land cost and personnel cost compared with other industrial zones in Vietnam?

Yes 14

30 91%

No 16


iv. Summary of the Questionnaire

The most important point garnered from the questionnaire is that approximately 70% of companies are

dissatisfied with their current water supply. Dissatisfaction with the current industrial water supply and

demands for improvement have also been frequently voiced in discussions with authorities in the

province. Moreover, the dissatisfaction of companies coincides with the results of the water quality

surveys conducted by the Study Team indicating that the quality of treated water doesn’t satisfy

standards.

3-14

The questionnaire also revealed that roughly a third of companies do not use industrial water supply as

it is but first conduct further treatment using their own equipment.

One of the reasons for the poor quality of existing industrial water supply is the contamination of source

groundwater caused by excessive pumping and percolation of untreated wastewater and sewage into the

ground. According to discussions with the DPI, the provincial authorities would ideally like to force the

companies that source industrial water supply from groundwater to suspend operations, however, since

there are no alternative water supply companies, it has no choice but to allow the existing companies to

continue supplying.

Considering these conditions, there is a good chance that Moc Bac Water Treatment Plant, which will

utilize surface water, will be able to attract existing demand for industrial water supply so long as it can

provide good quality water.

Moreover, it was found that 40% of companies are dissatisfied with the expensive industrial water

supply tariff (VND12,000) compared to that in other cities. According to the DPI which collected the

questionnaire responses, many companies indicated that they would not be unhappy with the tariff so

long as water quality was good, indicating that there is room to consider setting higher tariffs if good

quality industrial water supply can be realized.

4) Current Conditions, Future Forecast, and Problems in Case without the Project

Future plans in Hà Nam Province include construction of a dedicated industrial zone for Japanese enterprises

(Dongg Van III), relocation of 12 universities from Hanoi, and development of Duy Tien County, and such

projects are being implemented in accordance with the decisions of the central government. As a result of such

integration of education and industry, Hà Nam Province has a bright future as a center of industrial activity,

however, in line with sudden industrial development, the local water infrastructure is confronted by the

following issues

• Existing facilities have reached the limit of their water supply capacity, and expansion work can no

longer keep pace.

• Tap water does not meet water quality standards or satisfy the demands of Japanese-affiliated

enterprises in industrial zones.

• Industrial water supply to industrial zone is nowhere near enough, meaning that some enterprises

have to privately obtain groundwater.

• Due to arsenic contamination of groundwater and ground settlement caused by excessive pumping, it

is necessary to switch from groundwater to surface water.

• Existing water sources such as Dai River are experiencing deteriorating water quality due to the

inflow of sanitary sewage from Hanoi.

• As a result, tap water from existing water treatment plants does not satisfy water quality standards;

moreover, quantity is not sufficient to meet demand. Accordingly, improvements are anticipated in

3-15

water supply services over the entire province.

• The existing water distribution networks are badly deteriorated and the problem of non-revenue water

needs to be addressed.

Having cheap labor supply and land prices as well as a good transport infrastructure, the industrial zones of Hà

Nam Province are attracting attention, however, it will be urgently necessary to realize the quantitative and

qualitative improvement of current water supply situation in order to attract Japanese enterprises in the manner

envisaged by the provincial government.

5) Effects and Impacts of Project Implementation

Hà Nam Province aims to resolve the abovementioned problems of existing water supply systems through

switching to surface water sources. Moc Bac Water Treatment Plant, which will obtain water from Red River

with abundant water flow, is planned to become the largest water treatment facility in the province, supplying

water to key destinations such as Dong Van Industrial Zone, Nam Cao University, and the urban area of Phu Ly,

and its construction is expected to lead to improvement in the quantity and quality of water supply throughout

the entire Hà Nam Province.

Through this Project, it is intended to contribute to the achievement of targets established in the Trends and

Guidelines for Water Supply Development in Vietnamese Cities and Industrial Cities up to 2025, which was

compiled by the Government of Vietnam, and the program of public water supply development compiled by the

Government of Hà Nam Province in its master plan and other high-level plans, and to aid the sound and

sustainable development of Hà Nam Province.

In addition, the improvement of water infrastructure will encourage Japanese enterprises to locate in Hà Nam

Province, and effects can also be anticipated in terms of boosting Japanese industry through improving the

business environment and expanding overseas sales for Japanese-affiliated enterprises in the industrial zone and

boosting exports of Japanese water infrastructure.

6) Comparison of the Proposed Project and Other Options

Since groundwater is no longer suitable as a source for public water supply due to the abovementioned

problems of ground settlement and arsenic contamination, Hà Nam Province intends to prohibit use of

groundwater and switch to surface water from now on.

Dai River has the second biggest discharge behind Red River in and around Hà Nam Province; moreover,

because it runs through the center of Phu Ly City, it is currently used as a water source by Phu Ly No. 1 and No.

2 Water Treatment Plants. However, because polluted water flows down from Hanoi causing water quality to

deteriorate during the dry season, like groundwater it is not a suitable source for public water supply.

There are other water sources apart from groundwater and Dai River, however, because these are small in size,

3-16

it would be difficult to secure the necessary intake quantity and it would not be possible to respond to future

projected increase in demand.

Therefore, in order to respond to the future growing demand for water, it will be essential for the Moc Bac

Water Treatment Plant Project to obtain water from Red River, which offers better quantity and quality than

existing water sources and has so far hardly been exploited at all.

(2) Examinations for Project Contents 1) Examination Flow for Technical Aspects

In the water supply utility, first a master plan is formulated, and then the necessary facilities are successively

realized based on this. The master plan is intended to determine the overall scale of facilities and ensure the

completion of facilities that have no overall waste. In the study here, technical examination will be conducted

according to the following flow.

Figure 3-3 Master Plan Formulation Procedure

Note: facilities *1 and *2 are out of the Project scope


Decision of service area and targets Decision of design years

Estimation of service population

Estimation of water usage

Estimation of supply flow

Selection of water source

Decision of scale of facilities 決

Basic design of facilities

Intake facility

Conveyance facility

Treatment facility

Transmission facility*1

Distribution facility*2

Supply flow>Possible intake flow

Supply flow≦Possible intake flow

3-17

2) Preconditions for Forecasting Water Demand

The preconditions for forecasting the water demand are as follows.

• The design years for forecasting demand shall be 2015~2030.

• The base unit for water usage shall be the value determined in the Planning on orientation to supply

treated water in Ha Nam Province by 2030.

• Other water flows will be incrementally added for industrial water supply, university water supply,

and other development water supply.

• The service scope will be according to the Project scope and target service users described in 3-1.

• Table 3-8 and Table 3-9 show the base units and national standards of water usage.

Table 3-8 Water Supply Serving Targets and Base Units of Per Capita Water Usage by Type of City Item Target of serving rate Base Unit of Water Supply (lpcd)

City type Year 2015 2020 2030 2015 2020 2030

Type II 90% 100% 100% 130 150 165

Types III, IV, V 80% 90% 100% 100 100-120 120-130

Development districts 80% 90% 100% 100 100 120

Rural areas 50% 70% 100% 70 70 100


Province by 2030

Table 3-9 Base Units of Water Usage by Purpose of Water Supply

Item Base Unit of Water Usage

2015 2020 2030

Public facilities Domestic water

supply x 10%

Domestic water supply x

10%


10%

Small-scale factories, manual

industry, etc.

Domestic water

supply x 10%


10%


10%

Industrial zones (industrial

water supply)

22m3/ha/day

(40% of total area)

22m3/ha/day

(70% of total area)

22m3/ha/day

(100% of total area)

Landscaping water supply Domestic water

supply x 10%


10%


8%

Non-revenue water Domestic water

supply x 25%


22%


15%

Water treatment plant loss Domestic water supply x 4%


Province by 2030

3-18

3) Population Estimate

a) Population Estimate by Hà Nam Province and the Japanese Team

Hà Nam Province has compiled the Planning on Orientation to Supply Treated Water in Ha Nam Province

by 2030 as the master plan of public water supply development for the entire province. Within this,

population for the period 2015 to 2030 is estimated to assist formulation of the water supply plan for the

entire province. According to this, population is forecast to reach 825,000 in 2015, 864,000 in 2020, and

950,000 in 2030, however, these figures greatly differ from actual population movements over the past

five years.

Accordingly, in order to scrutinize the population estimate conducted by Hà Nam Province, the Study

Team used population data for the past five years obtained from the provincial department of statistics in

order to conduct its own population estimate. The results were very different from those projected by Hà

Nam Province, indicating that the population will rise gently from now on at a rate of approximately

0.19%.

Therefore, upon holding discussions with Hà Nam Province, it was decided to estimate population and

forecast the demand for water based on the Study Team’s rate of increase of 0.19%.

3-19

Figure 3-4 Future Population Estimate for Hà Nam Province Overall and Each Area

*1: Population estimate prepared by Hà Nam Province


2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030Phu Ly 83,022 82,580 82,892 83,448 84,742 85,178 85,615 86,055 86,498 86,942 87,389 87,838 88,290 88,743 89,200 89,658 90,119 90,582 91,047 91,515 91,986 92,459 92,934Duy Tien 127,616 126,430 126,736 127,069 127,743 128,073 128,405 128,737 129,070 129,403 129,738 130,074 130,410 130,747 131,085 131,424 131,764 132,105 132,447 132,789 133,133 133,477 133,822Kim Bang 125,684 126,469 126,416 126,560 127,567 128,042 128,519 128,998 129,478 129,960 130,445 130,930 131,418 131,908 132,399 132,892 133,387 133,884 134,382 134,883 135,385 135,890 136,396Thanh Liem 127,750 128,176 128,258 128,309 129,211 129,579 129,948 130,318 130,689 131,061 131,434 131,808 132,183 132,560 132,937 133,315 133,695 134,076 134,457 134,840 135,224 135,609 135,995Binh Luc 145,469 145,849 145,564 145,430 145,457 145,454 145,451 145,448 145,445 145,442 145,439 145,436 145,433 145,430 145,427 145,424 145,421 145,418 145,415 145,412 145,409 145,406 145,403Ly Nhan 177,245 176,664 176,444 176,044 176,682 176,542 176,401 176,261 176,121 175,981 175,841 175,701 175,561 175,422 175,282 175,143 175,004 174,865 174,726 174,587 174,448 174,309 174,171Total 786,786 786,168 786,310 786,860 791,402 792,868 794,339 795,817 797,301 798,789 800,286 801,787 803,295 804,810 806,330 807,856 809,390 810,930 812,474 814,026 815,585 817,150 818,721Ha Nam 786,900 786,200 786,300 786,900 789,400 794,300 796,338 798,381 800,430 802,483 804,542 806,607 808,676 810,751 812,831 814,917 817,008 819,104 821,206 823,313 825,425 827,543 829,666Ha Nam(*1) 825,000 864,000 950,000

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

popu

latio

n

Population estimates

Phu Ly Duy Tien Kim Bang

Thanh Liem Binh Luc Ly Nhan

Total Ha Nam Ha Nam(*1)

EstimatesPast

3-20

b) Population Estimate in the Target Service Area

As was described above, it has been decided to assume a rate of population increase of 0.19% for

estimating population and forecasting water demand in the Project. Table 3-10 shows the results of

estimating population in the target service area of Moc Bac Water Treatment Plant upon assuming this

rate of population increase.

3-21

Table 3-10 Population Estimate in the Target Service Area


2010 2011 2012 2013 2014 2015 2016-2020 2021-2030

10 Lam Ha 2967 3028 3147 5946 6100 6,112 6,170 6,182 14 Tien Tan 3178 3027 3187 4803 4988 4,997 5,045 5,055

2 Dong Van 6,066 6,160 6,263 6,399 6,431 6,443 6,505 6,629 3 Duy Minh 5,778 5,822 5,874 5,953 5,960 5,971 6,028 6,144 4 Duy Hai 5,039 4,986 4,990 5,027 5,036 5,046 5,094 5,191 5 Bac Thuong 7,659 7,669 7,731 7,799 7,845 7,860 7,935 8,087 6 Moc Bac 5,324 5,296 5,327 5,403 5,406 5,416 5,468 5,573 8 Chau Giang 13,226 13,207 13,322 13,528 13,583 13,609 13,739 14,002

11 Yen Bac 10,549 10,514 10,596 10,765 10,810 10,831 10,934 11,143 13 Hoang Dong 7,554 7,562 7,693 7,780 7,808 7,823 7,897 8,049 14 Tien Noi 6,477 6,448 6,533 6,597 6,615 6,628 6,691 6,819 15 Tien Ngoai 4,124 4,163 4,180 4,192 4,181 4,189 4,229 4,310

3 Nguyen Uy 6,940 6,567 6,606 6,699 6850 6,863 6,928 7,061 4 Le Ho 8,301 8,645 8,688 8,782 8920 8,937 9,022 9,195 5 Dai Cuong 7,391 7,299 7,335 7,428 7511 7,525 7,597 7,743

11 Tuong Linh 6,622 7,608 7,649 7,743 7250 7,264 7,333 7,474 12 Tan Son 10,276 9,844 9,885 9,979 10102 10,121 10,218 10,414 14 Thuy Loi 4,615 4,496 4,533 4,626 4533 4,542 4,585 4,673 15 Ngoc Son 5,846 6,015 6,052 6,146 6153 6,165 6,223 6,343

127,932 128,356 129,591 135,595 136,082 136,341 137,641 140,085

Duy Tien district

Kim Bang district

Total

No. City name Population

Phu Ly City

+0.19%/y

3-22

4) Water Demand Forecast

Based on the above population estimate, the water demand was forecast for two water demand cases, i.e.

Scenario 1 and Scenario 2. In Scenario 1, which was compiled in discussions with Hà Nam Province, only

projects deemed to have high feasibility and validity among the province’s development plants are selected and

incorporated into the projected water demand. In contrast, since it is necessary to ascertain risks in the case of

low demand in order for the SPC to implement the Project as a private sector undertaking, Scenario 2 was

calculated assuming the lowest demand for water in the case where development of Hà Nam Province does not

proceed as expected. The following paragraphs describe the detailed results of calculating water demand

according to purpose of use in both of these scenarios.

a) Domestic water supply

・Scenario 1

Domestic water supply was calculated using the following formula.

Domestic water supply ＝ Forecast population x Public water supply serving rate x

(Base unit of per capita water usage ÷1000) + (Public facilities + small-scale factories,

Manual industry + landscaping water + Non-revenue water + Water treatment plant loss)

For the base unit of water usage, out of the national standard of 100~120 liters shown in Table 3-2, the

largest figure of 120 liters was used. Concerning the amount of water used in public facilities, the formula

shown in Table 3-3 was used. Table 3-11 shows the results of calculations implemented using the above

formula and conditions.

Table 3-11 Results of Calculating Projected Domestic Water Supply (Scenario 1)

Target Service Area Water Demand (m3/day)

2015 2020

Duy Tien County

10 communes as follows: Moc Bac, Chau Giang,Bach Thuong,Duy Hai,Duy

Minh,Dong Van,Hoang Dong,Yen Bac,Tien Ngoai,Tien Noi

9,520 12,723

Phu Ly City

2 communes as follows: Lam Ha,Tien Tan 2,096 2,658

Kim Bang County

7 communes as follows: Tan Son, Nguyen Uy, Le Ho, Ngoc Son, Thuy Loi,

Tuong Linh , Dai Cuong

6,629 8,863


・Scenario 2

In Scenario 2, the same formula as used by Hà Nam Province was used to perform calculation, however,

concerning the base unit of water usage, out of the national standard of 100~120 liters shown, the average

3-23

value of 110 liters was used. Table 3-12 shows the results of calculation.

Table 3-12 Results of Calculating Projected Domestic Water Supply (Scenario 2)

Target Service Area Water Demand (m3/day)

2015 2020

Duy Tien County

10 communes as follows: Moc Bac, Chau Giang,Bach Thuong,Duy Hai,Duy

Minh,Dong Van,Hoang Dong,Yen Bac,Tien Ngoai,Tien Noi

9,426 11,619

Phu Ly City

2 communes as follows: Lam Ha,Tien Tan 2,075 2,648

Kim Bang County

7 communes as follows: Tan Son, Nguyen Uy, Le Ho, Ngoc Son, Thuy Loi,

Tuong Linh , Dai Cuong

6,564 8,094


As a result of the calculation, there is not a great difference between Scenario 1 and Scenario 2 in terms of

domestic water demand, so the calculation results for this are deemed to be appropriate in both scenarios.

b) Industrial Water Supply

・Scenario 1

Concerning Dong Van I and Dong Van II Industrial Zones, Hà Nam Province has conducted a hearing

survey of existing resident enterprises regarding the water supply that is required to operate factories.

Since the water quantity derived from this survey is thought to be valid as an indicator of the future water

demand, this value has been adopted as the water demand for Dong Van I and Dong Van II Industrial

Zones.

As for Hoa Mac Industrial Zone, where no such hearing survey of water demand has been conducted, and

Dong Van III and Kim Bang Industrial Zones, which are still being developed, the water demand was

forecast using the following formula.

Industrial water supply ＝ Total site area x Base unit of factory water supply x Occupancy rate

As the base unit of industrial water supply needed in the above formula, the national standard of 22

m3/ha/day was used. Concerning the occupancy rate, the value given in the province’s master plan was

adopted.

Table 3-13 shows the results of hearing survey and calculation assuming the above formula and

conditions.

3-24

Table 3-13 Results of Calculating Projected Industrial Water Supply (Scenario 1)

Target Industrial Zone Water Demand (m3/day)

2015 2020

Existing Dong Van I Industrial Zone 2,532 4,746

Existing Dong Van II Industrial Zone 2,958 6,965

New Dong Van III Industrial Zone 990 5,250

Existing Hoa Mac Industrial Zone 590 3,537

New Kim Bang Industrial Zone - 1,650


・Scenario 2

As was mentioned above, concerning Dong Van I and Dong Van II Industrial Zones, the water quantity

derived from the hearing survey of resident enterprises conducted by Hà Nam Province was adopted as

the water demand.

As for Hoa Mac, Dong Van III and Kim Bang Industrial Zones, since there are many uncertain elements

regarding how many enterprises will locate there, the water demand in 2015 was calculated assuming the

same formula as in Scenario 1, while the water demand in 2020 was calculated as almost the same value

assuming that there will be no sudden increase in demand. The calculation results are as shown in Table

3-14.

Table 3-14 Results of Calculating Projected Industrial Water Supply (Scenario 2)

Target Industrial Zone Water Demand (m3/day)

2015 2020

Existing Dong Van I Industrial Zone 2,532 4,746

Existing Dong Van II Industrial Zone 2,844 6,965

New Dong Van III Industrial Zone 990 990

Existing Hoa Mac Industrial Zone 1,572 1,572

New Kim Bang Industrial Zone - 0


c) Development Water Supply for Universities

・Scenario 1

Concerning the water demand arising in line with the relocation of universities to the Nam Cao university

attraction area, the forecast values calculated by the Hà Nam Province department for attracting

universities according to the number of students and purpose of use were adopted.

・Scenario 2

It was agreed to use the values that were scrutinized by Hà Nam Province and the department for

3-25

attracting universities, and, as was also the case with industrial water supply, it was assumed that demand

would not rise in 2020 in consideration of the possibility of delays in development. Table 3-15 shows the

calculation results for both scenarios.

Table 3-15 Results of Calculating Development Water Supply for Universities

Area/City Water Demand (m3/day)

Scenario 1 Scenario 2

Nam Cao University Area 2015 2020 2015 2020

1,009 4,924 1,009 1,009


d) Migrant Population from Surrounding Areas in Line with Development of Dong Van Industrial Zone

・Scenario 1

The same formula as used for domestic water supply was used to calculate the migrant population to Hà

Nam Province and water demand in line with the development of industrial zones and attraction of

universities such as described above. Hà Nam Province forecasts that approximately 90,000 people will

migrate in line with development, and roughly 10% of this figure has already moved to the province. The

provincial government estimates that approximately 40% of the total expected migrant population will

have moved to the province by 2020, and it has estimated water demand based on this assumption. Table

3-16 shows the results of calculation.

・Scenario 2

As was the case in Scenario 1, the same formula as used for domestic water supply was adopted, however,

since there are many uncertain elements regarding how many people will migrate in line with

development, it was assumed that the water demand will not change much between 2015 and 2020. Table

3-16 shows the results of calculation.

Table 3-16 Results of Calculating Migrants to Surrounding Areas in Line with Development of Don Van

Water Demand (m3/day)

Scenario 1 Scenario 2

2015 2020 2015 2020

1,648 6,592 1,622 1,840


e) Other Water Supply

・Scenario 1

Concerning other items, calculation was performed in consideration of small factories, shops, national

sports stadium, and unregistered resident population and so forth. Table 3-17 shows the results of

calculation.

3-26

Table 3-17 Results of Calculating Other Water Supply (Scenario 1)


Item 2015 2020

Small factories (Cau Giat, Hoang Dong,Tien Tan) 458 608

National sports stadium 550 550

Small enterprises (shops, etc.) 178 231

Visitors to industrial zones, rented property 1196 1,674


・Scenario 2

The same calculation as in Scenario 1 was conducted. As was also the case with industrial water supply, it

was assumed that development will not progress much and that the water demand in line with

development in 2020 will not change much between 2015 and 2020. Table 3-18 shows the results of

calculation.

Table 3-18 Calculation Results on Other Water Supply (Scenario 2)


Item 2015 2020

Small factories (Cau Giat, Hoang Dong,Tien Tan) 458 458

National sports stadium 550 550

Small enterprises (shops, etc.) 178 178

Visitors to industrial zones, rented property 1,332 1,512


5) Summary of Design Water Supply

Summing up the above findings, Table 3-19 indicates the water demand forecast for the entire Moc Bac target

area.

3-27

Table 3-19 Water Demand Forecast for Moc Bac Target Area


No. City and Area name2014 2015 2020 2015 2020 2015 2020

Population 136,341 137,641 136,341 137,641Sum 30,353 60,972 31,151 42,181

1Duy Tien County10 communes as follows: Moc Bac, Chau Giang,Bach Thuong,DuyHai,Duy Minh,Dong Van,Hoang Dong,Yen Bac,Tien Ngoai,Tien Noi

9,520 12,723 9,426 11,619 For water loss and leakage provision25%→22%

For water loss and leakage provision22%→20%120 l/day →110 l/day

2 Phu Ly City2 communes as follows: Lam Ha,Tien Tan

2,096 2,658 2,075 2,648

3Kim Bang County7 communes as follows: Tan Son, Nguyen Uy, Le Ho, Ngoc Son,Thuy Loi, Tuong Linh , Dai Cuong

6,629 8,863 6,564 8,094 120 l/day →110 l/day

Domestic use 18,245 24,244 18,065 22,3614 Nam Cao university area 1,009 4,924 1,009 1,009

Univ. use 1,009 4,924 1,009 1,0095 Existing Dong Van I Industrial Zone 2,110 2,532 4,746 2,532 4,746 2,110 x 1.26 Existing Dong Van II Industrial Zone 2,275 2,958 6,965 2,844 6,965 2,275 x 1.257 New Dong Van III Industrial Zone 990 5,250 990 990 300ha x 22m3/ha x 15% 300ha x 22m3/ha x 15%8 Existing Hoa Mac Industrial Zone 590 3,537 1,572 1,572 131ha x 40m3/ha x 30% 131ha x 40m3/ha x 30%11 New Kim Bang Industrial Zone - 1,650 - 0 300ha x 22m3/ha x 0% 300ha x 22m3/ha x 0%

Iz use 7,069 22,148 7,938 14,273

9 Population migrating from nearby cities in line with growth of industrialzones and development plans

1648 6,592 1,622 1,840 40% →10%

10 Small factories in the water supply area (Cau Giat, Hoang Dong,Tien Tan ) 458 608 458 45812 National sports stadium 550 550 550 550

13 Small enterprises (shops, etc.) 178 231 178 178

14 Industrial zone workers who haven’t registered as residents 1196 1,674 1,332 1,512 (130 l/day) →(150 l/day)

Other use 4,030 9,656 4,140 4,538

Senario1 Senario2 Difference

3-28

6) Raw water Quality

a) Outline of Source Water

The water source of Red River (Hong River) originates in Yunnan Province in China before entering

Vietnam and flowing through eight provinces and finally arriving at the Gulf of Tonkin. The river runs for

1,149 km and its catchment basin covers an area of 143,700 km2. Hydrological records show that the

mean flow at the river estuary is 2,440 m3/s and the minimum flow is 900 m3/s. Regarding the water

quality at the intake point of the new water treatment plant, BOD, COD, nutrient salts, heavy metals and

other organic matters have been increasing slightly since 2008, due to the effects of domestic wastewater

and industrial wastewater from Hanoi and other upstream areas of Hà Nam Province. The water quality

surveys were implemented at the locations shown in Figure 3-5 and Figure 3-6 in September, October and

November.

Figure 3-5 Water Sampling Locations (1st)

Source: The Study Team

Figure 3-6 Water Sampling Locations (2nd, 3rd)

Source: The Study Team

3-29

b) Survey Method

The survey was divided into three stages and conducted in such a way that results that would contribute to

identifying the conditions for selecting the method for treating the target substances

Table 3-20 Survey Objectives Sampling Date/Analysis

Date Objectives of Water Quality Analysis Sampling points

(Figure 3-5, Figure 3-6) 1st

September 20, 22 / 23-28

Analysis of raw water quality of main parameters in the Vietnamese standards for the drinking water and surface water, and substances that are difficult to treat

Sp1 Sp2 Sp3 Sp4

2nd October 27 / October

28-31

Confirmation of sedimentation

efficiency of turbidity and dissolved

substances in raw water by chemical

coagulation based on jar-test

No.1 No,2

3rd November 27/

November 27~December 7

Confirmation of fluctuation in suspended solids, nutrient salts and organic matter concentration in raw water for 12 hours

No.1

Source: Study team

c) Water Quality Analysis

This area has a rainy season and a dry season, and the study was implemented during the period of

transition from the rainy season to the dry season

i. Results of 1st water sampling analysis

Rainy season water samples were taken from the four locations shown in Figure 3-5. In order to confirm

the clarity of the river water, the pH, turbidity, electrical conductance, DO, BOD5, CODCr, CODMn, and

nutrient salts were investigated.

Table3-21 Results of the First Water Sampling Survey (in September)

Source: Study team

As a feature of the rainy season, the results showed that turbidity is relatively high at between 80 (fine

day) ~290 (rainy day). DO, BOD5, and CODCr all exceed the values given in the surface water standard.

pH Turbidity DO BOD5 CODCR NH4+ -N NO3- -N NO2- -N

- NTU mg/L mg/L mg/L mg/L mg/L mg/LDrinkwater

Standard6.5-8.5 2 - - - 2.3

(3 as N+) 11.29(50)

0.91(3)

SurfafeWater

Standard6.0-8.5 - >5 6 15 0.2 5 0.02

8.41 283.7 4.67 8.00 45.50 2.00 3.00 0.10 7.97 130.3 4.29 6.13 24.39 1.79 1.24 0.07 7.74 79.5 4.07 4.00 11.90 1.61 0.81 0.05 Min

Unite

Parameter

MaxumLimit of

MaxAverage

3-30

These values are high when compared to river water quality in Japan, and it is thought that high-level

treatment using ozone or activated carbon, etc. would be required in order to use such water as a source

for public water supply.

ii. Results of 2nd and 3rd water sampling survey

In the second survey, the reduction rates of turbidity and organic matter concentration comprising BOD5,

CODCr, etc. were confirmed by means of chemical precipitation (jar-test). Also, to assist selection of the

water treatment method, the accuracy of raw water quality was enhanced through adding analysis of all

substances from the surface water standard and organic solvents, etc. from the potable water standard.

The results of the survey (Table 3-22) showed that water quality values are slightly lower than in the

rainy season and that organic matter indicators, BOD5, and CODCr values are too high for public water

supply, indicating that steps must be examined in order to reduce these.

Table3-22 Results of the 2nd Survey on Main Water Quality Parameters (in October)

Source: Study team

The results of the jar-test revealed a dramatic effect of appropriate Pac concentration on sedimentation

and removal of turbidity, color, and suspended solids in raw water. At the same time, the results

demonstrated that effects can be expected in terms of removing iron, manganese, CODCr and ammonia

nitrogen.

Table 3-23 Reduction of Turbidity, Color and Suspended Solids by Jar- Test

Sample No． Raw Water 5 8 9

Concentration of PAC (mg/L) 60 65 70

1 pH 7.83 7.25 7.23 7.2

2 Color 40 10 10 10

3 Turbidity (NTU) 28.7 0.21 0.25 0.21

No. Parameter Unit

Location of SampleQCVN

08:2008/BTNMT

QCVN01:2009/BYT

No.1 – At thecenter of

river

No.2 - Nearthe riverside

01 pH - 6.0-8.5 6.5-8.5 7.83 7.6302 DO . mg/L ≥ 5 - 4.8 4.903 TSS mg/L 30 - 45.1 54.4

04 CODcr mg/L 15 - 14.3 24

05 BOD5 (20°C) mg/L 6 - 4.5 5.1

06 NH+4as N mg/L 0.2 2.3 0.24 0.86

09 Nitrite (N-NO-2 ) mg/L 0.02 0.91(3) 0.014 0.015

10 Nitrate (N-NO-3) mg/L 5 11.29(50) 0.84 0.82

24 Oils & grease mg/L 0.02 - 1.42 0.4443 Color (*) TCU - 15 40 35

44 Taste and odour (*) - - No strangetaste & odour

No strangetaste &

No strangetaste &

45 Turbidity (*) NTU - 2 28.7 29.2

Reference standard Result

3-31

4 TSS (mg/L) 45.1 1.9 1.5 1.8

Primary Judgment O ∆ ∆

Size of flocculation - Big Medium Big

Velocity of Sedimentation - Quick Quick Quick

Source: Study team

Table 3-24 Removal Rate of Water Quality Parameters followed by Jar-test

Sample No． Raw water

5 8 9 Decrease ratio by Jar-test on Sample

No.8 (%) Concentration of PAC (mg/L) 60 65 70 Parameter mg/l Value of after Jar-Test

5 Fe 0.031 0.024 0.023 0.025 25.8

6 Mn 0.023 0.005 <0.004 0.007 82.6

7 Permanganate 0.928 0.37 0.37 0.85 60.1

8 CODMn 0.72 0.72 1.68

9 CODCr 14.3 6.8 2.3 4.4 52.4~83.9

10 NH+4 as N 0.24 <0.003 <0.003 <0.003 ˃98.8

12 TOC - －－－

Source: Study team

The third water quality survey aimed to confirm changes in concentrations of nutrient salts and organic

matter based on changes in raw water quality over time. The results (Table 3-25) indicated the

following:

- In spite of it being the dry season, concentrations of NH4-N, NO2-N, and NO3-N were all under the

standard values for drinking water.

- CODCr (mg/L) on average was 22.3.1mg/L, exceeding the surface water standard of 15mg/L.

- TOC (mg/L) was 6.4≦TOC≦8.8, and 7.7mg/L on average.

- CODCr : TOC ＝ 2.2~4.0 : 1, indicating a standard ratio (3 on average) for river water

(environmental water).

Table 3-25 Fluctuation for 12 hrs in Water Quality of Red River at the Planned Intake Point

for Moc Bac Water Treatment Plant (Dry Season)

Source: Study team

Parameter Unit 7:15 9:05 11:10 13:10 15:05 16:55

ｐＨ (-) 7.74 7.81 7.81 7.79 7.78 7.79 7.7 7.8 7.8

DO (mg/L) 4.6 4.7 4.7 4.9 4.9 4.8 4.6 4.8 4.9

NH4+-N (mg/L) 0.74 0.85 0.54 0.65 0.53 0.32 0.32 0.605 0.85

NO2--N (mg/L) <0.001 <0.001 <0.001 <0.001 <0.001 <0.001 <0.001 <0.001 <0.001

NO3--N (mg/L) 0.52 0.44 0.23 0.35 0.47 0.24 0.23 0.38 0.52

CODcr (mg/L) 28.0 14.0 24.0 16.0 19.0 33.0 14.0 22.3 33.0

TOC (mg/L) 8.8 6.4 8.2 7.2 7.5 8.2 6.4 7.7 8.8

CODcr /TOC (mg/L) 3.2 2.2 2.9 2.2 2.5 4.0 2.2 2.9 3.7

Max

27th November 2014

Min Avg

3-32

d) Summary of the Water Quality Survey Results

i. BOD and CODCr treatability

In all the surveys, values of BOD and CODCr exceeded the surface water standard (environmental

standard) values. Results of the second jar-test indicated that around 50% of COD components arising

from suspended materials can be removed by chemical precipitation.

Focusing on the correlation between CODcr and TOC, this complies with the empirical theoretical

formula of TOC ≒ 1/3･CODcr. Table 3-27 shows the results of estimating the raw water TOC

concentration from the raw water CODCr concentration in the first survey indicated in Table 3-26.

Table 3-26 CODcr Concentration at Each Location

Source: Study team

Table 3-27 Estimated TOC based on CODcr of River water

Source: Study team

The estimated TOC concentration was between 6.8mg/L~9.2mg/L on average, reaching a maximum of

between 10.1mg/L~15.2mg/L.

The causative substances of TOC are color, agricultural chemicals, and organic chemicals, and these are

dissolved components of THM precursors and volatile substances, etc. The effective process for

removing such substances consists of chemical precipitation, rapid filtration, and activated carbon

point.1 point.2 point.3 point.4

CODcr CODcr CODcr CODcr

(mg/L) (mg/L) (mg/L) (mg/L)

9/20 AM10 27.1 32.0 33.6 20.1

9/20 AM11 30.4 19.8 31.9 16.3

9/21 AM10 18.5 12.8 25.3 30.7

9/21 AM11 11.9 45.5 19.3 15.0

Min 11.9 12.8 19.3 15.0

Ave 22.0 27.5 27.5 20.5

Max 30.4 45.5 33.6 30.7


EstimatedTOC

EstimatedTOC

EstimatedTOC

EstimatedTOC


9/20 AM10 9.0 10.7 11.2 6.7

9/20 AM11 10.1 6.6 10.6 5.4

9/21 AM10 6.2 4.3 8.4 10.2

9/21 AM11 4.0 15.2 6.4 5.0

Min 4.0 4.3 6.4 5.0

Ave 7.3 9.2 9.2 6.8

Max 10.1 15.2 11.2 10.2

3-33

filtration. On surveying the applicable scope of this process, provided that the TOC level is at this mean

level, it should be possible to reduce COD in a water treatment process that combines granular activated

carbon.

ii. Treatment of Ammonium Nitrogen, Nitrite Nitrogen and Nitrate Nitrogen

Concentrations of these three substances were less than the standard for potable water, however, they are

causes of odor and disinfectant byproducts, etc. Table 3-28 shows concentrations of ammonia nitrogen

at each location.

Table 3-28 NH4-N Concentration at Each Location

Source: Study team

The average concentration was between 1.7mg/L~1.9mg/L, and the maximum level was between

1.8mg/l~2.0mg/L. In order to reduce the ammonium nitrogen concentration, it is necessary to apply the

chlorine breakpoint method.

Table 3-29 shows the total values of nitrite nitrogen and nitrate nitrogen at each location. The average

concentration was between 1.1mg/L~1.8mg/L, and the maximum level was between 1.2mg/l~3.0mg/L.

It is thought that these concentrations can be treated by means of a process consisting of chemical

precipitation, sand filtration, and granular activated carbon.

Table 3-29 Concentration of NO2-N and NO3 at Each Location

Source: Study team

iii. Recommended Treatment Method for Moc Bac Water Treatment Plant

The recommended water treatment process consists of 1: Chemical precipitation, rapid filtration

combined with pre-chlorine, intermediate-chlorine, and post-chlorine injection for treating algae, and 2:


NH4-N NH4-N NH4-N NH4-N


9/20 AM10 1.7 1.8 1.8 1.8

9/20 AM11 1.8 1.8 1.8 1.7

9/21 AM10 1.9 1.9 1.7 1.8

9/21 AM11 1.8 2.0 1.6 1.7

Min 1.7 1.8 1.6 1.7

Ave 1.8 1.9 1.7 1.8

Max 1.9 2.0 1.8 1.8

　


NO2-N+NO3-N NO2-N+NO3-N NO2-N+NO3-N NO2-N+NO3-N


9/20 AM10 1.7 1.1 1.0 1.3

9/20 AM11 1.3 1.7 0.9 0.9

9/21 AM10 1.1 1.1 1.2 1.2

9/21 AM11 3.0 0.9 1.2 1.1

Min 1.1 0.9 0.9 0.9

Ave 1.8 1.2 1.1 1.1

Max 3.0 1.7 1.2 1.3

　各点濃度

3-34

granular activated carbon filtration pond for adsorbing dissolved organic substances.

Treated water quality resulting from this process basically guarantees the Vietnam standard for potable

water (QCVN 01: 2009/BYT). However, in the event where water quality in red River deteriorates to

the point where this water treatment process cannot realize sufficient purification (levels higher than the

treatment performance shown in the reference materials in the appendices), additional steps will need to

be taken.

iv. Future Issues

- Survey of records of past river water contamination incidents in Red River

- Survey of annual water quality fluctuations in Red River. In particular, seasonal fluctuations in pH,

turbidity, TSS, organic matter (CODcr), and nitrogen (NH4-N, NO2- N, NO3-N) need to be confirmed.

- In order to set an appropriate water treatment flow and design a compact water treatment plant, it is

necessary to confirm turbidity and TSS, divide organic matter and nitrogen into suspended matter and

dissolved matter, and confirm fluctuations in the dissolved substances.

- Following intake, to ensure efficient operation of the activated carbon filtration pond, an appropriate

method for removing suspended materials (fine particles of clay minerals, etc.) should be examined.

- If the breakpoint method is used to remove ammonium nitrogen, since the concentration of chloric acid

(inorganic substance) increases following treatment, it is necessary to examine the appropriate chlorine

injection rate (chemicals management) with respect to the ammonium nitrogen concentration.

e) References

Reference Materials is actual facility regard to applying granular carbon Filter for soluble organic matter

in Japanese Water Treatment Plant

i. Raw water TOC concentration and performance when adopting the chemical sedimentation, rapid

filtration + granular activated carbon (GAC) filtration method

ii. Raw water NH4－N concentration and performance when adopting the chemical sedimentation,

rapid filtration + granular activated carbon (GAC) filtration method

3-35

iii. Raw water NO2 －N+NO3－ N concentration and performance when adopting the chemical

sedimentation, rapid filtration + Granular carbon filtration (GAC) method.

7) Conditions around the Planned Water Treatment Plant and Intake Facility Sites

The planned site of the water treatment plant is an area of 5.6 hectares located in Moc Bac Commune in the

northeast of Hà Nam Province. This site has been selected because it is less than 1 km from the water source of

Red River water and the ground altitude is relatively high compared to the service area and so forth.

Moreover, because this area is not currently inhabited and there is not likely to be any migration there from now

on, another factor behind its selection was that it is easy to acquire the land.

In the study, a boring survey comprising the following contents was implemented in order to grasp soil

conditions around the planned water treatment plant and intake facility.

3-36

Table 3-30 Soil Quality Survey Quantities (Inside the Water Treatment Plant Site)

Boring Standard

Penetration Test

Laboratory Tests (particle size, water content, density, etc.)

Altitude (m) Coordinates (X,Y)

No.1 50m 50 times 18 samples 2.03 605145.051 2289789.221

No.2 50m 50 times 17 samples 2.92 604824.5904, 2289164.9532

No.3 50m 50 times 16 samples 2.44 604868.658, 2288831.099

計 100 times 33 samples


Boring was implemented at one point in the planned intake facility site and two points in the planned water

treatment plant site. Since both sites are situated close to Red River, the ground in both sites predominantly

consists of soft cohesive soil in alluvial layers with the following conditions.

Bor No.3

Water treatment plant site 5.6ha

Bor No.2

Bor No.1

3-37

Table 3-31 Outline of Soil Quality at Intake Points Intake Point (Bor No.1)

Groundwater level －1.0m from the ground surface Base ground surface Approximately -40~50m from the ground surface Surface composition No. 1 layer (clay mixed with

sand) Layer thickness 10.0m N value 5~9

No. 2 layer (clay mixed with sand)

Layer thickness 10.5m N value 10~19

No. 3 layer (cohesive soil) Layer thickness 3.0m N value 16



No. 5 layer (cohesive soil) Layer thickness 10.7m N value 5~9


No. 7 layer (sandy soil) N value 31~40

On the water treatment plant grounds (Bor No2,No.3) Groundwater level

-1.5m from the ground surface

Base ground surface

Approximately -40~50m from the ground surface

Bor No.2 Bor No.3 Surface composition

No. 1 layer (clay) － Layer thickness 0.3m N value 4


Layer thickness 1.2m N value 3

Layer thickness 1.2m N value 4

No. 3 layer (organic clay) Layer thickness 7.1m N value 2~4


No. 4 layer (sandy soil) Layer thickness 3.5m N value 2~3

－

No. 5 layer (organic clay) Layer thickness 14.4m N value 2~5

－

No. 5A layer (organic clay) Layer thickness 1.5m N value 2~4

－





－




No. 9 layer (clay mixed with gravel)



No. 10 layer (cohesive soil) － Layer thickness 6.0m N value 44~50


－


8) Examination of Intake Facility

a) Water Source Assessment

Selection of the water supply source is the linchpin of the basic plan. The design quantity of good quality

raw water must be acquired currently and in the future. Water quality is an important factor for

3-38

determining the water treatment method, and position of the water source greatly affects construction

costs and power costs. The basic conditions required of the water source are as follows:

• The design intake quantity can be secured even during the peak drought season.

• Water can be economically treated to a good level of quality, and there is no risk of contamination

in the future.

• The site is situated close to the demand area and water can be conveyed at low cost.

Hà Nam Province plans for Moc Bac Water Treatment Plant to utilize surface water from Red River. The

following table shows a comparison with other existing water sources in Hà Nam Province.

Table 3-32 Existing Water Sources and Future Planned Water Sources in Hà Nam Province

Dai River Groundwater ①Area

around Dong Van Industrial Zone

Groundwater ②Area around Red River Red River

Outline Water source for Phu Ly No. 1 and No. 2 Water Treatment Plants. This is a small river measuring 200 m across.

Water source for Dong Van Industrial Zone No. 1 and No. 2 Water Treatment Plants

Water source for Moc Nam Water Treatment Plant

Water source for Moc Bac Water Treatment Plant planned by Hà Nam Province. This is a large river measuring 1,000 m across.

Water quantity

The design intake quantity is currently 25,000 m3/d.

The design intake quantity of existing facilities is a total of 5,000 m3/d. Water is obtained from numerous wells.

The design intake quantity of existing facilities is a total of 3,000 m3/d. Water is obtained from numerous wells.

The design intake quantity is planned as 120,000 m3/d in the future.

Water quality, etc.

Hanoi is situated upstream, and organic indicators are high. According to existing water treatment plant inspections, consumption of potassium permanganate does not meet the standard value, so activated carbon has been introduced in an effort to seek improvement.

There is high ammonia content that cannot be removed by conventional water treatment. At the existing water treatment plant, it is removed through stripping and pH adjustment by slaked lime. Some factories inside the industrial zone obtain water from private water sources.

Because this is groundwater, turbidity is lower than in Red River. The raw water quality can be treated via conventional treatment methods.

Hanoi is situated upstream, and organic indicators are high. However, water quality was found to be better than in Dai River in the inspection here. Turbidity during the rainy season is roughly 300.

3-39

Assessment There are plans to conduct expansion in line with increase in water demand in Phu Ly. However, distance is too far and the quantity of water is not enough for supplying to Dong Van industrial zone.

Issues exist in terms of water quality and quantity, and it is planned to switch to surface water as a measure for addressing ground settlement in the future. The current supply flow is around 2,500 m3/d.

The current supply flow is around 500 m3/d, indicating room to spare in terms of capacity. The source is groundwater, however, quality is similar to the surface water from Red River. This source is not affected much by flooding, however, because it is groundwater, it is not suitable for large quantity intake.

This is the water source for Moc Bac Water Treatment Plant, which will supply water to Duy Tien County and Kim Bang County in the north of Hà Nam Province. Abundant water intake can be secured from Red River.


The design maximum daily intake in the Project is planned as follows upon considering a 10% water

treatment loss with respect to the design daily maximum water supply quantity.

Phase 1: Planned daily maximum intake quantity 66,000 m3/d＝Planned daily maximum water supply

quantity 60,000 m3/d x 1.1

Phase 2: Planned daily maximum intake quantity 132,000 m3/d＝Planned daily maximum water

supply quantity 120,000 m3/d x 1.1

General water intake divisions with respect to the above design water quantity are as follows. The intake

quantity looking ahead to Phase 2 corresponds to the large quantity intake, so in order to respond to future

expansion in water demand in the Moc Bac Water Treatment Plant Project, it will be essential to acquire

water from Red River, which offers better water quality in greater quantities than existing sources and has

so far hardly been exploited.

• Large quantity intake …100,000 m3/d or higher

• Medium quantity intake …10,000~99,000 m3/d

• Small quantity intake …~10,000 m3/d

The features of Red River as a water source can be summarized as follows, indicating that it basically

satisfies the basic requirements.

• It is a river that permits large quantity intake.

• Water quality is better than water in Dai River.

• Water quality is better than that in water sources used for Dong Van Industrial Zone.

• It is close to the demand areas (water supply districts) in the north of Hà Nam Province.

3-40

b) Water Intake Method

Water from Red River can be acquired as surface water or underground water. According to the results of

geological survey implemented around Red River, since there is a fine sand layer situated to a depth of 20

meters from the surface, it should be possible to obtain underground water providing that conditions are

good. However, since intake of underground water is generally suited to small quantity use and it would

be necessary to install a lot of screen pipes around the river area in order to achieve large quantity intake,

this approach will be omitted in this examination.

Accordingly, in view of the scale of the design maximum daily intake quantity, surface water from Red

River will be targeted for intake.

The following items should be carefully considered when acquiring surface water.

• The position and type of intake should be selected so that there is little risk of difficulties caused

by flooding, scouring, driftwood, or silt and interference due to topographical and geological

conditions.

• When installing weirs and sluice gates, etc., the structures must be safe with respect to the action

of flowing water during flooding.

• A screen is fitted to the intake section where necessary.

• Equipment for removing sand from raw water is installed where necessary.

In consideration of the above points, Table 3-33 shows a comparison of river surface water intake

methods.

3-41

Table 3-33 Comparison of Intake Facilities (1/2)


Intake Weir Intake Tower Intake Gate Intake Conduit Schematic view

Image

Outline Stable intake is made possible by raising the river water to secure the design intake level. The weir, intake mouth, and grit chamber function as an integrated structure.

This enables stable intake when the river water level is subject to large changes. It needs to be installed in places where water level is 2 m or deeper. The intake mouth can be selected from multiple options.

In this intake mouth facility, the screen, gate, and grit chamber, etc. function as an integrated structure. Stable intake is possible if the flow regime, riverbed, water level, etc. are stable.

The intake mouth is installed on the riverbank at a low water level, and the intake pipe conveys water inland. The pipe, screen, gate, and grit chamber, etc. function as an integrated structure.

Impact on river section

Because the structure is constructed inside the river, the river cross section is obstructed.

△

Because the structure is constructed inside the river, the river cross section is obstructed.

△

Because the structure is constructed at a point where water is drawn to from the river, the river cross section is not obstructed.

○

Because the intake mouth and intake pipe are installed at the low water level of the river section, the river cross section is not obstructed.

○ Securing of intake quantity; steps during the dry season

Large quantity water intake is possible. A moving weir can be used to control water and remove grit.

○

Large quantity water intake is possible. Intake can also be conducted in line with fluctuations in water level. However, there is risk that an intake mouth at a low water level will become submerged.

△

Large quantity water intake is possible if the water level is stable. Intake can also be conducted in line with fluctuations in water level. Even if the water draw-in section becomes silted, dredging is easy.

○

This is used for medium quantity water intake. Water can be obtained even when the river water level is low. However, there is risk of the intake mouth becoming submerged.

△

3-42

Table 3-34 Comparison of Intake Facilities (2/2) Intake Weir Intake Tower Intake Gate Intake Conduit Impact during flooding

Because the weir is movable, flooding is not accentuated. There is risk of the structure being damaged by driftwood, etc.

○

Because the tower is limited, flooding is not accentuated. There is risk of the structure being damaged by driftwood, etc.

○

Because there are no structures on the river section, flooding is not accentuated.

○

Because there are no structures on the river section, flooding is not accentuated.

○

Impact on shipping

The impact on shipping is large. Even if a shipping passage gate is installed, movement is still restricted.

x

There is some impact on shipping, but this is limited.

△

There is no impact on shipping.

○

There is no impact on shipping. However, it is necessary to ensure that the intake mouth and pipe are installed below the riverbed.

○ Impact on environment

The impact is large compared to the other options.

△

The impact is small.

○


○


○ Ease of maintenance

The weir needs to undergo periodic maintenance and upgrading. Maintenance costs are high. Grit can be removed by means of a scour gate.

△

The intake mouth gate of the intake tower needs to undergo periodic maintenance and upgrading. Periodic dredging of the bottom is necessary.

△

It is necessary to dredge silt from the draw-in section, however, because this is open, maintenance is easier than in the other options.

○

It is necessary to take steps to prevent blockage of the low intake mouth, and to conduct dredging.

△

Economy (order in terms of construction cost)

1 x

2 △

3

○

4 ◎

Other This is the only method that addresses back flows of sea water.

Site suitability

The river is wide, and massive construction costs are incurred.

x

This is conditional on there being no impact on shipping, etc.

△

This method enables water intake without obstructing the river section.

○

This method enables water intake without obstructing the river section.

△ Assessment x △ ○ ○


Because the intake weir and intake tower incur high construction costs and impact the river cross section,

they were omitted from the study. The intake gate and intake pipe obtain water from the side of the river,

and the ideal structure will be adopted upon considering the shape of the river section.

c) Water Intake Point

In selecting the surface water intake position on Red River, it is necessary to consider the following items:

3-43

- The riverbed is stable and inflow of sediment is kept to a minimum.

- The flow center of the river is stable.

- Water intake is possible even when the water level falls and the water’s edge retreats at times of

drought.

- There are no pollution sources such as factories, waste-related facilities, and sewage treatment

facilities in the upper reaches.

As a result of conducting field survey in consideration of these points, three candidate locations were

selected as shown in Figure 3-7.

Also, Figures 3-8, 3-9 and 3-10 show the cross sections of Site A, Site B, and Site C. The cross sections

indicate the intake structures.

3-44

Figure 3-7 Candidate Intake Sites


3-45

Figure 3-8 Candidate Intake Site Cross Section (Site A)

Figure 3-9 Candidate Intake Site Cross Section (Site B)

① Intake gate ② Grit chamber ③ Pump well ④ Conveyance pump station ⑤ Generator room


3-46

Figure 3-10 Candidate Intake Site Cross Section (Site C)


3-47

Table 3-35 shows the results of comparing the intake points. As can be gathered from the comparison

table, Site A is selected as the water intake point in this study.

Table 3-35 Comparison of Water Intake Points Site A Site B Site C Outline Out of the three points, the

river width is smallest and the riverbanks stand perpendicular here. It is situated on the boundary between Hanoi City and Hà Nam Province.

This is an intermediate point between Site A and Site C.

This is the closest point to Moc Bac Water Treatment Plant, and the river is widest here. There is a sand bar in the river here.

River flow regime and center of flow

Out of the three points, the river flow regime and center of flow are most stable here.

○

This point is situated upstream of a sand bar, and flow regime is more stable than at Site C.

△

Because the river bends here, a sand bar is formed and the center of flow is distant from the right bank of the intake point.

x Impact of sediment

There is no sand bar, and out of the three points, accumulation of sediment in the water flow part is smallest. Sand is extracted from the surrounding area.

○

There is far less sedimentation here than at Site C. Sand is extracted from the surrounding area. The riverbank is sandy and eroded.

△

Sediment tends to accumulate around the sand bar here.

x

Fluctuations in water level and water’s edge

The water’s edge doesn’t change much between the dry season and rainy season. The water level fluctuates by roughly 2 m. (Local hearings)

○

Fluctuations in water level and water’s edge are smaller than at Site C, however, this point is more prone to changes in water level between the dry season and rainy season.

△

The shallow section is broad. During the dry season, the water’s edge recedes to the sand bar that is formed in the rainy season.

x

Access and local area

Currently the intake point can be reached by a road that leads to a brick factory. There is a brick factory but the land belongs to the provincial government.

△

Currently the intake point can be reached by a road that leads to a brick factory. There is a brick factory but the land belongs to the provincial government.

△

There is a road that provides access to the intake point. This is used by fishermen and waste disposers, etc.

○

Conveyance pipe Out of the three points, this is located furthest away.

x

This is an intermediate point between Site A and Site C.

△

The conveyance pipe distance is shortest.

○ Pollution source, etc.

There is a sand borrow pit upstream of the point, but this is not a source of pollution.

○

There is a brick factory upstream of the intake point.

△

There is a waste dump, where wastes are buried along the riverbank.

x Others The boundary with Hanoi City

needs to be confirmed. －－

General assessment

Since this point has topographical advantage and there are no pollution sources, this point is the optimum option.

○

This could be planned as an alternative to Site A.

△

Considering the sand bar and waste landfill, this site is unsuitable as an intake point.

x


3-48

9) Water Treatment Facilities

a) Basic Policy for Technical Examination of Water Treatment Plant Facilities

In the technical examination for Moc Bac Water Treatment Plant, based on the major premise of realizing

a stable supply of good quality water and enabling Hà Nam Province to achieve sound and sustainable

development, technologies comprising highly reliable equipment and facilities will be introduced while

avoiding unnecessarily excessive specifications.

Also, although the initial investment required for construction and introduction will be expensive,

consideration will be given to the introduction of Japanese technology that enables lifecycle costs to be

reduced through installing durable equipment (with long replacement cycles) and limiting coagulant and

electricity costs and so on.

b) Design conditions

The major design conditions that have been decided in discussions with Hà Nam Province based on the

water demand forecast and local conditions described so far are as follows.

Table 3-36 Design Particulars for Moc Bac Water Treatment Plant

Item Design Particulars

Required quality of

treated water

Conformance to QCVN 01: 2009/BYT NATIONAL TECHNICAL

REGULATION ON DRINKING WATER QUALITY)

Supply capacity No. 1 Phase 60,000 m3/day

No. 2 Phase 120,000 m3/day

Water treatment

capacity



Water pressure at

transaction points

50 m

Generator capacity 12 hours

Wastewater treatment

facility

Conformance to National Technical Regulation on Industrial Wastewater

QCVN 40:2011/BTNMT

Site area 5.6 ha

Work foundation height EL＋4.50 m

Soil conditions (from

Bor No.2 and No.3)

- Groundwater level GL-1.50 m

- Supporting layer GL-40~-50 m

- Mainly soft cohesive soil


c) Standards Used in the Rough Design

In the study, rough design was conducted mainly in accordance with the standards indicated in the

following table.

3-49

Table3-37 Design Standards Used in Facility Planning

No Design Standard

1 QCVN 01 : 2009/BYT NATIONAL TECHNICAL REGULATION ON DRINKING WATER QUALITY

2 Decree 112/2009/ND-CP dated 14/12/2009 issued by Government on management of construction investment cost;

3 Decided 957/QD-BXD dated 29/09/2009 issued by Ministry of Construction on Norm of expenses for project management and construction investment consultant;

4 Circular 04/2010/TT-BXD dated 26/05/2010 issued by Ministry of Construction on "Guidelines and management on construction investment cost”;

5 Construction Norm - Civil work, NO.24/2005/QĐ-BXD dated 29/7/2005 issued by Ministry of Construction;

6 Construction Norm - Installation work, NO.33/2005/QĐ-BXD dated 4/10/2005 issued by Ministry of Construction;

7 Standard Water Supply 20TCN-33-2006 - Network outside and inside buildings

8 Standard 08: 2008 / BTNMT National Technical standards for surface water quality

9 Construction Regulations Volume I -1999

10 TCXD-51-1984 design standards; Drainage - Network and works outside

11 Standards for fire prevention and fire protection for buildings - design requirements ISO 2622 - 1995

d) Flow of Treatment

As was described above, water quality survey has been implemented on raw water at the intake point in

accordance with the major items of the Vietnamese standards for drinking and surface water. Based on the

findings of the water quality survey, the following table summarizes the target substances for removal and

the methods of removal that need to be considered when examining the flow of treated water.

Table3-38 Target Substances and Methods of Removal

Target Item Target Substance Treatment Method

Insoluble

content Turbidity －

Rapid filtration, chlorine treatment,

coagulation and sedimentation by PAC

injection

Soluble

content

Odor Mold and other odor Activated carbon treatment, ozone,

biological treatment

Sterilization

byproducts

Trihalomethane Activated carbon treatment

Trihalomethane formation

potential

Slow filtration, rapid filtration, ozone,

membrane filtration, activated carbon

Inorganic

content

Iron Chlorine treatment, biological treatment

Manganese

Ammonia Breakpoint method, biological treatment

Source: Prepared by the Study Team from the Design Guidelines for Water Works Facilities (Japan Water Works

Association)

3-50

Based on the above factors, out of the following four treatment flows, the granular activated carbon system

(Case 3) was adopted upon generally considering economy and performance, etc. in Vietnam.

Case 1: Rapid filtration + preliminary chlorine and intermediate chlorine addition

Case 2: Rapid filtration + powered activated carbon treatment system

Case 3: Granular activated carbon (adsorption) treatment system

Case 4: Biological activated carbon treatment system

Case.1Substances to be removed Removal method

Fe, Mn ChlorinationTurbidity, heavy metal Chemical (PAC) precipitation - Sedimentation

Receiving Well Sedimentation Tank Rapid filtration Tank

Treated WaterTank

CL PAC (CL) (CL)

Case2

Substances to be removed Removal methodOrganic substances, Odor, THMFP Powered activated carbon treatment system

Fe, Mn, Ammoniac Chlorination (Breakpoint chlorination for Ammoniac)Turbidity, heavy metal Chemical (PAC) precipitation - Sedimentation

Receiving Well Sedimentation Tank Rapid filtration Tank

Treated WaterTank

PAC CL (CL)

Powered activated carbon

Case3

Substances to be removed Removal methodOrganic substances, Odor, THMFP Granular activated carbon system

Fe, Mn, Ammoniac Chlorination (Breakpoint chlorination for Ammoniac)Turbidity, heavy metal Chemical (PAC) precipitation - Sedimentation

CVReceiving Well Sedimentation Tank

CVRapid filtration

TankTreated Water

Tank

PAC CL (CL)

Granular active carbon adsorption Tank

Case4

Substances to be removed Removal methodOrganic substances, Odor, THMFP

Biological activated carbon systemFe, Mn, Ammoniac

Turbidity, heavy metal Chemical (PAC) precipitation - Sedimentation

Receiving Well Sedimentation TankCV

Rapid filtration Tank

Treated WaterTank

PAC (CL)


(Bio logical)

CL

CV

3-51

(3) Outline of the Project Plan 1) Outline of intake facility, raw water pumping station and raw water main pipeline (Specifications)

Specifications of intake facility, raw water pumping station and raw water main pipeline are as follows.

Table3-39 Specifications of intake facility, raw water pumping station and raw water main pipeline

Item Specification

Intake water

quantity

66,000m3/day

Area 1.0ha

Main facilities Intake gate, sand basin, pump well, raw water transmission pipe line, raw water

pumping station, electric house, generator house etc.

Raw water

pipeline

- Raw water pumping station to pre- sedimentation lake:

Ductile iron pipeφ80mm L=1,750m

- Pre – sedimentation lake to WTP Ductile iron pipe φ70mm L=250m

Planned water

level

Flood level：EL +7.00m

H.W.L：EL +3.40m

N.W.L：EL +1.40m

L.W.L：EL -0.6m

Architecture works Administration house, electric house, generator house, gate house, mechanical

workshop, garage etc.

Others - In-plant piping: 1 set

- Transmission pump equipment: 1 set

- Electric instrumentation: 1 set

- Emergency generator equipment: 1 set

- In-plant maintenance: 1 set

Foundation

structure

RC pile (350mm x 350mm)： L=40m N=260

Main mechanical

equipment

- Double suction volute pump：φ400 x φ400 x 690m3/h x 15mH：5 set

- Submersible pump：φ250 x 8m3/min x 20mH:1 set

- Ultrasonic flow meter：φ70mm 15 to 50m3/min

- Overhead crane：Lifting load 5t、Lifting height 6m

- In-plant piping (including valve)：1 set

- Instrumentation: Water quality monitoring equipment, ultrasonic flow meter,

pressure gauge, etc.

Pump control

system

Pressure uniform control system (inverter control of rotating speed)


3-52

2) Outline of Water Treatment Facilities and Equipment

The following paragraphs describe the results of conducting outline review of the water treatment plant

facilities in consideration of the design conditions described earlier.

a) Flow of Treated Water

As was described in the previous section, the granular activated carbon treatment system has been

adopted with the objective of treating organic matter arising from increased domestic wastewater. In

subsequent survey it was found that turbidity in Red River is subject to large seasonal fluctuations, and

values ranging between 10NTU~400NTU were also obtained during the water quality survey conducted

by the Study Team. The Study Team conducted hearings survey at existing water treatment plants that

obtain water from Red River and its tributaries. As a result, it was found that these facilities reduce

turbidity by installing pre-sedimentation lake between the intake facilities and treatment facilities when

turbidity in Red River is high. Accordingly, it has been decided to add a pre-sedimentation lake to the

treatment flow of Moc Bac Water Treatment Plant too.

Figure 3-11 Water Treatment Flow (Final Form)


b) Wastewater Treatment Flow

In Vietnam, the National Technical Regulation on Industrial Wastewater QCVN 40:2011/BTNMT was

enacted in 2011, and it is necessary to install wastewater treatment facilities in compliance with this

standard. In the study, the following wastewater treatment flow has been adopted upon considering the

quality of raw water, site area, economy, etc.

Intake Facility Sand Basin

Raw Water Transmission

Pumping StationPre Sedmentation Lake Lift Pumping

Station

Receiving Well

Mixing Basin

Floc Formation

Sedimentation Tank

Treated Water Tank


ServiceReservoir

Water Distribution Network

Waste WaterTreatment Facility

3-53

Figure 3-12 Wastewater Treatment Flow


Figure 3-13 shows the flow of Moc Bac Water Treatment Plant combining the water treatment flow and

wastewater treatment flow indicated above.

Sludge

Sludge

Washing

wastewater

Return water

Supernatant

Waste sludge tank Thickening tank Sun drying bed Dried sludge Wastewater tank

Coagulation and

sedimentation tank Rapid filtration tank

Granular activated

carbon equipment

Receiving and

mixing tank

3-54

Figure 3-13 Treatment Flow of Moc Bac Water Treatment Plant


3-55

c) Layout

The planned site of the water treatment plant is an area of 5.6 hectares located in Moc Bac Commune in

the northeast of Hà Nam Province. This site has been selected because it is less than 1 km from the water

source of Red River and the ground altitude is relatively high compared to the service area and so forth.

In view of these factors, the layout policy and constraints shall be as follows.

- Layout will be designed with a view to limiting the length of pipes inside the plant.

- Layout will be designed with a view to limiting construction cost upon giving ample consideration to

the geological conditions.

- Entrances to the water treatment plant will be established so that vehicles can enter from roads on the

east side and west side.

- Rainwater inside the water treatment plant area will be discharged to the channel on the west side of

the site.

- Consideration will also be given to extension of power lines, expansion in Phase 2, and traffic lines

for maintenance work.

The resulting layout is shown below. The Phase 1 facilities are placed on the east side of the site, and

work space is secured on the west side.

Figure 3-14 Layout Map


3-56

d) Foundation Structure

The boring survey revealed that land on the water treatment plant site predominantly consists of a soft

layer of mainly cohesive soil, and the bearing layer is at a depth of between -40~-50 m from the surface.

Therefore, since it is not feasible in terms of cost and schedule to conduct ground improvement, pile

foundations will be adopted. These will comprise RC piles, albeit with differing shapes and lengths

according to each structure, and this will entail a large share of the works cost. Accordingly, in the

feasibility study and basic design stage, it will be necessary to increase the number of boring holes and

conduct detailed examination of foundation structure.

e) Outline of Water Treatment Plant (Specifications)

The following table summarizes the outline of water treatment plant based on the examination conducted

so far.

Table 3-40 Outline of Water Treatment Plant Facilities Item Specifications

Water treatment flow

66,000m3/day (calculated assuming a treatment loss of 10%)

Supply flow 60,000m3/day (No. 1 Phase) Time factor 1.25 Site area 5.6ha Expected turbidity Average turbidity 100NTU, 10~400NTU Treatment flow Granular activated carbon treatment system Treatment facilities

Pre-sedimentation lake, raw water pumping station, receiving tank, rapid mixing tank, flocculation tank, chemical coagulation and sedimentation tank, rapid filtration tank, granular activated carbon equipment, clean water tank, transmission pump room, chemical injection facilities, chlorine injection facilities (preliminary chlorine, intermediate chlorine, after chlorine), etc. 1 set

Mixing and flocculation method

Mixing: Mechanical mixing by flash mixer Flocculation: Hydraulic agitation

Coagulation and sedimentation tank

Clarifiers with tube settler

Chlorine injection Preliminary chlorine, intermediate chlorine, after chlorine

Backwashing system

Surface washing, backwashing

Wastewater treatment equipment

Washing wastewater tank, waste sludge tank, thickening tank, sun drying bed, etc. 1 set

Construction equipment

Administration block, electricity room, chlorine room, chemical injection room, guardroom, storeroom, generator room, etc. 1 set

Others - In-plant piping: 1 set - Transmission pump equipment: 1 set - Electric instrumentation: 1 set - Emergency generator equipment: 1 set - In-plant maintenance: 1 set

3-57

Foundation structure

RC piles L=40m, 1 set

Main mechanical equipment

- Vertical axis paddle flash mixer:φ1100mm x 2 steps - Double suction volute pump:φ500 x φ500 x 750m3/h x 50mH - Backwash pump: φ600 x φ500 x 1900m3/hr x 20mH - Pump room pipes (including valves): 1 set - Instrumentation: Water quality monitoring equipment, ultrasonic flowmeter,

pressure gauge, etc. Pump control system

Pressure uniform control system (inverter control of rotating speed)


3) Outline Examination of Water Distribution Pipe Network

Regarding the service scope of Moc Bac Water Treatment Plant, this is set in the Orientation to Supply Treated

Water in Ha Nam Province by 2030. The province is advancing a number of other water treatment plant and

water distribution network construction projects in addition to Moc Bac Water Treatment Plant, and

differentiation with the scope of service of these other plans is clearly specified. The target area of Moc Bac

Water Treatment Plant set by the province is as stated in the section “Scope of the Project and Target Users,”

and this was used as the basis for calculating the pipe network and examining the route. Figure 3-15 shows

the results of pipe network calculation and water distribution pipe route examination.

Figure 3-15 Map of Transmission Pipe Routes


Pipe diameter Length (km)

φ1000 mm 1.26

φ800 mm 2.12

φ600 mm 1.96

φ500 mm 11.34

φ400 mm 5.42

φ300 mm 3.77

Moc Bac Water

Treatment Plant Transmission pipe route

100

Connection

3-58

Also, concerning the scope of service, the Director of Hà Nam Province DPI has given the following comments,

and since these are important items in securing profitability of the Project, it will be necessary to coordinate in

detail with the province when advancing the Project in future.

• Hà Nam Province and the SPC will sign a contract to specify the service area and the SPC will have

an exclusive right to supply water in the contracted area. .

• In the case where the water demand in the planned service areas of the Moc Bac WTP will not

increase as expected, Ha Nam Province can make some adjustment to secure the water supply amount

of the Moc Bac WTP by incorporating a part of the service areas of the other WTPs that are currently

being developed.

Chapter 4

Evaluation of Environment and Social Impacts

4-1

(1) Analysis on Current Conditions of Environmental and Social Aspects

1) Environmental and social considerations relating laws and regulations in Vietnam and general context of

policy

Vietnam’s economic has been remarkably growing due to its rapid development. On the other hand, those

development activities have also caused environmental problems and involuntary resettlement.

In order to achieve the sustainable development, it is necessary to assess the impact of the development project

on the environment and local communities, as well as to take necessary measures to avoid or minimize the

predicted negative impact.

Concerning the environmental and social impact, Vietnam has enacted the “Law on Environmental Protection,

No. 55/2014/QH13 on June 23, 2014 and put into effect on January 1, 2015, as a fundamental act of

environmental protection in Vietnam.

Based on the provisions of this law, Circular No. 08/2006/TT-BTNMT details the content on Strategic

Environmental Assessment (hereinafter referred to as “SEA”), Environmental Impact Assessment (hereinafter

referred to as “EIA”) and environmental protection commitment. This Circular No. 08/2006 / TT-BTNMT has

now replaced by No.26 / 2011 / TT-BTNMT.

Also, Vietnam has enacted several laws and regulations on resettlement and land acquisition, which includes:

Law on Land No. 45/2013/QH13 (hereinafter referred to as the “Law on Land 2013”) on November 29, 2013;

Decree 43/2014/NĐ-CP of May 15, 2014 providing for implementation of Law on Land 2013 (hereinafter

referred to as the "Decree 43"); and Decree 47/2014/NĐ-CP of May 15, 2014 on compensation, support and

resettlement when land is recovered by the State.

2) Current situation of the project sites

Rural consulting center of Ministry of Construction has already selected the land to construct the Moc Bac

water treatment plant, which is located far distance a straight line from Dong Van industrial park, 30km from

the center of Phu Ly City.

Around the planned construction site, there is neither protected area stated by national laws or international

treaties, nor any of the ecological habitats of endangered species. Figure 4-1 shows the planned location for the

water treatment plant and the photos of the project site

4-2

Figure 4-1 The Planned Construction Site for the Treatment Plant

Source: Prepared by the Study Team using Google Map. Photos on the right were shot by the Study Team

(2) Environmental Improvement Effects of the Project

With the rapid industrial development, Ha Nam Province has been facing the following issues in water

infrastructure:

• Tap water does not meet water quality standards, and does not meet the requirements of the industrial

park of Japanese companies.

• Industrial water supply to the industrial park is not quite enough, some companies have been intaking

groundwater on their own.

• Land subsidence has occurred due to arsenic contamination and excessive pumping of groundwater

Therefore, through the implementation of the project, the following environmental benefits are expected.

• Problem of arsenic pollution and excessive pumping of groundwater in Hà Nam Province can be

resolved by conversion of water source from groundwater to surface water.

• In the current areas where tap water is not supplied, residents are using filtered or boiled well water and

rainwater. Therefore, by supplying clean water to households where current tap water is not supplied,

the project can contribute to health of citizens.

• By supplying good quality and stable industrial water, business environment in industrial park can be

improved.

Water purification plant site

4-3

(3) Environmental and Social Impacts of the Projects

As described above, by conversion of water sources from arsenic-contaminated groundwater to surface water, this

project is expected to contribute to solving the problem of arsenic contamination and excessive pumping of

groundwater in Hà Nam Province, and eventually to promote health of citizens. Also, considering the fact that

people are still using groundwater and tenants of industrial park are complaining about poor quality of water, this

project, which constructs a new water treatment plant to offer good quality of industrial water, is expected to be

welcomed by the local industries and local people without any strong opposition.

In addition, the People's Committee has already secured the lots to construct the water treatment plant. There is

neither house nor people living in the project site, therefore it does not cause any impact on local economy such as

means of livelihood and employment, as well as involuntary resettlement.

It is generally necessary to examine the impact of water intake from the river. However, considering the very rich

drought flow of 440 m3/s of Red river, the designed water intake for this project, which is 1.53 m3/s, is considered

not to give any impact on river.

However, some negative effects would occur in implementing the Project, such as the noise and air pollution

caused by an increased traffic at the construction stage, and disposal of sludge produced from the water

purification process during the service period.

Thus, it is necessary to pay attention to minimize the impact on environment and traffic during the construction,

and to eliminate negative influence over residents those who are not direct beneficiaries of the Project. As for the

pollution that would occur during construction (noise, vibration, turbid water, dust, exhaust gas, waste, etc.) and

waste sludge that would be discharged in the treatment process of the WTP, it is quite possible to mitigate or

reduce by appropriate countermeasures.

For mitigation measures, after developing a monitoring plan, it is necessary to reliably be monitored by project

implementation agency in each of construction phase and operation phase.

Moreover, the evaluation of social environment consideration items referred JICA checklist has shown in Table

4-1.

4-4

Table 4-1 JICA’s Checklist on Environment and Social Impacts

Category EnvironmentalItem

Main Check ItemsYes: YNo: N

Confirmation of Environmental Considerations(Reasons, Mitigation Measures)

(1) EIA andEnvironmentalPermits

(a) Have EIA reports been already prepared in official process?(b) Have EIA reports been approved by authorities of the host country'sgovernment?(c) Have EIA reports been unconditionally approved? If conditions areimposed on the approval of EIA reports, are the conditions satisfied?(d) In addition to the above approvals, have other required environmentalpermits been obtained from the appropriate regulatory authorities of thehost country's government?

(a)N(b)N

(c)(d)N

(a)It has not been created now. In the future, it shall be made by SPC inconjunction with detailed design and project concession negotiations(b)After EIA created, it must be approved(c)(d)

(2) Explanation tothe LocalStakeholders

(a) Have contents of the project and the potential impacts beenadequately explained to the Local stakeholders based on appropriateprocedures, including information disclosure? Is understanding obtainedfrom the Local stakeholders?(b) Have the comment from the stakeholders (such as local residents)been reflected to the project design?

(a)N

(b)N

(a) future implementing as needed

(b) future implementing as needed

(3) Examinationof Alternatives

(a) Have alternative plans of the project been examined with social andenvironmental considerations?

(a)Y (a) confirmation in the existence of alternative water sources has beendone

(1) Air Quality

(a) Is there a possibility that chlorine from chlorine storage facilities andchlorine injection facilities will cause air pollution? Are any mitigatingmeasures taken?(b) Do chlorine concentrations within the working environments complywith the country’s occupational health and safety standards?

(a)N

(b)Y

(a)

(b)

(2) Water Quality(a) Do pollutants, such as SS, BOD, COD contained in effluentsdischarged by the facility operations comply with the country’s effluentstandards?

(a)Y (a)

(3) Wastes(a) Are wastes, such as sludge generated by the facility operationsproperly treated and disposed in accordance with the country’sregulations?

(a)Y (a)

(4) Noise andVibration

(a) Do noise and vibrations generated from the facilities, such aspumping stations comply with the country’s standards?

(a)Y (a)

(5) Subsidence(a) In the case of extraction of a large volume of groundwater, is there apossibility that the extraction of groundwater will cause subsidence?

(a)N (a) Pumping groundwater is not carried out.

(1) ProtectedAreas

(a) Is the project site or discharge area located in protected areasdesignated by the country’s laws or international treaties andconventions? Is there a possibility that the project will affect the protectedareas?

(a)N (a) Not located.

(2) Ecosystem

(a) Does the project site encompass primeval forests, tropical rainforests, ecologically valuable habitats (e.g., coral reefs, mangroves, ortidal flats)?(b) Does the project site or discharge area encompass the protectedhabitats of endangered species designated by the country’s laws orinternational treaties and conventions?(c) If significant ecological impacts are anticipated, are adequateprotection measures taken to reduce the impacts on the ecosystem?(d) Is there a possibility that the amount of water used (e.g., surfacewater, groundwater) by project will adversely affect aquatic environments,such as rivers? Are adequate measures taken to reduce the impacts onaquatic environments, such as aquatic organisms?

(a)N

(b)

(c)

(d)

(a) Not included.

(b) Not included.

(c) No impact on the ecosystem.

(d) No impact on the aquatic environment by water intake.

(3) Hydrology(a) Is there a possibility that the amount of water used (e.g., surfacewater, groundwater) by the project will adversely affect surface water andgroundwater flows?

(a)N (a) The project takes water from river, but the river flow is large enoughcompared to the volume of water intake, so it does not cause any impact

1 Permits andExplanation

2 PollutionControl

3 NaturalEnvironment

4-5


(1) Resettlement

(a) Is involuntary resettlement caused by project implementation? Ifinvoluntary resettlement is caused, are efforts made to minimize theimpacts caused by the resettlement?(b) Is adequate explanation on compensation and resettlementassistance given to affected people prior to resettlement?(c) Is the resettlement plan, including compensation with full replacementcosts, restoration of livelihoods and living standards developed based onsocioeconomic studies on resettlement?(d) Is the compensations going to be paid prior to the resettlement?(e) Is the compensation policies prepared in document?(f) Does the resettlement plan pay particular attention to vulnerablegroups or people, including women, children, the elderly, people belowthe poverty line, ethnic minorities, and indigenous peoples?(g) Are agreements with the affected people obtained prior toresettlement?(h) Is the organizational framework established to properly implementresettlement? Are the capacity and budget secured to implement theplan?(i) Are any plans developed to monitor the impacts of resettlement?(j) Is the grievance redress mechanism established?

(a)N

(b)N

(c) N

(d)N(e)N(f)N

(g)N(h)N(i)N(j)N

(a) People's Committee aldready acquired the land, resettlement doesnot occur.

(b) unnecessary

(c) unnecessary

(d) unnecessary(e) unnecessary(f) unnecessary

(g) not required(h) not required(i) unnecessary(j) unnecessary

(2) Living andLivelihood

(a) Is there a possibility that the project will adversely affect the livingconditions of inhabitants? Are adequate measures considered to reducethe impacts, if necessary?(b) Is there a possibility that the amount of water used (e.g., surfacewater, groundwater) by the project will adversely affect the existing wateruses and water area uses?

(a)N

(b)N

(a) People's Committee aldready acquired the land, resettlement doesnot occur.(b) The project takes water from river, but the river flow is large enoughcompared to the volume of water intake, so it does not cause any impact

(3) Heritage

(a) Is there a possibility that the project will damage the localarcheological, historical, cultural, and religious heritage? Are adequatemeasures considered to protect these sites in accordance with thecountry’s laws?

(a) (a) No possibility that impairs historic heritage sites, etc..

(4) Landscape(a) Is there a possibility that the project will adversely affect the locallandscape? Are necessary measures taken?

(a) (a) No andscape to be considered

(5) EthnicMinorities andIndigenousPeoples

(a) Are considerations given to reduce impacts on the culture and lifestyleof ethnic minorities and indigenous peoples?(b) Are all of the rights of ethnic minorities and indigenous peoples inrelation to land and resources respected?

(a)

(b)

(a) No impact on the culture and lifestyle of ethnic minorities andindigenous peoples(b)

(6) WorkingConditions

(a) Is the project proponent not violating any laws and ordinancesassociated with the working conditions of the country which the projectproponent should observe in the project?(b) Are tangible safety considerations in place for individuals involved inthe project, such as the installation of safety equipment which preventsindustrial accidents, and management of hazardous materials?(c) Are intangible measures being planned and implemented forindividuals involved in the project, such as the establishment of a safetyand health program, and safety training (including traffic safety and publichealth) for workers etc.?(d) Are appropriate measures taken to ensure that security guardsinvolved in the project not to violate safety of other individuals involved, orlocal residents?

(a)Y

(b)Y

(c) Y

(d)Y

(a) implementing necessary measures.(b) implementing necessary measures.(c) implementing necessary measures.(d) implementing necessary measures.

(1) ImpactsduringConstruction

(a) Are adequate measures considered to reduce impacts duringconstruction (e.g., noise, vibrations, turbid water, dust, exhaust gases,and wastes)?(b) If construction activities adversely affect the natural environment(ecosystem), are adequate measures considered to reduce impacts?(c) If construction activities adversely affect the social environment, areadequate measures considered to reduce impacts?(d) If the construction activities might cause traffic congestion, areadequate measures considered to reduce such impacts?

(a)Y(b)N(c) N(d)

No impact on (a)、(b)、(c).(d) In the construction phase, because approriate tecnologies can reducewaste, noise, vibration, muddy water, dust, exhaust gas, appropriatemitigation measures shall be adopted. In the construction phase in theroad such as laying water pipe, there is a possibility that road trafficcongestion, occurs. Therefore, performing the work at night is consideredas the measures of minimizing impact on the surrounding traffic, trafficsafety and health of workers.

(2) Monitoring

(a) Does the proponent develop and implement monitoring program forthe environmental items that are considered to have potential impacts?(b) What are the items, methods and frequencies of the monitoringprogram?(c) Does the proponent establish an adequate monitoring framework(organization, personnel, equipment, and adequate budget to sustain themonitoring framework)?(d) Are any regulatory requirements pertaining to the monitoring reportsystem identified, such as the format and frequency of reports from theproponent to the regulatory authorities?

(a)Y

(b)

(c) Y

(d)Y

(a)、(b)、(c)、(d) Approriate operation of the water purification plant shallcontribute to the improvement of the natural and social environment.Mitigation measures for predicted impact items are also discussed in thisreport. Detailed environmental monitoring plan is prepared. In theconstruction phase and operation phase, the activities in the monitoringplan must be undertaken

Reference toChecklist of OtherSectors

(a) Where necessary, pertinent items described in the Dam and RiverProjects checklist should also be checked.

(a) (a)

Note on UsingEnvironmentalChecklist

(a) If necessary, the impacts to transboundary or global issues should beconfirmed (e.g., the project includes factors that may cause problems,such as transboundary waste treatment, acid rain, destruction of theozone layer, or global warming).

(a) (a) No impacts to transboundary or global issues. Water source of thisproject is from Red River. In general, it is necessary to consider theimpact on the river by water intake, but compared to design intake flow of1.53m3 / s of this project, drought flow of 440m3 / s of Red River is veryrich, it is believed not to cause impact to the river. Therefore, it issupposed that there is no impact to water use of residents living indownstream region

1) Regarding the term “Country’s Standards” mentioned in the above table, in the event that environmental standards in the country w here the project is located diverge signif icantly from international standards,appropriate environmental considerations are required to be made. In cases w here local environmental regulations are yet to be established in some areas, considerations should be made based on comparisons w ith appropriate standards of other countries (including Japan's experien2) Environmental checklist provides general environmental items to be checked. It may be necessary to add or delete an item taking into account the characteristics of the project and the particular circumstances of the country and locality in w hich the project is located.

4 SocialEnvironment

5 Others

6 Note

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(4) Legal Framework on the Environment and Social Impact in Vietnam

1) Laws and regulations relating to the environmental assessment

Laws and regulations relating to the environmental assessment such as New Law on Environmental Protection

and other enforcement ordinance are organized as below:

a) Law

i. The Law on Environmental Protection No 52/2005/QH11 dated November 29th 2005

New Law on Environmental Protection is deemed to replace the old law on Environmental Protection.

This Act, all 15 chapters, is composed of 134 articles, regulates significantly increasing environmental

issues such as EIA and SEA, conservation of water environment, management of waste, environmental

monitoring, environmental audit, such as compensation for environmental damage,

In addition, it is worth noting that waste management is enhanced and provisions for environmental

protection of water such as oceans and rivers are added.

On January 1, 2015, Law on Environmental Protection No 52/2005/QH11 is replaced by Law on

Environmental Protection No 55/2014/QH13 dated June 23, 2014.

ii. Law on Water Resources 17/2012/QH13 ( date of issue: June 21st 2012 ;date of effect: January 1st

2013)

b) Laws and regulations (Government Decree)

i. Decree No.80/2006/NĐ-CP August 9th 2006: Detailed regulations and guidelines for implementation of

some articles of the Law on Environmental Protection

This Decree regulates projects subject to EIA reporting as well as SEA reporting and certification

authority.

ii. Decree No.21/2008/NĐ-CP dated 28/02/2008 Decree on amendment and addition to a number of

articles of the decree No. 80/2006/ND-CP on detailing and guiding the implementation of a number of

articles of Law on Environmental Protection

Decree No.80 / 2006 / ND-CP mentioned in “i” is amended in this Decree No.21 / 2008 / ND-CP

Appendix in 2008. According to this decree, over 162 types of projects subject to EIA reporting are

classified in details.

iii. Decree No. 29/2011/ND-CP dated 18 April 2011 on SEA

This Decree is amendment of Decree No.21/2008/NĐ-CP mentioned in ②. In current, based on

4-7

Appendix 2 of this decree, projects subject to EIA reporting are classified. Therefore, this decree

regulates whether this project is subject to EIA reporting or not.

iv. Decree No. 35/2014/ND-CP dated April 29, 2014 of the Government on amending and supplementing

some articles of the Decree No. 29/2011/ND-CP dated April 18, 2011 of the Government providing

SEA, EIA and environmental protection commitment

v. Decree No.59/2007-ND on Solid Waste Management

vi. Decree No.88/2007/NĐ-CP Decree on Urban and industrial-park water drainage

c) Circular

i. Circular No. 16/2009/TT-BTNMT of October 07, 2009, defining national technical regulations on

environment;

ii. Circular No. 12/2011/TT-BTNMT of April 14, 2011, stipulating hazardous waste management

iii. Circular No. 26/2011/TT-BTNMT of July 18, 2011, detailing a number of articles of the

Government's Decree No. 29/2011/ND-CP of April 18, 2011, on strategic environmental assessment,

environmental impact assessment and environmental protection commitment

Based on provision under Law on Environmental Protection, Circular No. 08/2006/TT-BTNMT

provides guidance in details on implementing numbers of content of EIA reporting. However, this

Circular No. 08/2006/TT-BTNMT dated August 12, 2008 has been amended by Circular

05/2008/TT-BTNMT, then replaced by Decree No.26/2011/TT-BTNMT

This Decree regulates:

1) Verification and Appraisal of SEA,

2) Assessment reporting environmental impacts,

3) Certification, registration, evaluation related to environmental protection works and measures,

4) EIA report, evaluation document of environmental protection and verification.

EIA reporting and its evaluation and approval of the proposed project is regulated under this Circular.

iv. Circular No. 22/2014/TT-BTNMT dated May 5, 2014 of the Ministry of Natural Resources and

Environment defining and guiding the implementation of the Government's Decree No. 35/2014/ND-CP

dated April 29, 2014 amending and supplementing a number of articles of the Government's Decree No.

29/2011/ND-CP dated April 18, 2011 providing strategic environmental assessment, environmental

impact assessment and environmental protection commitment

4-8

d) Decision

Decision 04/2008/QD-BTNMT Ministry of Natural Resources and Environment dated 18/07/2008 issuing

national technical regulations on environmental

e) Regulations and standards applicable to EIA

Atmosphere

QCVN 05: 2013/BTNMT National technical regulation on ambient air quality

QCVN 06: 2009/BTNMT National technical regulation on hazardous substances in ambient air

Noise

26:2010/BTNMT - National Technical Regulation on Noise

TCVN 3985 - 1999: Acoustic - working place air quality standard

QCVN 27:2010/BTNMT - National Technical Regulation on Vibration

Water quality

QCVN 08:2008/BTNMT - National technical regulation on surface water

QCVN 09:2008/BTNMT - National technical regulation on underground water

QCVN 14:2008/BTNMT - National technical regulation on domestic wastewater

Hazardous waste

QCVN 07:2009/BTNMT - National Technical Regulation on Hazardous Waste Thresholds

TCVN 6707-2000: Hazardous wastes Warning signs

Others

QCVN 06:2010/BXD Viet Nam Building Code on Fire Safety of Buildings

QCXDVN 01:2008/BXD: Vietnam Building Code on Regional and Urban Planning and Rural Residential

Planning

TCVN 33:2006 - Water Supply - Distribution System and Facilities Design Standard

TCXDVN 7957:2008 - Drainage and Sewerage - External Networks and Facilities-Design Standard

TCXDVN 4513:1988 Internal water supply - Design standard

2) Procedure relating to EIA reporting

Procedure for EIA reporting is regulated under Decree No. 29/2011/ND-CP and Circular No.

26/2011/TT-BTNMT, as shown in the following flow chart:

4-9

Figure 4-2 Flow chart of EIA reporting in Vietnam

Prepared by study team

Step 1. Project classification

Appendix II of Decree No. 29/2011/ND-CP specifies the projects subject to EIA reporting in its list. If the

impact of the project on environment is small, EIA reporting is not required.

Step 2. EIA Process

Pre-stage of the full EIA reporting is step of determining scope of the EIA. The main research contents are as

follows:

- Setting and reviewing the major impacts caused by the project implementation

Targeted Project

Project classification Decree No. 29/2011/ND-CP Appendix II

Intention Statement on environmental protection

Implementation of EIA

EIA Process Not subject to EIA reporting

EIA Reporting

Supplement / revision by opposite views

Public opinion consultation

Complete EIA reporting

- Evaluation application form - EIA report - FS report

- Decide institutions participating public consultation

- EIA reporting - Public announce project content

- Forming EIA reporting team - Defining scope of EIA - Deciding relevant parties - Team gathering

Legend

Evaluation and verification of EIA report

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- Summary of the major environmental impact items, and determining EIA scope

- Determining whether detailed EIA reporting is needed or not

Step 3. Implementation of EIA

For project that is determined to be necessary to write EIA report by Step 2, a preliminary EIA including

regulated contents described as below is implemented under Circular No. 26/2011/TT-BTNMT

Preface

Background of the project

Laws and standards to be compliant in implementing EIA

List of EIA method applicable to reporting and implementation of EIA

EIA implementation organization

Chapter 1: Overview of the project

Project name

Project owners

Geographical location of the project

Main components of the project

Chapter 2: Natural environment and socioeconomic conditions

Natural environment conditions

Geographical, geological conditions

Weather conditions such as weather and hydrological and marine

Existing conditions of the natural environment elements

Biological resources conditions

Socio-economic conditions

Chapter 3: EIA (EIA)

Natural socio-economic EIA in each phase of pre-construction, under construction, and in-serviced of

the project is carried out. In addition, detailed quantitative and qualitative assessment methods are

conducted to assess the environmental impact of the project, in comparison with comparison with all

possible reference values and regulations.

Reliability of implemented impact assessment shall be evaluated

Chapter 4: Impact mitigation measures Measures to mitigate negative impacts in each stage of the project (pre-construction, under construction, operation) shall be developed

Chapter 5: Construction and management and monitoring for environmental impact improvement

(monitoring plan) Development of Environmental Management Plan (EMP)

Development of environmental monitoring plan

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Conclusions, recommendations and Responsibilities

EIA reporting

Step 4. Public opinion consultation (public hearings)

With the purpose of reflecting public opinions about the project (public consultation), project implementer

shall collect all the opinions from representatives of commune-level People’s Committee and representative of

the community, and then include all the recorded opinions in the EIA report

In addition, the details of public consultation (process, relevant parties, period, method, etc.) with

commune-level People’s Committee, representative of commune, Fatherland Front shall also be included in the

EIA report to submit to the People’s Committee.

Step 5. Completion of EIA report

After the public hearings, consulted opinions shall be truthfully reflected and enclosed in the revised and

supplemented version of the EIA report. The contents of the final version EIA report, however, must comply

with Decree No.29 / 2011 / ND-CP and Circular No.26 / 2011 / TT-BTNMT.

3) Regulations relating to the resettlement and land acquisition are organized as below:

i. Law on Land No. 45/2013/QH13 (“Law on Land 2013”) dated November 29, 2013

This Law is higher law on use of land which regulates use of land, rights and obligations of land users.

ii. Decree No. 43/2014/ND-CP of May 15, 2014 providing for implementation of Law on Land Decree

No. 43/2014/ND-CP (Hereinafter referred to as the "Decree 43") is detailing a number of articles of the

Land Law issued by the Government on May 15, 2014,

iii. Decree 47/2014/ND-CP of May 15, 2014 on compensation, support and resettlement when land is

recovered by the State.

iv. Circular 30/2014/TT-BTNMT of June 2, 2014 by MONRE, detailing the compensation, support and

resettlement and order of and procedures for land recovery, allocation and lease

This Circular regulates filing of application for land handing over, land leasing, conversion of land use,

and land recovery.

v. Circular 57/2010/TT-BTC on making cost estimates, using and settling funds for organizing the

compensation, support and resettlement when the state recovers land

It is Circular related to budget and expenses of compensation, which is issued by Ministry of Finance to

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clearly defined about the funding levels, spending contents, the detail spending levels as well as the

estimation, funding usage and settlement in organizing compensation, support and resettlement when

the state recovers land.

vi. Decree 44/2014/NĐ-CP of May 15, 2014 on price determination methods and price frameworks for all

types of land

This Decree regulates the methods for land pricing, adjustment to land price brackets and land price lists

for different land types, specific land pricing and provision of consultancy on land pricing.

(5) Work to be done by the Implementation Bodies for the realization of the projects

As described above, although some negative impacts of the Project might be occurred such as noise and dust

arisen under construction, and disposal of sludge during in-service operation of the project, it is possible to reduce

or minimize its impacts sufficiently by implementing appropriate countermeasures.

However, during the detailed designing, in pre-stage of project formation, or in the future FS, it is necessary to

implement the EIA in accordance with environmental and social laws and regulations as well as policies of

Vietnam, and to properly assess the project’s impacts on environment and local communities, avoiding or

minimizing these impacts, and then develop mitigation measures so as not to cause unacceptable impacts.

At the present stage, since the detailed designs of facilities have not been completed, the detailed EIA has not to

be implemented yet. The Project operators shall conduct EIA when the detailed designs of water treatment plants

and intake facilities are prepared.

Chapter 5

Financial and Economic Evaluation

5-1

(1) Estimation of Project Cost

1) Estimation of construction cost

Construction cost account for a considerable portion of the total cost of project implementation, and is a basis to

determine water price. With this in mind, cost estimation was carried out in accordance with the following

policies:

• Collaborate with experienced local consultants to make accurate quantity survey in order to execute

basic design of civil part and equipment and electrical part based on the local condition, and estimate

the cost following the accurate quantity calculation.

• Examine and decide the unit price of civil works based on the Vietnamese standard listed below

checked by local consultants and Kajima.

- Circular No.04/2010/TT-BXD dated 26th May 2010 of MOC, guiding the establish and

management of work construction investment cost.

- Construction Unit Price - Installation Portion. Issued pursuant to Decision

No.809/UBND-GTXD dated 24th May 2013 of Ha Nam People's Committee

- Cost Estimate Quota of Construction Works - Installation Portion No.1173/BXD-VP dated 26th

December

- Cost Estimate Quota of Construction Works - Installation Portion No.1173/BXD-VP dated 26th

December 2012

- Publication of prices of building materials 11/2014 / CBGVL-LS dated 27/11/2014

CBGVL-Union Building Department Ha Nam Province.

- Decision No. 957/QD-BXD dated 29/9/2009 of the Ministry of Construction

- Decision 33/QĐ-UBND dated 9/1/2009 of City People's Committee

- Circular No. 76/2003/TT-BTC dated 4/8/2003 of the Ministry of Finance

- Circular No.19/2011/TT-BTC dated 14/02/2011 of the Ministry of Finance

- Circular No.176/2011/TT-BTC dated 6/12/2011 of the Ministry of Finance

• Collect quotations for main equipment and estimate it.

• Use the exchange rate of Bank of Tokyo-Mitsubishi UFJ on 22nd December 2014, the exchange rate

applied for this report is; USD1 = VND 21,388 = JPY 119.5.

• The result of estimation of construction cost is mentioned in the project cost below.

5-2

2) Estimation of project cost

a) Preconditions

The terms and conditions of the project are to be supposed as mentioned below. In the cost estimation

below, the exchange rate is mentioned on Chapter 5 and inflation rate is set as 5 % per year which is

average of Vietnam CPI on recent two (2) years.

Table 5-1 Project Outlines

Project Style PPP/BOT

Tenor 23 years (Construction 3 years + Operation 20 years)

Equity / Debt Ratio 30% / 70%

Sponsors(*1) Japanese company, Vietnamese company

Lender JICA

EPC Contractors Kajima Corporation, Japanese company

Off-taker(*2) HANWACO

Construction Start Date 2017/7/1

Commercial Operation Date 2020/7/1

Production Capacity 60,000m3 per day

Production Volume(*3) 60,000m3 per day

(*1)、(*2)、(*3)Assumption at this point

b) Project cost

Project cost is mentioned as below.

Table 5-2 Project cost

(2) Outline of Preliminary Financial and Economic Analysis Results

1) Conditions for financial and economic analysis

a) Possible financing plans

Potential lenders for the Project include local Vietnamese banking institutions, international banking

institutions, export credit agencies (ECAs), ADB and JICA, as the Project site is in Vietnam.

As for Vietnamese local banks, whether state banks or commercial banks, their project financing

experiences were extremely limited. The refinance interest rate, which is the most popular index of loan

interest rate in Viet Nam, shows 7.55% p.a. on average and 4.80% at the lowest in 14 years from 2000 to

5-3

2013, and actual loan interest rates tend to be even higher than the refinance interest rate. This level of the

interest rate is likely to jeopardize the project feasibility. Likewise, borrowing from VDB will not be

preferable as the maximum loan tenor of VDB is 12 years, which does not match the Project’s concession

period.

As for international financial institutions, it will be difficult for them to lend to the Project without

supports from ECAs, taking into account currency mismatch risk and sub-sovereign risk in developing

countries. As for ECAs, lending money from them will be difficult, since there is a high possibility that

they will need sovereign guarantee to deal with Vietnamese projects, judging from past cases.

From the above, the potential lenders can be ADB and JICA. Considering that the FS Team has been

promoting the Project with support from Japanese Government, and so JICA is supportive to close the

Project and to other related project developments in Da Nang, JICA should be judged as the most

preferable lender for the Project.

From the above, the most plausible lenders can be international financial institutions such as ADB and

JICA. In view that it is important to keep reliable funding source in order to make projects successful,

borrowing from these international financial institutions is the best choice for the project.

However, it should be noted that loan needs to go directly to SPC since, if the loan is made via local bank,

there will be additional loan interest which will adversely affect the feasibility of the project.

b) Foreign exchange rate

Managed floating exchange rate system is practiced in Vietnam, and managed and controlled by the

Vietnam Central Bank. The exchange rate band for Vietnamese Dong is fixed in this system and Dong is

traded freely within that band. In reality, the Vietnamese dong is pegged to the US Dollar, and its standard

rate is now VND 21,245 for USD 1 after VND was depreciated in June 2014. Vietnam became a formal

member of WTO in January 2007.

In principles all the equipment, material and human resources for this project are procured in Vietnam or

Japan, and a priority is given to the financing by the international assistance agencies such as JICA.

Therefore, the following exchange rate between the currencies is assumed.

USD 1 = VND 21,388

USD 1 = JPY 119.50

c) Comparison of water tariff in some cities in Vietnam

It is very important to understand the water tariff presently practiced in Vietnam and its adjustment

mechanism for the assessment of the project feasibility. Therefore, this study investigated the water tariff

in Ha Nam Province as well as that in some other cities.

5-4

Only the People’s Committee is authorized to revise the water tariff in Vietnam. On the other hand, the

water tariff has been set at so low, since it is the fee for the public service that the initial investment cost

and operational cost has not been able to be recovered by the water tariff and the operation has been

subsidized by the due local government. The Central Government issued the decree No. 117/2007/ND-CP

that requests local governments to set the appropriate water tariff to recover all the costs in order to

improve the critical financial condition in the public service sector.

Under these circumstances, the water tariff in Ha Nam Province in 2014 is currently as follows:

VND 5,700 /m3 for domestic use

VND 5,700 /m3 for Nam Cao University area

VND 11,500 /m3 for factories in industrial zones

For a comparison purpose, the water tariff at some other cities in Vietnam is tabulated below.

Table 5-3 Water Tariff in other cities in Vietnam

Object using waterĐối tượng sử dụng nước

Hai Phong 01/07/14

Phu Yen 18/12/13

Đa Nang

01/02/14

Can Tho

01/04/13

Binh Thuan 01/07/12

Khanh Hoa

01/02/13

Vung tau

01/08/13

Binh Duong 01/04/13

Quang Nam

01/07/12 Household

5,500

Initial level 10 m3

8.500 6,500

4,000 4,800 6,000 3,900 5,800 6,100 Above 10 m3 to 20 m3 4,800 6,000 7,000 5,200

8,200 Above 20 m3 ton 30 m3 6,700 10,000

5,900 8,500 Above 30 m3 to 40 m3 6,000 7,000 8,500 9,500 Above 40 m3 13,000 Administrative offices, non- business 12,000 8,800 6,800 7,000 12,000 6,400 8,200 8,500 8,000

Material Production 15,000 10,000 8,900 7,800 14,000 7,800 8,200 9,500 8,500 Business, service 18,000 11,000 13,500 9,800 18,500 6,900 13,000 13,000 9,500

(Including VAT) no yes yes yes yes yes no yes yes

It is noted that a new water supply project financed by ADB is planned in Da Nang City. In association

with this ADB financed project, the following water tariff adjustment road map was agreed between ADB

and Da Nang City so that the water company in Da Nang City, a borrower, may maintain financially

sound management and be able to repay the ADB loan.

Table 5-4 Water Tariff Adjustment Road Map In Da Nang City

Year 2019 2021 2022 2024 2026 2028 2030 2032 2034 2036 2038

Adjusted water tariff 7,918 9,185 10,655 12,360 14,337 16,631 19,292 22,379 25,959 30,113 34,931

2) Financial analysis conditions for feasible project

This Project is to sell the treated water produced at the water treatment plant to some water distribution service

company. In making the financial analysis for the Project, the conditions which enables the project feasible are

set first and, then, the water sale price under these conditions are evaluated. It should be noted that since the

water tariffs summarized in 1) above cover the treated water delivery service cost, these tariffs may not be

5-5

directly compared with the water sale price evaluated for the Project.

Main conditions for the feasible project are summarized below:

Table 5-5 Conditions for Feasible Project

Project Scheme 20 year-BOT

Equity/debt ratio 30%/70%

Project IRR 10.5％

Minimum DSCR 1.95

Average DSCR 2.30

LLCR 2.38

Other detailed analysis conditions are described in Chapter 9.

3) Summary of financial analysis result for the Project

The water tariff in Ha Nam Province would be VND 10,617, provided it increases with an inflation rate of 5%.

Cash flow was computed under the conditions above and those in Chapter 9. In result, the water sale price was

computed at the almost same value at the commencement of the project operation in July 2020. Influential

economic effects by the Project

The financial feasibility for the public service projects is, in general, not so promising. In addition, the public

service projects exercise not only direct effects but also spreading effects on other markets and societies, which

should often be considered for the financial analysis.

To consider those factors, EIRR (Economical Internal Rate of Return) is usually used. The EIRR computations

consider direct benefit/loss, spreading (indirect) benefit/loss and external cost. The direct benefit/loss is the

same benefit/loss as considered for the FIRR computations, while the spreading benefit/loss is the benefit/loss

brought to any interested parties by the project implementation. On the other hand, the external cost is the

effects brought to other economical groups without going through market by an economy group’s action such as

implementation of a project.

There are two methodologies to estimate those benefits/losses: individual measurement method and integrated

model method. In the individual measurement method, various benefits/losses are evaluated separately and then

are summed together as the total effects. On the other hand, in the integrated model method, interrelations

among possible affecting parties are modeled so that the total effects by the public service project may be

measured simultaneously.

It is said that there are some disadvantages in using the individual measurement method including difficulty of

measuring various effects by a common scale, possibility of counting twice and unclear definition of benefits to

5-6

beneficiaries. On the other hand, the reliability of the estimation of each benefit/loss is high because it is

directly evaluated for very clear beneficiaries. The individual measurement method especially becomes

effective when the project is small-scale or its spreading effects are very limited, because the effect on other

markets or societies is very small.

In the integrated model method there is the general balance model available, which uses the data on the industry

structure and social structure. The general balance model can consider the whole social situation and provide

the information on who are beneficiaries. There are disadvantages at the same time, which sometimes doubts its

accuracy. They include difficulty of obtaining the data such as industry correlation table, possible errors

embedded in the model and difficulty of solving the model.

Considering the characteristics of the both methods, the individual measurement method is chosen to evaluate

EIRR in the present analysis, since limited information causes large errors in the results by the integrated model

method, since the scale of the proposed project is small and its effects are limited, and since it is easy to identify

the beneficiaries for this particular project.

On the other hand, this project is a long term water supply project in the public sector to be implemented by the

private sector. The feasibility in terms of profitability is the most important estimation in any projects by the

private sector. In the assessment of profitability of the project not only construction cost and operational cost

but also future water demand which is related to the social development and practical water tariff which local

community can afford are considered. The latter factors are already reflection of social and economic effects by

this project.

Hence, when financial feasibility of the project is good, the economic influential effects are necessarily high. In

addition if the financial feasibility is low, this project will not be a target by the private sector even if the

economic influential effects are high. Considering these circumstances of the project by the private sector, only

qualitative assessment was made for the influential economic effects in the society, which may be used for

assessment of the importance and/or priority of ODA projects, in general.

Social and economic impacts, which are possibly caused by the project, are as follows:

i. Supply of good quality treated water to factories in industrial zones

ii. Promotion of factories and colleges to Ha Nam by good quality treated water supply

iii. Supply of good quality treated water to local residents who have no service now

iv. Termination of water supply service which uses ground water as raw water

v. Improvement of water environment by wastewater and sludge treatment by project

vi. Increase of employment

These merits are studied individually below.

5-7

i. Supply of good quality treated water to factories in industrial zones

A questionnaire on the current water supply conditions was sent to the factories in the industrial zones,

to which this project is supposed to supply water. 33 factories responded as of December 2014, among

which 22 factories complain the water quality and 11 factories have their own treatment facilities

because of the poor supplied water.

Because this project will supply treated water in good quality to these factories, the favorable

economic influence will be expected to spread to them by increased factory operation efficiency and

by termination of operation of their own treatment facilities.

ii. Promotion of factories and colleges to Ha Nam by good quality treated water supply

Construction of infrastructure facilities including treated water supply facility is often not done in time

in the industrial zone developments in Vietnam. The target areas by this water supply project include

the planned expansion areas of the Dong Van I and Dong Van II Industrial Zones, new Dong Van III

and the new academic development area. Competition for having factories is quite high in Vietnam

these days, since many new industrial zones are constructed.

Therefore, existence of a treated water supply plant in good quality like this project is a strong

contribution to the competition, bringing the favorable economic influence.

iii. Supply of good quality treated water to local residents who have no service now

This project will supply the treated water to the area where piped water is currently not available. The

households in these areas use ground water. In addition, approximately 97,000 people will be

anticipated to come to Ha Nam Province from the neighboring cities according to the Province’s

Master Plan. Because these people will have access to good quality water freely, some favorable

economic influence is expected associated with the improvement of living standard and hygienic

condition.

iv. Termination of water supply service which uses ground water as raw water

The water treatment plant that currently supplies the treated water to the factories in Dong Van I and

Dong Van II Industrial Zones, where the project plans to supply its treated water, uses ground water as

raw water. Ha Nam Province wants to prohibit use of ground water if possible, since use of ground

water causes ground water pollution and settlement of the ground. The total water used in these

industrial zones is 20,000 m3 in 2020, and the water of this amount would be supplied by using ground

water if this project is not implemented. Hence, this project eliminate the recovery cost of potential

deterioration such as cleaning of polluted ground water, medical expense for health problems

associated with use of poor quality water and cost of corrective measures for ground settlement.

v. Improvement of water environment by wastewater and sludge treatment by project

5-8

A water treatment plant produces wastewater and sludge during its treatment process. Most of the

water treatment plants in Vietnam do not treat them satisfactorily. Because this project designs the

water treatment plant so that wastewater and sludge will be treated in accordance with the regulations,

less environment improvement costs may result.

vi. Increase of employment

The project creates new employment of 18 people. Among those the number of management staff and

operators is 12, while there will be 6 unskilled workers. This new employment will lead to some

socio-economic benefits.

Chapter 6

Planned Project Schedule

6-1

Table 6-1 shows the planned schedule of the Project implementation. After completion of this study, a detailed

feasibility study is expected to be implemented in fiscal 2015, followed by the negotiations for operating rights

and signing of the PPP/BOT contract, detailed design, EIA, and construction. The operation of the plant is planned

to be commenced in fiscal 2020.

Table 6-1 Planned project schedule

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

This study by METI :6months

JICA FS : 1 year

First refusal right

Cotract negotiation :6months

PPP/BOT contract

Water purchaseagreement

Establishment of SPC :3months

Negotiation of PrivateSector InvestmentFinance : 6months

Agreement of PrivateSector InvestmentFinance : 6months

Detailed design :6months

EIA : 1year

Costruction of WTP :3years

O & M : 20years

Activity 2014 2015 2016 2017 2018 2019 2020 2023 ・・2021 2022 2040

Moc Bac WTPand Intakefacility(PPP/BOTscheme)

Costruction of Distribution network

Chapter 7

Implementing Organizations

7-1

1) Implementing Organizations in Vietnam

Currently, there are 30 WTPs in operation in Ha Nam Province, of which small-scale plants with water

production capacity below 1,000m3/ day are under the jurisdiction of the DARD, while the WTPs in urban areas

are overseen by the DOC. Water quality management has been overseen by DONRE. However, actual operation

and management of the existing WTPs have been carried out by private companies or privatized ex-public

companies. Each company runs its own WTPs independently.

This Project plans to establish a SPC which runs a business to produce and supply water for Dong Van

Industrial zones and peripheral development areas in Ha Nam Province. At present, there is no existing water

supply company that covers the above areas. Therefore, the tentative counterpart or implementing organizations

in Vietnam for this Project are DPI that handles all foreign investment projects, DOC that oversees urban areas,

and DONRE to control water quality.

However, in the implementation stage, the SPC needs to have a local partner company which buys produced

water, construct distribution pipelines and distribute water to end-users. Currently, the most likely candidate is

Han Waco that operates the largest WTP in Ha Nam Province.

2) Capacity Assessment of the Implementing Organizations

a) Ha Nam Governmental Agencies

As previously-mentioned, the Government of Vietnam has developed a policy to accelerate the

privatization of water sector, and established the Decree No. 117/2007/ND-CP to require the local

governments to: i) privatize public-own water supply companies; ii) set water price to secure funding for

all the cost involved in water supply activities; and iii) utilize private investment to develop water supply

infrastructure. As of 2012, 35 water supply companies have been undertaking the process of privatization.

Amongst others, Ha Nam Water Company is the first company that started the privatization process, and

has already completed the conversion to a joint stock corporation in 2011.

In the rural areas, World Bank has been implementing 10 projects to increase water supply capacity,

including the development of new WTPs and the expansion of the existing WTPs. For these projects, WB

only focus on micro-scale plants which will be operated by private companies, and major bidders for the

project implementers are construction companies partnered with a local water supply companies.

The state-owned water supply company that operates the Phu Ly I WTP and Phu Ly II WTP, the largest

WTPs in Ha Nam Province, has already converted to joint-stock company by transferring 70% of the

state-owned stocks to private sector. This privatization, which is likely the first case in Vietnam, aimed to

utilize the technologies and experiences of private sectors to improve the efficiency of water supply

services. The concept of this privatization is similar to that of PPP scheme, in terms of utilizing private

sector’s know-how and introducing a market-mechanism.

7-2

In this regards, Ha Nam Province has a good understanding about PPP scheme through its experience of

the privatization, which would be a huge advantage in implementing the Project under PPP scheme.

b) HanWaco

Han Waco is the operators of Phu Ly I WTP and Phu Ly WTP, the largest WTPs in Ha Nam Province. Phu

Ly I and II WTPs had been operated by a state-owned water supply company for more than 20 years since

1992, and now it is operated by Han Waco after privatization in 2010. The operation efficiency of the two

WTPs has been significantly improved after privatization. For instance, domestic and industrial

wastewater has led to aggregation of the water quality of Dai River, the major water source for the Ha

Nam Province, and affected the water quality of treated water. After the privatization, Han Waco reviewed

the treatment system and introduced a pre-chlorination process, which has improved the water quality

after treatment. Han Waco also plans to expand the water production capacity of Phu Ly II WTP by

45,000 m3/day.

As such, with a long experience of water supply business, Han Waco is considered to have a sufficient

capacity to implement the proposed Project.

3) Issues

The expected SPC’s scope of business only includes the taking and treatment of raw water, and the

produced water is planned to be sold to a local company that can distribute water to end-users. Therefore,

to set up the business, it is necessary to select a local partner company that buys produced water, develop

a distribution system and supply water to end-users.

Generally, especially in the large cities such as Hanoi and Da Nang, there is an only water supply

company (usually state-owned company) that has centralized control over water supply in the whole city.

On the other hand, in Ha Nam Province, there are many independent water supply companies and each

WTP is operated by a different water supply company. Therefore, it is careful study on the existing water

companies is required to select the best company to sell the produced water and eventually to transfer the

management of the WTP.

Currently, Han Waco is considered to be the most appropriate candidate, and the Study Team has been

discussing with Han Waco the possibility to be a counterpart of the project and/or to be an investor for the

SPC. It is necessary to continue consultations on the detailed plans for development of a distribution

network, joint investment, business framework, and water price.

Chapter 8

Technical Advantages of Japanese Companies

8-1

(1) The Assumed Types of Participation for the Japanese Companies (Investment, provision of resources and machines, operation and management of facilities)

Figure 8-1 shows the business model of this project which is presently proposed. This project aims to respond to

the needs of Ha Nam Province and those from the Japanese companies which want to make a market entry. It is

presumed to be conducted under PPP/BOT in which the Japanese companies will set up a SPC for providing clear

water as well as providing necessary funding, designing, construction, and operation and management for 20 years.

SPC shall construct a WTP in Moc Bac by making overseas investment and using its own funds, etc. and shall

collect the initial investment and pay the maintenance and management cost with the revenue gained by selling

tap water in bulk to local water suppliers. In this case SPC whose main body is the proposer of this project shall

select EPC contractors, and design and construct the water treatment plants and provide resources and machines

necessary for its construction as well as operate and manage the facilities.

The target facilities are planned to be Moc Bac water treatment plant and its water intake facility. As for the water

distribution pipes from the water treatment plant to its purchasers which need to be developed at the same time,

Ha Nam Province is presumably responsible for improving the pipes by using yen credits and water sector loans.

(Figure 8-1*1） For project financing the loan and investment program for overseas projects of JICA will be

utilized (Figure 8-1*2).

It is considered to utilize mechanisms such as EBF and VGF as well as grant aids especially designed for business

operation rights in order to financially cover business risk which cannot be covered only by private sector (Figure

8-1*3).

EBF: Equity Back Finance (Financial support to supplement investment for developing countries)

VGF: Viability Gap Funding(System to help secure business viability)

8-2

Figure 8-1 Presumed business structure

(2) Advantages of the Japanese Companies (in Technologies and Financing) in Implementing This Project

1) Life cycle cost

The machines and equipment of high reliability, precision and long machine life supplied by the Japanese water

supply-related companies is the base for the high reliability of the Japanese style water supply system. Thanks

to this the Japanese companies find themselves in technically advantageous position to their competitors.

Japanese companies’ supremacy related to this project, not only in provision of resources and equipment but

also in operation and management of the facilities, can be considered as “our long-term cost competitiveness

based on “high quality” in both hard and soft aspects.”

As far as PPP business is concerned, the Japanese machines and equipment are not very much likely to be

selected due to their relatively weak cost competitiveness, because usually at the beginning of a project the user

intends to reduce the initial investment cost. This can be said only when the initial investment is considered. In

case of this project which deals with management and operation of the facilities for as long as 20 years, it is

important to select machines and equipment based on a comprehensive comparison including not only the

Vietnamese government, People’s Committee

BOT agreement Give approvals Issue license Guarantees

Water Supply Company in Ha Nam Province

[Water distribution / Improvement of

distributing pipes]

Water purchase and sales contract

SPC Special-purpose company to supply purified water to Moc Bak, Ha Nam

Province

[Fund procurement, construction, maintenance and management for

water conduit pipes and purification

Investment*2

JICA

NEXI

Private Banks

Insurance contract Other

Investors

Official Finance e.g., VGF *3

Invest- ment

Share

EPC agreement O&M agreement

Design companie

EPC contractor

Companies in charge of operations, maintenance

and management

Han Waco

Japanese Government/

JICA

Japanese companies

8-3

initial cost but also life cycle cost. Figure 8-2 shows the total cost reduction seen from the perspective of life

cycle cost (Hereinafter referred to as LCC).

Figure 8-2 Life-Cycle- Cost Oriented Business Model

Prepared by the Study Team

According to the business model with emphasis on the initial cost it is likely for the user to purchase low cost

equipment in order to reduce the initial cost (CAPEX) as much as possible. However, since these equipment are

low in reliability, quality and durability, the running cost(OPEX) is likely to increase due to possible repair and

replacements, and as a result the total cost (LCC=CAPEX+OPEX) will end up to increase. On the other hand,

according to the minimum LCC method the total cost (LCC) will be cheaper because of advantageous running

cost (OPEX) realized by high reliability, quality and durability even if the initial cost (CAPEX) is more

expensive.

When F/S performance of a water treatment plant in Vietnam is taken as a reference, it is presumed that the

introduction of the Japanese products with high energy saving effect will be advantageous in competition in

terms of LCC, because the electricity cost required for operation of a water treatment plant will be about half of

the maintenance and management cost. It is necessary to make a comprehensive analysis by comparing with the

other options regarding the total cost (LCC), which is the total of the initial cost and running cost (electricity,

repair cost, replacement cost of equipment, etc.), when thinking of introducing Japanese products with long

durability. So far there has been no study which made a quantitative review. If there were some researches or

studies systematically conducted to make a qualitative evaluation, it could have been used as a base for proving

the business viability of using Japanese machines and equipment.

Therefore, for this study, the Study Team conducted the survey on the actual machine life of the facility

equipment used in the country. The result showed that the equipment is actually used for much more years than

the legal durable years, thus reducing the total cost.

8-4

The total cost can be further reduced by positively procuring Japanese resources and machines, while

considering the cost effectiveness, because they can effectively and efficiently respond to the locally specific

challenges such as more needs for maintenance of the equipment due to often-occurring blackouts, or more

treatment cost for polluted sludge related to the water quality of the rivers for water intake.

In terms of “operational maintenance aspect”, the high quality of clear water can be maintained on a stable basis,

while reducing the operational cost, by making a transfer to overseas businesses of the operational know-how

for the safe and stable water supply business which has been cultivated in Japan over long years. It is also

indispensable to reduce the maintenance and management cost by introducing the efficient operation approach

which is recently becoming popular in Japan, including the positive use of private know-how in order to secure

business viability. It is expected to contribute to business viability of this PPP project to introduce the efficient

operation approach through the partnership of public and private sectors in this leading water supply project in

the county.

2) The supremacy of Japanese companies

a) Long durability of products

In the case of hard (machines and equipment) the optimum procurement of the Japanese products of long

durability and fewer disorders because of the high quality is expected to reduce the cost over long years,

when considering LCC. As a result of hearings from main companies and water treatment plants, it

became clear that the machine life of the relevant equipment are in many cases much longer than the legal

durable years as well as the replacement criteria decided by the users. Table 8-1 shows the average

replacement years of the relevant equipment in domestic water supply plant and the result of hearings

from Company “A” in Hiroshima Prefecture concerning the main machines and electrical equipment of

water treatment plant.

Table 8-1 Average replacement years of Japanese technology products and an actual case example of usage

years（Survey target：Company “A” in Hiroshima Prefecture）

8-5


According to “The guidelines for replacement of water facilities” formulated by Japan Waterworks

Association in 2005, the average replacement years were 1.15 to almost 2 times longer than the durable

years stipulated by Local Public Enterprise Act. Even the hearing result from the Company “A” showed

that the actual usage years were longer than the replacement criteria years stipulated by the Company “A”

in 1991 except for the measurement equipment. It is considered that measurement equipment are replaced

earlier than the criteria in order to keep precision. It is possible to largely reduce the total cost by

analyzing it quantitatively while considering the supreme durability of Japanese technologies.

b) Excellent energy saving technologies

Electricity cost is one of the important factors of the operation costs. Especially for the water distribution

pipes, energy saving function is required. We should not say that only the Japanese products are the best,

but when Japanese companies conduct water supply business overseas it is expected for them to use

Japanese products which are excellent in terms of reliability and maintenance in addition to the energy

saving technologies.

c) The products and technologies which can effectively and efficiently respond to the local problems

There is a need for a countermeasure for frequent electric outages in order to respond to the locally

specific issues. Middle and small sized companies in Hiroshima prefecture produce various types of

pumps which can stably resume operation even with air mixed in water after the stoppage, or the valves

which can prevent possible damages of the pumps and pipes due to impact from countercurrent water

movement inside. Though these products are rather costly as the initial cost, but they are thought to lead

to cost reduction in a long run because they are effective for prevention of disorders, etc.

It is presumed that there will be a large amount of polluted sludge after water treatment because the river

Hong He from which water will be taken contains vast amount of silt. So it is necessary to give a thought

Large category Middle category Device, etc. NoteDurable years

by Local Public

Enterprise Act

Average

replacement

years*1

Replacement

criteria*2

Actual usage

years*3Note

Mechanicalequipment

Agglomeration Agitation device Flash mixer 17 22 25 ～40Material quality is improved by usingstainless steel or resin.

Agitation device Flocculator 17 21 25 ～34Quality can be improved by changing material from

wood to synthetic wood. The shaft bearing structure is

simplified by increase of buoyancy

Sedimentation Sludge collector 17 22 25 ～34Quality is improved by using stainless steelor resin.

Clear water

reservoir Main pump Water pump 15 26 25 ～43Overhaul is done every 5 years. Sleep Impera is

replaced. Reviewing the plan to use it for 40 years for

alternative operation.

Electricalequipment

Power Transformer platform 20 23 25 28～32Planned to make gradual replacement,because the cost is so high.

Inverter 6 20 25 25

Emergency generator 15 24 30 ～40

Monitor control 10 19 20 ～16It is planned to make it shorter than theconventional criteria.

Measurement equipment Fluid volume meter 10 20 20 20

Water level meter 10 19 20 20

Water quality checker 10 17 15 15

※1：From P.48 of Guidelines for Water Supply Facilities for 2005　　　※2：Replacement criteria stipulated by business A in 1991.　　　※3：Actual performance heard on the site

Maker should check it once a year. It is avery important equipment, a failure ofwhich can cause operation stoppage.

Measurement

equipment

8-6

to the continuous cost required to deal with the sludge. For example, it is possible to largely improve the

dehydration effect in a shorter time by using the sun dry floor and its operation know-how in which the

sand drain method developed by a water treatment plant in Hiroshima Prefecture is utilized, thus

effectively reducing the polluted sludge to be treated. It is considered to contribute to the long term cost

reduction by introducing such technologies and know-how.

d) Management and operation know-how which assures safety, stability, and efficiency

As for the operational aspect of water supply business, the local autonomies in Japan have been

conducting good management and operation such as observance of the world standard for water quality,

maintenance and management of the appropriate facilities, and safety. Now in this water supply

business many initiatives are being taken in order to introduce the efficient management know-how of the

private sector. For example, in Hiroshima Prefecture a water supply company was founded as a public

and private joint venture with a heavier weight on the private sector, which was the first case in Japan. It

is providing water supply services safely on a stable manner by making the most of the good combination

of the two sectors with different strengths. By applying this know-how to a variety of service sectors such

as human resources fostering, operation assistance, technical assistance, maintenance of resources and

equipment, etc. it will be able to realize an efficient operation as well as make contribution to a long term

operation cost reduction.

e) Introduction of IT technologies

It is expected that there will be rather few human resources who are experienced in management of water

treatment plants in foreign counties and their qualities are diverse. In order to conduct inspection of the

operation and related facilities in a short time without fail, it is considered to be effective to introduce the

visual inspection system by using tablet terminals. Presently in Hiroshima Prefecture this kind of

approach is being made and there is a lot of possibility to contribute to reduction of the operation cost by

making a transfer of this experience to overseas businesses.

The introduction of IT technology will be effective even for prevention of water leakage. About 20 to

40 % of the water treatment plants overseas suffer from a serious water leakage from the pipes. The

fundamental measures will be replacement of the old pipes, but it will take a long time as well as a large

financial cost. It will be possible to perform the best cost-effective pressure control efficiently by

detecting leakage points and making analysis of the pipes.

f) Expected direct effect on the Japanese economy

If a Japanese company can get this project by taking advantage of its supremacy, not only the business

owner itself but also other Japanese companies will directly benefit from the project through provision of

goods at the facility development stage or a variety of services at the management operational stage. The

Japanese companies which already operate in the local market can be indirectly benefit from the project,

because they can operate in a good business environment thanks to the high quality infrastructure

8-7

developed as a result of this project and increase production and improve quality of the products in the

hygienic environment for the employees.

g) Effect on the local economy

The Hiroshima Prefectural Government puts an emphasis on the assistance and support to the small and

medium sized companies which are making challenges to the overseas water business, etc. so that they

can acquire the Asian growth markets and promote the local economy through “The Environmental

Cleanup Industrial Cluster Formation Project (Creation of occasions for matching and subsidy assistance,

etc.)”

It is not easy for the small and medium sized companies to enter into overseas markets due to varied

obstacles related to limited management resources. The small and medium sized companies which

participate in this project as a part of the prefectural government’s project will benefit from this project by

accumulating actual performances and know-how, getting a lead to business expansion, becoming a

business model for other companies and expanding business relationships, thus leading to the local

economy vitalization.

For this objective the prefectural government intends to continue to give a strong assistance to the

companies making efforts toward the participation in this project through the cluster formation initiative,

while promoting the partnership with the Ha Nam Province with which a collaboration treatment in the

environment-related industrial sectors was already concluded toward the realization of this project and

success of acquiring business ownership by Japanese companies.

(3) The Measures Required to Improve the Possibility of Getting Orders by Japanese Companies

For the infrastructure export, although the tackling by a private company is important in the first place, it is

necessary for both the public and private sectors to cooperate because of the following three reasons: 1) The

scale of the initial investment is huge, 2) it takes a long time to collect the investment made, 3) there is a strong

influence of the policies of the country where the company operates.

Especially in the case of a newly emerging country where the economy is not strong enough to secure the

collection of water (sewerage) fee, different from other industries, the fee collection sometimes cannot be

sufficiently secured nor business viability due to un-controllable factors such as foreign exchange rate change. In

case of an emerging country which is likely to put more stress on the initial order cost, private companies should

make their best efforts to make a proposal for reducing the life cycle cost (the total cost of construction and

operational cost). However it is also important for the public sector to resort to an effective policy in order to

provide risk hedge which cannot be controlled by the private sector. In this perspective, the policies and

measures required for the Japanese companies to improve the possibility of getting a chance are divided into

some categories in terms of the status of the competition environment, the financial aspect, the approach method

8-8

to PPP project, and the legislative preparedness.

1) The status of the competitive environment

Table 8-2 shows the issues and proposals concerning the competitive environment. The biggest challenge for

Japanese companies when competing with foreign companies is that their supremacy in the total cost and

quality are difficult to make understood by the clients and tend to lose the competition as a result. In order to

conquer this difficulty it is very important for the Japanese companies to put their superb technologies in the

high level specifications to win the competition. It is also indispensable to make sure that the user properly

evaluates LCC. In the case the actual operation cost becomes larger than the proposed LCC, it can be possible

to impose a penalty on the operator regarding the cost surplus after the operation start of facility. By doing this

it becomes easier to eliminate businesses which do not keep promises. As for fair evaluation it is required to set

up a third party committee for fair evaluation (temporary naming) so that it can make a transparent evaluation.

Table 8-2 Issues and Proposed Countermeasures to Create Competitive Environment

View point Issue Proposed Countermeasures

1.Competition environment improvement

In many cases Japanese companies get defeated in competition because of rather expensive initial cost and the difficulty to make the supremacy of total cost and quality understood by the clients.

• They can become more competitive by putting the technical supremacy in the specification at the early planning stage.

• Proper evaluation of LCC (Life cycle cost) Example：In case of cost surplus a penalty is given to the EPC operator.

• Third party committee for fair evaluation (temporary naming) will conduct a more transparent evaluation. (Example: evaluate the actual performance by the client country＋Japanese staff)

There is a gap between the Japanese style proposal and the actual status of the client county.

• Propose the equipment and system which fit the local status (Provide good products cheaply.)


The second challenge is that in some cases there is a gap between the Japanese company’s proposal and the

actual situation of the local area. It should make a proposal for the minimum sized economical equipment and

system which fits the local environment without depending too much upon their experiences in Japan.

2) The financial aspects

Table 8-3 shows the issues and proposals concerning the financial aspects. The first issue is the difficulty to

8-9

secure cash flow because of low income from water fee. Its countermeasure is to use the assistance funds of

Japan as the base capital and cover the shortage from the local government, etc. Specifically speaking, it is the

use of the free financial aids intended to respond to the business ownership in addition to EBF or VGF at an

earlier stage. The second issue is that there will be mismatch between the currencies if the financial currency

and the currency by which water fee income is collected in the local area are different. Its countermeasure shall

be to use the U.S. dollar for settlements, or to establish swap market of the currency of the emerging country or

to make a previous agreement on compensation method in case of the shortage of water fee at the time of

exchange rate change. The third issue is about the credit risk of the local autonomy, etc. as the off-taker. In

order to compensate this, the warranty and insurance by the public financial institutions which can take the

sub-sovereign risk should be used.

Table 8-3 Issues and Proposed Countermeasures concerning the Financial Aspects

View point Issues Proposed Countermeasures

2.Finance

It is difficult to secure cash flow because of low income from water fee.

• Use the assistance funds of Japan as the main capital and compensate the shortage by funds from the local government. (use of the free financial aids intended to respond to the business ownership in addition to EBF or VGF at an earlier stage .)

Currency mismatch occurs when the currency used for finance and the currency by which water fee is collected in the local area is different.

• Use U.S. dollar for settlement. • Establish swap market for the currency of the

developing country.(Long term challenge) • Pre-agreement on the water fee at the time of

exchange rate change.

Credit risk of the local autonomy as the off-taker.

• Warrant/ insurance by the public financial institutions which can take the sub-sovereign risk.


3) The approach method to PPP project and legislative preparedness

Table 8-4 shows the issues and proposals concerning the legislative preparedness. The approach method is

important in order to make PPP project a success. In case of an emerging county where fundamental

infrastructures for design, procurement and construction are not yet stabilized, it is vital for the Japanese

company itself to collect the necessary information and proceed the business in cooperation with the local

enterprises, while putting emphasis on engineering. By doing this kind of detailed approach and care it will be

possible to establish a trustworthy relationship with the client country government. As for risk burden, it is

necessary to previously conclude an agreement between the Japanese enterprise and the client country

government.

8-10

When doing business with an emerging country with the legislative structure still being in progress, it is

required to perform collaboration and explanation which favor the client country. It is required to continue

jointly working with operators, technicians, and legislative specialists in order to tackle with not only technical

problems but also all the related laws and regulations. In such an occasion it is required to make explanation

which is easy for the client people to understand regarding the project contents and its merit.

Table 8-4 The issues and proposals concerning the approach method to PPP Project and the Legislative

Preparedness

View point Issue Proposed Countermeasures

3.PPP (Mainly for

South-east Asia)

Approach to success

• Engineering oriented (for emerging countries)：Infrastructures for design, procurement and construction are not stabilized (legislation, etc.). So the Japanese company will collect information by itself and cooperate with the local enterprises to make progress the project.

• Do this activity by paying attention to the details and establish a trustworthy relationship with the client country.

Risk burden • Decide how to share the risk burdens between the Japanese company and the client country government.

4.Legislative preparedness (Mainly for

South-east Asia)

Cooperation and explanation which fit the

client country

• As for PPP business, in many cases the emerging countries have not fully established the legislative structure. It is necessary to tackle with the legislation not only related to technologies but also the others. Jointly work with operators, technicians and legal specialists.

• Explain the project contents in an attractive and easy-to-understand manner to the client country.


As described under the above 2), it is important for the Japanese company to quantitatively explain Japanese

technical supremacy such as long machine life of Japanese products and to cooperate with the client country to

foster human resources who can manage and operate the facility while introducing our excellent energy saving

technologies and safe and efficient management know-how as well as IT.

study on ha nam province moc bac water supply project in viet nam

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