Viet Nam: Water Sector Investment Program - Tranche 3

Sovereign Project | 41456-043

Summary

In November 2014, Asian Development Bank (ADB) received the State Bank of Vietnam's periodic financing request letter for project 3 requesting $142.5 million to finance seven water companies (WSCs) having completed their project preparation and initiated advance action under project 2. The investments would improve water services for 1.2 million persons, including 17,500 poor households with their own piped water connection for the first time.

Project 3 outputs will support the multitranche financing facility (MFF) outputs: (i) increased coverage; (ii) improved business planning, financial management, and asset management; and (iii) effective nonrevenue water reduction for seven WSCs for the following: Bac Giang City, Cua Lo Town, Nghi Son Economic Zone, Tam Hiep-Dien Nam, Dien Ngoc Towns, Thai Hoa Town, Thai Nguyen City and Vinh City in four provinces.

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Project Name Water Sector Investment Program - Tranche 3
Project Number 41456-043
Country Viet Nam
Project Status Approved
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 3251-VIE: Supporting Viet Nam Water Sector, PFR 3
Ordinary capital resources US$ 142.50 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Governance and capacity development
Knowledge solutions
Partnerships
Private sector development
Sector / Subsector Water and other urban infrastructure and services - Urban water supply
Gender Equity and Mainstreaming Effective gender mainstreaming
Description

In November 2014, Asian Development Bank (ADB) received the State Bank of Vietnam's periodic financing request letter for project 3 requesting $142.5 million to finance seven water companies (WSCs) having completed their project preparation and initiated advance action under project 2. The investments would improve water services for 1.2 million persons, including 17,500 poor households with their own piped water connection for the first time.

Project 3 outputs will support the multitranche financing facility (MFF) outputs: (i) increased coverage; (ii) improved business planning, financial management, and asset management; and (iii) effective nonrevenue water reduction for seven WSCs for the following: Bac Giang City, Cua Lo Town, Nghi Son Economic Zone, Tam Hiep-Dien Nam, Dien Ngoc Towns, Thai Hoa Town, Thai Nguyen City and Vinh City in four provinces.

Special features of project 3 include (i) promoting technical and financial sustainability by enforcing water tariff increase to full-cost recovery, while reducing subsidies and meeting targets of selected key performance indicators; (ii) providing access to finance for second-ranked WSCs willing to secure their debt through water tariff increase, resulting in greater access to safe water for the poor; and (iii) promotion of engineering, procurement, and construction (EPC) contracts.

The Ministry of Planning and Investment (MPI), coordinating agency for the MFF, is responsible for (i) selecting WSCs that can access the MFF, and (ii) consolidating reports with the assistance of the WSCs. Under project 3, the project management is delegated to the WSCs, and the provincial people committees (PPCs) are the executing agencies. Each WSC has set up a project management unit (PMU) in its organizational structure under project 2. The PMU organizes the procurement of consulting services and works. The MPI has no role in procurement.

Project 3 is structured with one loan to the government. The Ministry of Finance will sign seven subsidiary loan agreements with the participating WSCs with a letter of guarantee from the respective PPC, after the loan signing. Each WSC, acting as implementing agency, will implement its procurement plan separately. The MPI will consolidate the reporting with assistance of the WSCs. The project performance management information system was set-up under project 1 and applies to all subsequent tranches.

Project Rationale and Linkage to Country/Regional Strategy The project 3 impact will be the sustainable provision of safe water in Bac Giang, Nghe Anh, Quang Nam, Thai Nguyen, and Thanh Hoa Provinces. The outcome will be the improved efficiency of participating water companies. The project impact and outcome address the core sector problem of Inefficient Water Service Delivery and contribute to the overall impact of the mutitranche financing facility sustainable provision of safe water in Viet Nam.
Impact sustainable provision of safe water in Bac Giang, Nghe Anh, Quang Nam, Thai Nguyen, Thanh Hoa Provinces.
Project Outcome
Description of Outcome improved efficiency of participating water supply companies.
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

increased coverage

improved business planning, asset and financial management

nonrevenue water reduced.

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location
Safeguard Categories
Environment B
Involuntary Resettlement B
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects

Project 3 is categorized B for environment, as environmental impacts are not reversible and primarily related to construction works and the safe disposal of sludge the WTPs produce. Those would be mitigated through environmental management plans (EMPs), covering design, pre-construction, construction, and operations phases. Climate resilience measures have been integrated into the project primarily pertaining to water availability as well as site preparation. Environmental impacts related to siting, design, construction, and operation, and mitigation measures for environment impacts are incorporated in the EMPs.

The final EMPs specific to each subproject, cleared by ADB, will form part of the contract bidding documents. The adequate incorporation of environmental considerations during design, and allocation of sufficient budget for operation and maintenance will mitigate the potential adverse impacts during operation. Water balance will be maintained by the water utilities through compliance with the Decree 201/2012 on water abstraction. Public consultations were conducted as part of the initial environment examinations (IEEs) and include communities upstream and downstream of water source and intake points. The IEEs will be updated during detailed design.

Involuntary Resettlement

Project 3 is categorized B for involuntary resettlement because the seven subprojects are assessed to cause potential nonsignificant involuntary resettlement impacts.

For the Vinh Subproject, the investments will support pipe laying and pipe replacement within public roads and hence there is no detailed alignment yet. Should there be any land acquisition and resettlement impacts during the final alignment, the WSC will prepare a RP, based on the MFF RF during detailed design.

One subproject in Cua Lo, already completed land acquisition and resettlement activities for which a due diligence report is prepared. Land acquisition for the construction of the water treatment plan is about 8.2 ha, managed by Nghi Hoa communal people's Committee and 1.25 ha for booster pumping station and administration office is sandy soil and managed by Nghi Hoa ward of Cua Lo town. None of the 32 HHs own the affected land; local authorities had allowed people to temporarily plant trees and cultivate fish on public land. The compensation payments for all assets was paid to them and the due diligence report confirms the same. There are no gaps in accordance with MFF RF and no CAP is required.

The remaining five subprojects include about 420 affected households (about 1,890 people) to be affected under project 3. Those impacts are mostly partial with no relocation required and no structure affected. There are 26 severely affected households (117 people) that will lose more than 10% of their total productive land holding under project 3; 25 households in Nghi Son Economic Zone and 1 in Thai Hoa Town. The RPs and the entitlement matrix include sufficient provisions and mitigating measures for all the impacts. Involuntary resettlement is limited to the footprint required to build the water treatment plants (WTPs) and the pumping stations. The construction of the networks mostly takes place in the right of way of the urban road network with temporary land acquisition and resettlement impacts. All unanticipated impacts will be mitigated in accordance to the MFF RF. When there are information changes noted after detailed design and during project implementation, project 3's RPs will be updated and disclosed.

Indigenous Peoples

Project 3 is categorized C for Indigenous Peoples. Due diligence confirmed that there are no ethnic minority peoples who may be considered Indigenous Peoples per the Safeguard Policy Statement present in the project 3 subprojects' areas.

Nevertheless, the MFF's indigenous peoples planning framework will guide the application of indigenous peoples safeguards should any unanticipated impact on ethnic minority communities arise during project 3's implementation

Stakeholder Communication, Participation, and Consultation
During Project Design The Water Companies have conducted stakeholders workshops during the project preparation.
During Project Implementation

A Stakeholder Communication Plan is included into the Project Administration Manual.

A Participation Plan is included into Supplementary Appendix 4.

Responsible ADB Officer Hubert M. Jenny
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Urban Development and Water Division, SERD
Executing Agencies
Nghe An Water Supply One Member Limited CompanyTHAO.NAWSCO@GMAIL.COM.VNNo. 32 Phan Dang Luu, Vinh City,
Nghe An Province
Cua Lo Water Supply One Member Limited CompanyCONGTYCAPNUOCCUALO@YAHOO.COMNghi Tan Ward,Cua Lo Town,
Nghe An Province
Bac Giang Water Supply and Sewerage One Mem Ltd CoTRANDIEUBG@GMAIL.COMNo. 386 Xuong Giang Street, Bac Giang
City, Bac Giang province
Quang Nam Wter Supply&Drainage Joint Stock CompanyTCTNQNAM@GMAIL.COMLot 6, Phan Boi Chau Str, Tam Ky city,
Quang Nam province
Song Chu One Member Limited CompanyTHUYSONGCHU@GMAIL.COM24 Pham Banh, Ngoc Trao Ward, Thanh Hoa
City, Thanh Hoa Province
Thai Nguyen Water Joint Stock CompanyDUONGTHAISON73@GMAIL.COMBen Oanh Street, Trung Vuong ward, Thai
Nguyen City, Thai Nguyen Province
Thai Hoa Water Supply One Member Limited CompanyCAPNUOCTHNA2010@GMAIL.COMLien Thang, Hoa Hieu ward, Thai Hoa Town
,Nghe An Province
Timetable
Concept Clearance -
Fact Finding 29 Aug 2014 to 05 Sep 2014
MRM 07 Oct 2014
Approval 27 Mar 2015
Last Review Mission -
Last PDS Update 03 Oct 2014

Loan 3251-VIE

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
27 Mar 2015 - - 31 Dec 2020 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 169.00 Cumulative Contract Awards
ADB 142.50 27 Mar 2015 0.00 0.00 0%
Counterpart 26.50 Cumulative Disbursements
Cofinancing 0.00 27 Mar 2015 0.00 0.00 0%

Safeguard Documents

See also: Safeguards
Title Document Type Document Date
Viet Nam Water Sector Investment Program: Initial Environmental Examination for Thai Nguyen Water Supply Subproject - Thai Nguyen City, Thai Nguyen Province Initial Environmental Examination Oct 2014
Viet Nam Water Sector Investment Program: Thai Nguyen Water Supply Subproject Resettlement Plan Resettlement Plans Sep 2014
Viet Nam Water Sector Investment Program: Initial Environmental Examination for Quang Nam Water Supply Subproject - Dien Nam-Dien Ngoc and Tam Hiep, Quang Nam Province Initial Environmental Examination Sep 2014
Viet Nam Water Sector Investment Program: Bac Giang Water Supply Subproject Resettlement Plan Resettlement Plans Sep 2014
Viet Nam Water Sector Investment Program: Initial Environmental Examination for Bac Giang Water Supply Subproject - Bac Giang City, Bac Giang Province Initial Environmental Examination Sep 2014
Viet Nam Water Sector Investment Program: Nghi Son Water Supply Subproject Resettlement Plan Resettlement Plans Sep 2014
Viet Nam Water Sector Investment Program: Initial Environmental Examination for Cua Lo Water Supply Subproject - Cua Lo Town, Nghe An Province Initial Environmental Examination Sep 2014
Viet Nam Water Sector Investment Program: Initial Environmental Examination for Vinh Water Supply Subproject - Vinh City, Nghe An Province Initial Environmental Examination Sep 2014
Viet Nam Water Sector Investment Program: Quang Nam Water Supply Subproject Resettlement Plan Resettlement Plans Sep 2014
Viet Nam Water Sector Investment Program: Initial Environmental Examination for Nghi Son Subproject - Nghi Son Economic Zone, Thanh Hoa Province Initial Environmental Examination Sep 2014
Viet Nam Water Sector Investment Program: Cua Lo Water Supply Subproject Resettlement Due Diligence Report Safeguards Due Diligence Reports Sep 2014
Viet Nam Water Sector Investment Program: Thai Hoa Water Supply Subproject Resettlement Plan Resettlement Plans Sep 2014
Viet Nam Water Sector Investment Program: Initial Environmental Examination for Thai Hoa Water Supply Subproject - Thai Hoa Town, Nghe An Province Initial Environmental Examination Sep 2014

Evaluation Documents

See also: Independent Evaluation

No documents found.


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