Sawaco Ho Chi-Minh ppp para lograr eficiencia

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SAIGON WATER CORPORATIONSAIGON WATER CORPORATION (SAWACO)

PUBLIC – PRIVATE PARTNERSHIP IN NON-REVENUE WATER REDUCTION

IN SAWACO

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POPULATION OF HOCHIMINH CITY: POPULATION OF HOCHIMINH CITY: 7,123,0007,123,000

TOTAL CAPACITY OF WATER PUMPED INTO NETWORKTOTAL CAPACITY OF WATER PUMPED INTO NETWORK : 1,350,000 : 1,350,000 m³/daym³/day

TOTAL PIPELINE LENGTH (TOTAL PIPELINE LENGTH (Ø100mm - Ø2400mm )Ø100mm - Ø2400mm ) : : 3,800 km 3,800 km

TOTAL WATER METERS ON THE NETWORKTOTAL WATER METERS ON THE NETWORK : 740,000: 740,000

NON-REVENUE WATER RATENON-REVENUE WATER RATE : > 40 %: > 40 %

BRIEF ON WATER SUPPLY NETWORKS OF HCMCBRIEF ON WATER SUPPLY NETWORKS OF HCMC

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DEVELOPMENT DEMAND UP TO 2025DEVELOPMENT DEMAND UP TO 2025

CAPACITY OF WATER PUMPED TO NETWORK - INCREASED TO:CAPACITY OF WATER PUMPED TO NETWORK - INCREASED TO: 3,200,000 m3,200,000 m33/day/day

PIPELINE EXPANSION (Pipe with diameter from Ø100mm up):PIPELINE EXPANSION (Pipe with diameter from Ø100mm up): 2,775 Km2,775 Km

PIPE REHABILITATION:PIPE REHABILITATION: 933 Km933 Km

NON-REVENUE WATER – REDUCED TO:NON-REVENUE WATER – REDUCED TO: 25%25%

ESTIMATED FINANCE REQUIRED FOR THE DEMANDS: ABOUT USD 4 BILLIONESTIMATED FINANCE REQUIRED FOR THE DEMANDS: ABOUT USD 4 BILLION

NEED INVESTMENTS FROM SOURCES INSIDE AND OUTSIDE THE COUNTRY NEED INVESTMENTS FROM SOURCES INSIDE AND OUTSIDE THE COUNTRY WITH AN IMPORTANT INVOLVEMENT OF PRIVATE SECTORWITH AN IMPORTANT INVOLVEMENT OF PRIVATE SECTOR

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PERFORMANCE-BASED CONTRACTPERFORMANCE-BASED CONTRACT

ONE KIND OF ONE KIND OF PUBLIC – PRIVATE PARTNERSHIPPUBLIC – PRIVATE PARTNERSHIP

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1) Contractor is responsible to carry out leak detection surveys

2) Contractor is paid for example per length of pipeline surveyed or per staff day

3) The results of this modality are in many cases still less-than-optimal

TRADITIONAL LEAKAGE REDUCTION CONTRACTS

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TRADITIONAL LEAKAGE REDUCTION CONTRACTS

4) Contractor has the wrong (or no) incentive and no obligation whatsoever to achieve maximum savings

5) Repairs are traditionally carried out by a third party; the leakage reduction Contractor is not accountable for anything and the results are sometimes not satisfactory.

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1)1) This is a new concept This is a new concept

2)2) Contract is designed to increase the efficiency and Contract is designed to increase the efficiency and effectiveness of water distribution networks and related effectiveness of water distribution networks and related operationsoperations

3)3) Ensures that the leakage will be significantly reduced Ensures that the leakage will be significantly reduced and the reduced leakage levels will be maintained over and the reduced leakage levels will be maintained over several yearsseveral years

CONCEPTCONCEPT OF PERFORMANCE-BASED CONTRACTOF PERFORMANCE-BASED CONTRACT

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4)4) Contract significantly expands the role of the private Contract significantly expands the role of the private sector, from the simple execution of works to the sector, from the simple execution of works to the management and conservation of water distribution management and conservation of water distribution networksnetworks

5)5) Performance Based Contract tries to address the issue Performance Based Contract tries to address the issue of inadequate incentivesof inadequate incentives

6)6) Contractors are not paid directly for “inputs” or Contractors are not paid directly for “inputs” or physical works, but for the “output”: volume of physical works, but for the “output”: volume of leakage reducedleakage reduced


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7)7) Contractor is responsible for designing and carrying Contractor is responsible for designing and carrying out the actions he believes are necessary in order to out the actions he believes are necessary in order to comply with the contract.comply with the contract.

8)8) Under the performance-based contract, the Contractor Under the performance-based contract, the Contractor has a strong financial incentive to be efficienthas a strong financial incentive to be efficient..

9)9) To maximize profits, the Contractor must reduce his To maximize profits, the Contractor must reduce his activities to the least possible volume of intelligently activities to the least possible volume of intelligently designed interventions but also that pre-defined designed interventions but also that pre-defined outputs are achieved and maintained over time.outputs are achieved and maintained over time.


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10)10) Necessary for the Contactor to have a good Necessary for the Contactor to have a good management capacity having the means to define, management capacity having the means to define, optimize and carry out in a timely basis the optimize and carry out in a timely basis the physical interventions which are needed in the physical interventions which are needed in the short, medium and long term, to guarantee short, medium and long term, to guarantee efficiencyefficiency

11) The role of the Employer is to enforce the contract 11) The role of the Employer is to enforce the contract by verifying achieved leakage reduction, as well as by verifying achieved leakage reduction, as well as all other legislation and regulations the Contractor all other legislation and regulations the Contractor must comply with.must comply with.


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1.1. Customers of Water Utility:Customers of Water Utility:

• Customers will be able to know the service Customers will be able to know the service level they will get for their water tariff.level they will get for their water tariff.

• Improved water quality and servicesImproved water quality and services

• More new customers suppliedMore new customers supplied

BENIFICIARIES OF THE NEW CONCEPTBENIFICIARIES OF THE NEW CONCEPT

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2. Water Utility2. Water Utility• Benefit from the cost-efficient water loss reductionBenefit from the cost-efficient water loss reduction

• Able to sell saved volume of water to existing and Able to sell saved volume of water to existing and new customers without investment in new water new customers without investment in new water treatment plantreatment plan

• Opportunity for apply of new technology in Opportunity for apply of new technology in management of water supply systems to improve management of water supply systems to improve the efficiency of general managementthe efficiency of general management

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3. 3. Contractors and other private enterprises:Contractors and other private enterprises:

• The new type of contract opens up new business opportunities, in The new type of contract opens up new business opportunities, in which longer contract periods provide amore stable business which longer contract periods provide amore stable business environment.environment.

4.4. Future generations perhaps benefit most, since they will not Future generations perhaps benefit most, since they will not have to pay for excessive capacity of new water production have to pay for excessive capacity of new water production facilities.facilities.

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The performance-based contract has The performance-based contract has been officially used in SAWACO from been officially used in SAWACO from 2006 under Ho Chi Minh City Non-2006 under Ho Chi Minh City Non-revenue Water Management Project – revenue Water Management Project – IDA creditIDA credit

APPLICATION OF NEW CONCEPT IN HCMC APPLICATION OF NEW CONCEPT IN HCMC NRW PROJECTNRW PROJECT

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The Project divided the water distribution network The Project divided the water distribution network of HCMC into six (6) zones with totally estimated of HCMC into six (6) zones with totally estimated 500 District Metered Areas (DMAs).500 District Metered Areas (DMAs).


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Network ZonesNetwork Zones

ZONE 4ZONE 4

ZONE 1ZONE 1

ZONE 5ZONE 5ZONE 6ZONE 6

ZONE 2ZONE 2

ZONE 3ZONE 3

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The Project will establish around 200 The Project will establish around 200 DMAs in Zone 1 and Zone 2 and the DMAs in Zone 1 and Zone 2 and the Performance-based Contract applies in Performance-based Contract applies in Zone 1.Zone 1.


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CONTRACT AREA: ZONE 1CONTRACT AREA: ZONE 1

ZONE ZONE 11

ZONE 2ZONE 2

Zone 1Zone 1: : by Contractorby Contractor

Zone 2Zone 2: : by SAWACOby SAWACO

This will give an opportunity This will give an opportunity to compare the efficiency in to compare the efficiency in leakage reduction in the two leakage reduction in the two Zones.Zones.

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PERFORMANCE-BASED LEAKAGE PERFORMANCE-BASED LEAKAGE REDUCTION AND MANAGEMENT REDUCTION AND MANAGEMENT

CONTRACTCONTRACT(Zone 1)(Zone 1)

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Establishment of District Metered Areas Establishment of District Metered Areas (DMA Establishment Works) (DMA Establishment Works)

Leakage Reduction and Management ServicesLeakage Reduction and Management Services

System Expansion Works System Expansion Works (install service connections for new customers (install service connections for new customers within contract area)within contract area)

Emergency and Unforeseen Works Emergency and Unforeseen Works (leak repairs on mains outside contract (leak repairs on mains outside contract area …)area …)

Transfer of TechnologyTransfer of Technology

CONTRACT ELEMENTSCONTRACT ELEMENTS

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Leakage reduction and management is the Leakage reduction and management is the key element of the contract reflecting the key element of the contract reflecting the public-private partnershippublic-private partnership

The Contractor has to execute all works, The Contractor has to execute all works, provide all personnel, services, equipment provide all personnel, services, equipment and materials required to achieve the and materials required to achieve the contractual targets.contractual targets.

LEAKAGE REDUCTION & MANAGEMENTLEAKAGE REDUCTION & MANAGEMENT

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A special and new point in this Contract: Contractor A special and new point in this Contract: Contractor will not be paid directly for “inputs” but for “output”: will not be paid directly for “inputs” but for “output”: volume of leakage reduced. volume of leakage reduced.

By bidding, the Contractor will get “performance By bidding, the Contractor will get “performance fee” at unit rate per mfee” at unit rate per m33 of water saved, paid on the of water saved, paid on the basis of quarterly billings according to the volume basis of quarterly billings according to the volume of water saved in respective quarters and unit rate of water saved in respective quarters and unit rate per illegal connection detected.per illegal connection detected.

LEAKAGE REDUCTION & MANAGEMENTLEAKAGE REDUCTION & MANAGEMENT

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Liquidated damages will be applied if, for any Liquidated damages will be applied if, for any reasons attributable to the Contractor:reasons attributable to the Contractor:

Quarterly DMA establishment targets are not met;Quarterly DMA establishment targets are not met;

Annual minimum leakage reduction targets are not Annual minimum leakage reduction targets are not met;met;

Leakage levels in established DMAs increase more Leakage levels in established DMAs increase more than the required levels under the Contractthan the required levels under the Contract

LIQUIDATED DAMAGES UNDER CONTRACTLIQUIDATED DAMAGES UNDER CONTRACT

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CONTRACTOR’S RISKS CONTRACTOR’S RISKS

1.1. Unqualified personnel mobilizedUnqualified personnel mobilized

2.2. New working environment and conditions: night New working environment and conditions: night works in complicated traffic and flood in HCMCworks in complicated traffic and flood in HCMC

3.3. Difference in culture, habits, and language.Difference in culture, habits, and language.

ALLOCATION OF RISKSALLOCATION OF RISKS

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CONTRACTOR’S RISKS CONTRACTOR’S RISKS

4.4. Coordination and support of water supply joint stock Coordination and support of water supply joint stock companies and customerscompanies and customers

5.5. Not in time assistant from Transport Department in license of Not in time assistant from Transport Department in license of excavation permitsexcavation permits

6.6. Changes in laws and regulations and inflation during the Changes in laws and regulations and inflation during the Contract periodContract period


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EMPLOYER’S RISKS EMPLOYER’S RISKS

1.1. Capability of coordination, management of network, and Capability of coordination, management of network, and strong support from stakeholders in execution of the Contractstrong support from stakeholders in execution of the Contract

2.2. Inaccurate maps and drawingsInaccurate maps and drawings

3.3. Contract indemnity for late response to eligible requests from Contract indemnity for late response to eligible requests from the Contractor, especially in payment.the Contractor, especially in payment.


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EMPLOYER’S RISKSEMPLOYER’S RISKS 4.4. Changes in laws and regulations during Contract periodChanges in laws and regulations during Contract period

5.5. Inflation causing additional costs for contract executionInflation causing additional costs for contract execution

6.6. Support of customers both in day time and night timeSupport of customers both in day time and night time

7.7. Not in time assistant from Transport Department in license of Not in time assistant from Transport Department in license of excavation permitsexcavation permits

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EMPLOYER’S RISKS EMPLOYER’S RISKS

8.8. It may be a risk that the Contractor will request for It may be a risk that the Contractor will request for indemnity for delays caused by late settlements of indemnity for delays caused by late settlements of competent authorities for proposals from the competent authorities for proposals from the Employer, Contractor and Consultant as well as Employer, Contractor and Consultant as well as delays caused by the Employer.delays caused by the Employer.

9.9. Risk of loan cutting from the World Bank in case of Risk of loan cutting from the World Bank in case of delayed contract execution, causing adverse delayed contract execution, causing adverse impacts to the overall project.impacts to the overall project.

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The above mentioned management and allocation of The above mentioned management and allocation of risks will be a constant effort from the relevant parties risks will be a constant effort from the relevant parties during the execution of the Contract as well as the during the execution of the Contract as well as the Project so that the Project will be successfully carried Project so that the Project will be successfully carried out and benefits both the public and the private sides. out and benefits both the public and the private sides. More new customers will be connected to the supply More new customers will be connected to the supply network thanks to the saved volume of water from network thanks to the saved volume of water from NRW reduction and this is also one of the most NRW reduction and this is also one of the most important objectives of the Public – Private Partnership important objectives of the Public – Private Partnership (PPP).(PPP).

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NEW TENDENCY OF JOINT VENTURE WITH NRW NEW TENDENCY OF JOINT VENTURE WITH NRW REDUCTION INVESTORSREDUCTION INVESTORS

Currently there is a new tendency that many foreign Currently there is a new tendency that many foreign investors with high qualifications and experience in investors with high qualifications and experience in water loss reduction expect to cooperate with water loss reduction expect to cooperate with SAWACO in investment in reduction of non-revenue SAWACO in investment in reduction of non-revenue water in Zone 3 and Zone 4 under the joint venture water in Zone 3 and Zone 4 under the joint venture association.association.

Investors will carry out projects with their own finance Investors will carry out projects with their own finance and recover their investments. Profits will be and recover their investments. Profits will be distributed on the basis of the agreement between distributed on the basis of the agreement between SAWACO and investors acceptable to competent SAWACO and investors acceptable to competent authorities.authorities.

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SAWACO has been submitted this to the People’s SAWACO has been submitted this to the People’s Committee of HCMC for its acceptance as a basis policy Committee of HCMC for its acceptance as a basis policy for SAWACO to proceed with negotiations with foreign for SAWACO to proceed with negotiations with foreign investors.investors.

NEW TENDENCY OF JOINT VENTURE WITH NRW NEW TENDENCY OF JOINT VENTURE WITH NRW REDUCTION INVESTORSREDUCTION INVESTORS

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Zone 3 and Zone 4Zone 3 and Zone 4

ZONE 4ZONE 4

ZONE 3ZONE 3

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SAIGON WATER CORPORATIONSAIGON WATER CORPORATION------oOo------------oOo------

THANK YOU FOR YOUR ATTENTION !

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Sawaco Ho Chi-Minh ppp para lograr eficiencia

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