Current Status and Policy on PPP
in the Sewerage Sector in Japanand Vietnam
Norihide TAMOTO
JICA Expert (Sewerage Policy Advisor)
in Ministry of Construction, Vietnam
November 2022

1

Contents
1. Current status of sewerage projects inVietnam
2. PPP projects in Japan
3. Challenges for PPP sewerage projects inVietnam
4. Conclusion

21. Current status of sewerage
projects in Vietnam

3

Rivers in Hanoi

To Lich River

Lu RiverPhoto by: Takatoshi WAKO

Thuy Khue Channel

4Surface Water Quality in Vietnam(Ammonia as an example)
The water quality of surface water bodies are significantly exceeding the standard
value in the national regulation.

Data source: WEPA Outlook on Water Environmental Management in ASIA 2018
http://wepa-db.net/3rd/en/publication/2018_outlook/wepa_outlook_report_2018_en.pdf

5Wastewater Treatment Ratio(Only 14% in 2020)
About only 14% of urban wastewater volume is collected and treated, which is far behind from thenational target to achieve wastewater treatment ratio in urban centres of 50 % by 2025 and 100%by 2050 respectively.

It seems to be difficult to reach the target by continuing the current trajectory under the situation
where investment resources and choices for applicable technologies are limited.
In Japan,

Wastewater Treatment Ratiio
in Urban Cnters (%)

Wastewater is discharged through combined
sewer system into rivers
Photo by: Makoto IBARAKI, 9 Jan. 2019
(To Lich River in Hanoi City 9 Jan. 2019)1009080
7060
50
40
3020
10092% in 2020
100 % in 2050

National Targets

In Japan,
70% in 2000

50 % in 2025
In Japan,
14% in 1970
14 % in 2020
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

6Development of Sewerage System(71 plants under operation)

As of the end of 2020, 71 centralized WTTPs are under operation with total capacity of 1,383,000
m3/day in 36 centrally run cities and provinces since the first small-scaled WWTP in Hanoi city
started operation in 2005

1,400,000

Accumulated Capacity of WWTPs (m3/day)60

Number of WWTPs

1,200,000

50

1,000,000

40

800,000

30600,000
400,000*Operation start years of 8 WWTPs(relevant to 31,300 m3/day) areunknown.

200,000-702005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

20

Number of WWTPs

1,600,000

Accumulated Capacity of WWTPs(m3/day)

1007

Projects Under Construction (80 plantsunder design/construction)
About 80 WWTPs are under design/construction; it is expected that total capacity ofwastewater treatment would increase by 3 million m3/day.

 Yen Xa WWTP in Ha Noi City
 CAS, 270,000m3/day, JICA, Underconstruction
 Pipe jacking is adopted(Photo: JFE Engineering, 2022)

 Binh Hung WWTP in Ho Chi Minh City
 CAS, 141,000 +328,000 ->469,000m3/day, JICA
 Pipe jacking is adopted(Photo by : Mr. Ibaraki, JICA Expert, Feb. 2019)8

Difficulties and Challenges in Wastewater
Management in Vietnam
1. Poor qualities of sewer network and House connection
Causing inefficient wastewater collection, ineffective water environment improvement andless volume and concentration of Inflow leading poor performance of invested WWTPs.

2. Poor sludge and septage management
The volume of sludge are estimated to rapidly increase.

3. Lower pollution load in influent to WWTP
Use of septic tanks and poor quality of sewer networks make the pollution load lower, anddifficult to estimate the pollution load.

4. Requirement of Wastewater treatment level
Removal of Nitrogen and Phosphorus is required for every WWTP.

5. Application of Drainage Service Price
Expected to be accelerated to improve financial condition of sewerage management.
9Issues of Sewer Networks and House
Connection

Existing sewer networks and house connection quality is poor, which cause wastewater
infiltration into the ground and dilution of wastewater.

Street drain is used as a part of combined sewer
network (Hanoi city, November 2020)

Poor house connection quality(Hanoi city, September 2020)10

2. PPP projects in Japan11

Forms of Private Sector Participation
Privatization

PrivatePPPPFIOwnership

DesignatedAdministrator
Comprehensive
Outsourcing

BOT, BTO, Concessions

DBO

Utilization of
Public Estate

Public Works

PublicParticipation of Private sector

PrivateSource: Ministry of Land, Infrastructure, Transport and Tourism of Japan (Translated by JICA expert)

12

Background of Promoting PPP
Projects in Sewerage Sector in Japan
Decreasing Population and Tariff Income

Decreasing Human Resources in
Municipalities(Number of employees is currently about 2/3 of those in 1997)

Large Demand for Replacement andRehabilitation of Deteriorated Pipelines
and Facilities
13

Funds for managing sewerage worksin Japan
Ministry ofFinanceState Funds

Budgeting
Ministry of Internal
Affairs andCommunications (MIC)

Ministry of Land,
Infrastructure, Transport andTourism (MLIT)

Local public financestability system(for generaladministration)
Municipality(General Account)

Local tax

State subsidy(around 50% ofconstruction/rehabilitation cost)
Municipality(Public Wastewater
Utility account)

Service charge(operation and maintenancecost, and const/rehab cost
not covered by grants)

Municipality’s generalaccount subsidy

Taxpayers

Undertake municipal
sewerage bonds(for construction.
Long term and lowrate)

Users

14Financial system of sewage works in Japan• Sewage works are implemented by the state and local budget, anduser charge appropriately.
Subsidiary
project

Construction

510

Government
Subsidy

Non-Subsidiary
project

Municipal
Bond

4.5
10

Municipal
Bond

0.5
10

Payment by beneficially, etc.

Operation &MaintenanceRainwater

Public Expenditures(tax, etc)

Repay

Rainwater

Wastewater

Public Expenditures(tax, etc)

UserCharge

Wastewater

User charge

15Current Situation PPP Projects in
Sewerage Sector in Japan(As of JFY 2018)

WWTPs(2,166plats in Japan)

Comprehensive Outsourcing471 plants (252cities)

Designated Administration

60 plants （20 cities）

DBO

24 plants （20 cities）

PFI (Conventional)

11 plants （7 cities）

PFI (Concession)

2 plants （2 cities）

Example of DBO (Carbonized fuel production at Kosei
WWTP in Shiga Pref.)Pumping stations

Pipelines(3,676stations in Japan)(470,000km in Japan)

652stns (124cities)

29 （20Cites）

1 station (1city)

2 stations (1city)

1 (1city)
Example of PFI (Resource
Recovering Project(Power generation andcarbonized fuelproduction) in ToyohashiCity)
16

Sewage concession in Hamamatsu City
(SEIEN WWTP) A 20-year concession of the plant and 2 pump stations is the first case of water sector

concession in Japan.(Concession operation started in April 2018)

 SEIEN WWTP covers the largest treatment area that treat 60% of wastewater in the City.

Akura pumpingstation

Hamana pumping station

Seien WWTP

-Project Scheme-

3. Challenges for PPP sewerage
projects in Vietnam

18

Vietnam needs more private investment
in Sewerage sector.
But is it attractive for investors?

Saigon News
September 12, 2022

(https://www.sggpnews.org.vn/national/vietnam-should-use-moreppp-in-wastewater-treatment101849.html)

19

PPP projects in sewerage sector inVietnam (as of 2021)
No.

Project name1

Bac Ninh
Bac Ninh
Binh Dinh

299,740651

BTBT

4

Wastewater treatment system of Tu Son town (phase 1) including
Component 1 (wastewater treatment plant) and Component 2(wastewater collection system)
Construction of Van Mieu's reservoir
Renovation and Upgrading the drainage system of Phu Hoa lake (Projectproposed by the investor)
Ha Thanh water treatment plant project (Project proposed by investor)

Total investment Contract
costs (billion VND)
type902,730
BTBinh Dinh

119,752

BOO

5678Wastewater treatment station in West Lake area
Yen So wastewater treatment station
Cau Nga
Project to solidify Hung Long Canal, Nga Son town, Nga Son District

Ha NoiHa NoiHa NoiThanh Hoa

600,280
6,224.5
N/A
76,130BT
BT
BTBT

910Wastewater treatment station in Cua Lo town
Tham Luong - Ben Cat canal wastewater treatment plant

Nghe An
Ho Chi Minh City

59,440
2,542

BTBT11Nam Viem (Phu My Hung) Wastewater treatment plant

Ho Chi Minh City

N/APPP

12Canh Doi (Phu My Hung) Wastewater treatment plant

Ho Chi Minh City

N/APPP

13Wastewater collection and treatment system in the tourist area north ofCam Ranh peninsula
Rainwater drainage system in Cam Ranh peninsula tourist area (phase 2)

Khanh Hoa

642.5

BT

Khanh Hoa

188.1

BTDa Nang
Soc Trang

N/A102,614

BTBOT231415
16

Flood drainage canal in Hoa Lien commune area
Upgrading centralized wastewater treatment plant in An Nghiep industrial
park

Location

Source: Inspection Report of Survey on Promotion of Investment on Sewerage Development in Vietnam (JICA, 2022)

20EX) Yen So WWTP in Hanoi

Source: Google Map
Photo by Tamoto (2015) 21

Ownership of sewerage facility
JapanVietnamSewerage Law

Decree on the drainage and treatmentof wastewater (No. 80/2014/ND-CP)

Article 3 (Management)
1. Municipalities are to conduct
installation, reconstruction, point repair,maintenance, and any otheradministrative operations of Public
Sewerage Systems.

Article 11 (Investors in drainage system)
1. A competent People’s Committee or adrainage unit shall be designated as aninvestor to construct drainage systemwith support from the State budget ofthe administrative division.
4. Investors in drainage systems are theirowners.
22

Law on Public-Private Partnership Investment(Law No.64/2020/QH14)

Types of contracts of PPP (Article 3)• BOT, BTO, BOO, O&M contract, BTL, BLT, Mixed contract
Investment sector of PPP projects (Article 4)• Transportation;• Power grids, power plants, except hydropower plants and thosesubject to the state monopoly requirement as provided in the
Law on Electricity;• Water resources and irrigation; clean water supply; waterdrainage and wastewater treatment; waste management anddisposal;• Healthcare; education – training;• Information technology infrastructure.
23

Decree on the drainage and treatment ofwastewater (No. 80/2014/ND-CP)• Pricing drainage service (Article 38)• In case drainage service price decided by the PPC is lower than that calculated
taking into account accurate and full costs of drainage and wastewater
treatment and reasonable profit level, the PPC shall compensate from local
budget to ensure the legal rights and benefits of the drainage entity.

• Formulating, assessing and approving the price of drainage service(Article 41)• (For drainage systems invested by the State budget)
The DOC shall take charge and cooperate with relevant agencies to formulate
plans for pricing the drainage service, the DOF shall assess the plan andsubmit it to the PPC for consideration.
• (For drainage systems invested by other sources)
The owners of the drainage system shall formulate plans for pricing thedrainage service, the DOF shall take charge and cooperate with the DOC toassess the plan and submit it to the PPC for consideration.
24

Drainage Service Price vs.
Environmental Protection Fee

10% of WaterPrice• Payment method for drainage service (Article 43)• The entities providing the water supply service shall collect payment fordrainage service according to the water bill from the discharging entities thatuse water from the common water supply system, and receive payment forcollection service;• The discharging entities that paid for drainage service are exempt from thefee for environmental protection according to current regulations on fee forenvironmental protection on wastewater.
Typical Structure in Sewerage Management by Using Drainage Service Price in Vietnam

Central Government
Legal and Technical Regulation
O&M Service
Local Governments

Payment

Drainage Service
Drainage Unit

Drainage Service Price (Full Cost Recovery Principle)

Discharger
25

Institutional Framework of Sewerage Sector
in Vietnam
Tasks
Sector policies andregulation

Key central agencies►►

Ministry of Construction (MOC)
Ministry of Natural Resources andEnvironment (MONRE)
Ministry of Science and Technology(MOST)
Ministry of Finance (MOF)►

Ministry of Construction (MOC)►►►►

Master planning

Key local agencies
►►►

►
►
►

State budget
allocation andmanagement►Project preparation

Departments of Construction (DOC)
Departments of Natural Resources andEnvironment (DONRE)
Departments of Science and Technology (DOST)
Departments of Finance (DOF)
Provincial People’s Committees (PPC)
Departments of Construction (DOC)
Departments of Planning and Investment (DPI)
Departments of Finance (DOF)

Ministry of Planning and Investment(MPI)
Ministry of Finance (MOF)►►

Departments of Planning and Investment (DPI)
Departments of Finance (DOF)►

Ministry of Planning and Investment(MPI)►

Departments of Planning and Investment (DPI)

Design andconstruction►

Ministry of Construction (MOC)►

Provincial People’s Committees (PPC)
Departments of Construction (DOC)

Operation andmanagement►►►►

Ministry of Construction (MOC)
Ministry of Natural Resources andEnvironment (MONRE)►►►

Departments of Construction (DOC)
Departments of Natural Resources andEnvironment (DONRE)
26(DOST)
Departments of Science and Technology

Source: Inspection Report of Survey on Promotion of Investment on Sewerage Development in Vietnam (JICA, 2022)

Drainage Service Price• “Drainage Service Price” which is stipulated in Decree 80 (2014) is graduallyreplacing “Environmental protection fee” to realizing “Polluters pay principle” and“Full cost recovery.”• For example, drainage service price in Ho Chi Minh City will increase up to 30% ofdrinking water price in 2025.
• According to survey by JICA expert and MOC in 2020, 38% (24/63) of local
governments have issued their Drainage Service Prices, including Ho Chi Minh
City and Hai Phong. (The others still charge only 10% of the drinking water price.)• Application of Drainage Service Price is expected to improve financial conditions.
Example: Drainage Service Price in Ho Chi Minh City
Item2022
2023
2024
Average Drinking Water Price
9,590
10,165
10,775
Vietnamese Dong/m3(0.42)(0.44)(0.47)(USD/m3)
Drainage Service Price/Drinking
15%20%25%
Water Price
Average Drainage Service Price
1,439
2,033
2,694
Vietnamese Dong/m3(0.06)(0.09)(0.12)(USD/m3)

2025
11,422(0.50)
30%
3,426(0.15)
27

Conclusion• At this moment, the followings are risk for investors and should be
addressed to promote PPPs in Vietnam, whereas there is large
demand for wastewater management;
1.
2.
3.
4.

Lack of regulations or toolkits for PPPs
Lack of guidance on management of fiscal risks
Limited capacity of both central and local governments (no experience insewerage sector after promulgation of new PPP law)
Low tariffs in wastewater• Besides the promoting private investment, there are many
problems in sewerage works in Vietnam in terms of technical andmanagement aspect.
• International assistance is still needed to breakthrough above
issues.
28

Ideal Future Circulation in Wastewater
Management for Sustainable Society
Sludge Reuse
Septage,
Other Biomass

Other Biomass

BiogasDewatered Sludge

SewageSludgeJokasoSewerage(decentralized) (centralized)
SystemSystem

Electricityor Fuel

Digestion

Fertilizer,
Agricultural use

Factories, Hotels

Financial
Households
Sustainability

Crops

Water Reuse
29Thank you for your attention!

Ha Long Bay, Vietnam (2019)30