JCM Project Planning Study in Asian Region(JCM PS) 2014 – Final Report

MOEJ JCM Project Planning Study in Asian Region(JCM PS) 2014
Summary of the Final Report“Saving Energy by introducing optimum pumps in water purification
plant”(Implementing Entity: Nippon Koei. Co., Ltd.)
1．Overview of the Proposed JCM ProjectJapan
Nippon Koei
To summarize the survey results
To prepare business plan
To collect data for JCM methodology development
Ebara Corporation
To prepare business plan and financial plan
To study for the MRV method and implementation structure
Host country（Vietnam）
Ebara Vietnam Pump Company (EVPC)
To study for the MRV implementation structure
To collect data for JCM methodology development
Saigon Water Corporation (SAWACO)
To plan a project for efficient operation by introducing high efficiency pumps inits purification plant
Tan Hiep 1
To plan its operation policy and MRV implementation structure after
introducing high efficiency pumps in its facility
Study partners

Saigon Water Infrastructure Corporation/ Viet Technology Import Export
Investment Corporation (Veeteq)
To prepare business plan and financial plan

Figure 1 Implementation Structure for the StudyJCM Project Planning Study in Asian Region(JCM PS) 2014 – Final Report

Project site

Vietnam, Ho Chi Minh City

Category of project

Energy saving
This study is for the project to replace existing distribution pumps with energy
efficient pumps in a purification plant managed by Saigon Water Corporation(SAWACO). This study covers three existing pumps (out of five) introduced in 2002
which have specs 105 m3/min, 65 m and 1,411 kW, and three new pumps produced

Description ofproject

by Ebara Corporation which have specs 105 m3/min, approximately 40 m and 850
kW. Significant effects of GHG emissions reduction can be expected since operationtimes of purification plants is basically 24 hours a day,365 days a year.
Furthermore, applying for JCM projects is expected to be smooth since this project
is for a private business, and SAWACO, the management company of the plant, haspurchasing discretion. Therefore there is also no need for tender.

Expected project
implementerJapan

Ebara Corporation

Host country

SAWACO and Veeteq

Initial investment

JPY 170,000,000

Annualmaintenance cost

JPY 120,000,000

Willingness toinvestment

Date ofgroundbreaking

July 2015

Construction period

12 months

Date of projectcommencement

June 2016(only for electricity)Yes

JPY 170,000,000 is expected for initial investment of this project. Financing will beFinancial plan ofproject

handled by Viet Technology Import Export Investment Corporation (Veeteq), a
private company, that will bear financing costs.
Business plan and financial plan are now being finalized under discussion withEbara corporation, the outsourced vendor in this project.

GHG emission
reductions

Approx. 7,500 tCO2/year

JCM Project Planning Study in Asian Region(JCM PS) 2014 – Final Report

2. Study Contents(1) Project development and implementation
1) Project planning- Implementation Structure for the Project
The prime company of the international consortium is Ebara Corporation. The other three members of theconsortium are Tan Hiep 1 which manages and operates the target facility, Veeteq and Ebara Vietnam Pump
Company (EVPC) which is the affiliated company of Ebara Corporation.
Initial investment for the project will be financed by Veeteq mostly with its own funds mostly. Ebara
Corporation is in charge of design and construction. EVPC will implement maintenance for equipment andsupport for the monitoring, it will stay in close contract with Veeteq and Tan Hiep 1 which manage andoperate the purification plant.
Initially, Saigon Water Infrastructure Corporation was considered as the investment company, but later,
SAWACO proposed Veeteq as the result of preliminary meetings, since when Saigon Water Infrastructure
Corporation implements a project, it requires agreements of company and shareholders, and therefore it isdifficult to arrange schedules flexibly.
Later, Tan Hiep 1 was added as a consortium member to manage and operate the facility. Since Tan Hiep 1, a
department of SAWACO, will be in charge of the management and operation of the purification plant and it
can be called practical management and operation.

Source: Study TeamFigure 2 Implementation Structure for the Project

JCM Project Planning Study in Asian Region(JCM PS) 2014 – Final Report- Management Setup and Performance Records of Members in the Consortium
Tan Hiep 1 is in charge of the management and operation of Tan Hiep 1 purification plant managed bySAWACO. SAWACO has the ownership of the purification plant and collects & manages the water chargeof the clean water from Tan Hiep 1 purification plant to Ho Chi Minh City.
Veeteq, in charge of investments for the project, was established for business related to water techniques andservices in August 2014. Veeteq is still in a new firm, but Saigon Water Infrastructure Corporation, which
proposed this project to SAWACO, is the founder and most members of Veeteq accumulated experience ofbusiness at Saigon Water Infrastructure Corporation. The company profile of Veeteq is listed below.
Table 1 Company Profile of Veeteq
Description
Viet Technology Import Export Investment Corporation (Veeteq Inc.)
August 2014
VND 15,000,000,000- Equipment procurement- Installation of machinery and equipment- Manufacturer of machinery- Consultation of environmental technique- Civil engineering and construction- Management and operation-New construction of Tan Hiep 2 purification plant- Outline: equipment procurement and construction- Schedule: 2014-2017

ItemName
Date of Foundation
Capital FundBusiness Configuration

RecordSource: Study Team- Profitability Evaluation
The purpose of this project is to replace pumps in Tan Hiep 1 purification plant in Ho Chi Minh City. This
project aims at energy saving and plans to reduce GHG emissions reduction by replacing three pumps (out offive existing pumps).
Initial investment costs are estimated at JPY 170,000,000. Veeteq will bear the initial costs. It plans torecover the investment by sharing profits with SAWACO from the decrease of running costs by introducing
high efficiency pumps.

- Financial Plan for Initial Investments, Maintenance and Operation, and MRV
Initial investment for the project will be financed by Veeteq with its own funds mostly. Costs for themanagement and operation, electricity and MRV will be born by Tan Hiep 1.
Veeteq and Tan Hiep 1 will have close contract with EVPC for MRV implementation. Costs for MRV are
estimated at JPY 1,200,000. Financial plan including initial investments and costs for management, operationand MRV are shown below.
Item
Initial InvestmentsElectricity Costs
MRV Costs
Source: Study Team

Table 2 Financial PlanCostInvestor
USD 1,458,100
Veeteq
USD 1,020,581
Tan Hiep 1 (SAWACO)
USD 12,000 (per year)
Tan Hiep 1 (SAWACO)

JCM Project Planning Study in Asian Region(JCM PS) 2014 – Final Report- Risk Analysis
This project is positioned as a private project and there is no need for purchasing tender since a privatecompany will make the investment. SAWACO, the management company of the plant, has purchasediscretion; therefore there is no need to get permits of HCM City People’s Committee. SAWACO is a public
sector firm in Ho Chi Minh City and the Decree of Prime Minister 24/2005/QT-TTg states that SAWACO
has purchasing discretion for projects related to facilities which it owns. Risks and policies for the project are
shown below.

Risk Item
1)
Financial
Arrangements

SAWACO-2)
Non-completionof EPC*-3)
Cost Increase ofEPC*-4)
Settlements ofthe OwnershipYes

5)
Share of Profits

Yes

Table 3 Risk and Policy
Consortium
PolicyYes
Veeteq will be in charge of financial
arrangements.
It is necessary to check its own funds and creditline from banks.
Furthermore, SAWACO and Saigon Water
Infrastructure Corporation will make a
Memorandum Of Understanding (MOU) thatSaigon Water Infrastructure Corporation will takeover the projects if there is any problem inmaking financial arrangements.
Yes
Veeteq will pay the construction cost to Ebara
Corporation by Letter of Credit (L/C). Therefore,
Ebara can keep the cost and the project ofmanufacturing if Veeteq cannot pay.
Agreements of international consortium notes thatmembers of the consortium will take over othertasks (e.g. custom cleaning and installation) insuch a case.
YesIt is necessary to pay attention when deciding therates in the agreements since the main reason ofcost increase will be caused from the change ofcurrency exchange rates of JPY-VND.
Yes
The ownership of pumps will belong to Veeteq
until Veeteq collects initial investment costs.
After collecting costs, the ownership will belong
to SAWACO. Relating to the above, SAWACO
and Veeteq will sign a MOU. Also, thesettlements of the ownership will be described in
the MOU in the case Veeteq cannot continuebusiness.
Yes
SAWACO and Veeteq will share profits from thedecrease of running costs by introducing highefficiency pumps. Profits will have been shared
for seven years after the start of operation in theprovisional plan.

Source: Study Team
*EPC: Engineering procurement and construction

JCM Project Planning Study in Asian Region(JCM PS) 2014 – Final Report2) Permits and License for the project development and implementation
This study is a replacement project for the existing purification plant. Therefore, there is no need to gain new
permits for this project. Furthermore, the project does not include the installation of facilities or equipment
which requires permits or license.

3) Advantage of Japanese technology
The study targets the technology for high efficiency pumps for purification plants produced by Ebara
Corporation and the size of pumps is large-scale over 6,000 m3/h. There are five purification plants whichhave been installed pumps of this size in Ho Chi Minh City and its suburbs. There are additional five otherplants which will install pumps of this size in future.
In the market of pumps for purification plants, Company A, has the largest share with more than 45%, Ebara
Corp. has 25%, Company B has 15% and others have 4% to 5% each. Products by Japanese enterprise havethe advantage in technologies, but also have a disadvantage in cost, and therefore they do not have the top
share of the market.
In performance tests, the efficiency of pumps produced by three top manufacturers in the market of Ho Chi
Minh City was rated. In the size of pumps which can allow water flow 6,300 m3/h, pumps produced by Ebara
show the top efficiency with 91.2%, ones by Company B show 87.0% and ones by Company A show
86.0%.The following table and graph show the results.
Table 4 Comparison Table for Manufacturers
Ebara Corp.
Company ATypeMarket ShareCostEfficiency1)

Radial Flow Pump
(both sides)
Approx. 25%
10090.6%

Radial Flow Pump
(both sides)
Approx. 45%-50%
90-10086%Company B

Radial Flow Pump
(both sides)
Approx. 15%
90-10087%

Source: Results of hearings and performance tests by manufacturers (modified by study team)
1) Efficiency for the range of pump discharge from 6,000-7,000 m3/h4) MRV Implementation structure
EVPC will make a service contract with SAWACO and Tan Hiep1 for support of monitoring works.

TanHiep1 will make a service contract with EVPC for support of monitoring works and will monitor theelectricity consumption as a routine work. EVPC will issue monitoring reports as per the service contractwith Tan Hiep1 and SAWACO. EBARA will manage the implementation and report for monitoring as theprime company of the project and will submit annual monitoring reports based on the results of monitoringby EVPC.

JCM Project Planning Study in Asian Region(JCM PS) 2014 – Final Report

Source: Results of performance tests by manufacturers (modified by study team)Figure 3 MRV Implementation Structure5) Environmental integrity and Sustainable development in host country
This project aims to replace existing pumps with high efficiency pumps in the irrigation and drainage pumpfacility. The project does not construct new facilities, so it is not necessary to get new approval andauthorization about environmental impact assessment referring government ordinance (Decree No.
80/2006/ND-CP).
Moreover, the project contributeｓ to reducing environmental load as follows.
i.
ii.

Using paints with low heavy metal content
Reusing of casting sand made from pump production.

As a result of the interview surveys, the major pump manufacturers in Vietnam do not take measurements for
reduction of environmental load in the manufacturing process. However, the diffusion of EBARA’s pumps
will contribute to reduce the environmental load in Vietnam.

6) Toward project realization (planned schedule and possible obstacles to be overcome)
The Project needs to prepare some documents for subscription of subsidiary business system and build
consensuses within international consortium by mid March. If the subsidiary business system is adopted, theinternational consortium will contract in July or August with Ministry of the environment about thesubsidiary business system. Lead time will take nine or ten months. The transportation of pumps from Japanto Vietnam will take one month. The installation and testing operation will take about one month. Theoperation will start in July 2016.

JCM Project Planning Study in Asian Region(JCM PS) 2014 – Final Report

Table 5 Tan Hiep1 / Project Execution Schedule
123452015
6 78910 11 121

1 PS study
2

Technical inspection of exisiting
facilities

3

Subscription of subsidiarybusiness system

4

Decision to adopt subsidiarybusiness system

5Contract for subsidiary businesssystem (if adopted)

6 Manufacture
7 Transportation
8 Installation and testing operation
Source: Study Team

<9-10 months>

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