WASHINGTON, D.C., July 1, 1998 --- The International Finance Corporation has approved a US$25 million loan for Binh An Water Corporation Limited (BAWC) to construct and operate the first private water treatment facility in Vietnam.
Vietnam recently embarked on a major program to expand its existing water systems and increase consumer coverage. The non-state sector is expected to contribute much-needed new capacity and financing to this program.
BAWC will undertake the project on a Build-Operate-Transfer (BOT) basis under a 20-year contract with the People’s Committee and the Water Supply Company of Ho Chi Minh City in southern Vietnam. The treated water will be sold to the Water Supply Company. By helping to ensure the efficient supply of clean water to the entire city, BAWC is likely to have an important demonstration effect.
Ho Chi Minh City is Vietnam’s largest city with an estimated population of over 5 million. Current water usage by residents is 140 liters a day and is expected to increase to 180 liters a day by 2001. When the new US$38 million water treatment plant is completed in 1999, it will supply 100,000 cubic meters a day of treated water, thus contributing an estimated 11 percent to Ho Chi Minh City’s water supply.
Mr. Declan Duff, IFC’s Director for Transportation, Telecommunications, and Utilities noted that, as the first project awarded under Vietnam’s BOT law, BAWC will illustrate the unique role of the non-state sector in the area of utilities and environmental services. IFC has a strong role to play in developing such pioneering transactions, which are at the forefront of Vietnam’s equitization program -- a program designed to promote the role of the non-state sector in the economy, he added.
IFC’s financing package consists of a loan of up to US$12.5 million for its own account and a syndicated loan of up to US$12.5 million for the account of commercial banks and financial institutions.
BAWC was formed by a consortium of Malaysian companies with interests in engineering, manufacturing, property development, and water supply and treatment. The companies include Sadec Corporation Sdn Bhd, IJM Corporation Bhd (IJM), Salcon Engineering Sdn Bhd (Salcon), and Malaysia South-South Corporation Sdn Bhd. IJM and Salcon will have managerial responsibility for the duration of the BOT contract.
IFC, part of the World Bank group, fosters economic growth in the developing world by financing non-state sector investments, mobilizing capital in the international financial markets, and providing technical assistance and advice to governments and businesses.
