SAWACO es la empresa socialista de Agua de la ciudad Ho Chi Minh, la Hidrocapital de la ciudad capital de la República Socialista de Vietnam. Para prestar un mejor servicio realiza asociación con empresas privadas, PPP. Los amigos de Hidroven deberían viajar a Vietnam y retomar una ruta que abandonaron, hace 15 años.

1. SAIGON WATER CORPORATION
(SAWACO)
PUBLIC – PRIVATE PARTNERSHIP
IN NON-REVENUE WATER
REDUCTION
IN SAWACO
1

2. BRIEF ON WATER SUPPLY NETWORKS OF
HCMC

POPULATION OF HOCHIMINH CITY:
7,123,000

TOTAL CAPACITY OF WATER PUMPED INTO NETWORK
1,350,000 m³/day

TOTAL PIPELINE LENGTH (Ø100mm - Ø2400mm )
: 3,800 km

TOTAL WATER METERS ON THE NETWORK
: 740,000

NON-REVENUE WATER RATE
: > 40 %
:
2

3. DEVELOPMENT DEMAND UP TO 2025

CAPACITY OF WATER PUMPED TO NETWORK - INCREASED TO:
3,200,000 m3/day

PIPELINE EXPANSION (Pipe with diameter from Ø100mm up):
2,775 Km

PIPE REHABILITATION:
933 Km

NON-REVENUE WATER – REDUCED TO:
25%
ESTIMATED FINANCE REQUIRED FOR THE DEMANDS: ABOUT USD 4 BILLION
NEED INVESTMENTS FROM SOURCES INSIDE AND OUTSIDE THE COUNTRY
WITH AN IMPORTANT INVOLVEMENT OF PRIVATE SECTOR
3

4. PERFORMANCE-BASED
CONTRACT
ONE KIND OF
PUBLIC – PRIVATE PARTNERSHIP
4

5. ADITIONAL LEAKAGE REDUCTION CONTRACTS
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-thanoptimal
5

6. ADITIONAL 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.
6

7. ONCEPT OF PERFORMANCE-BASED CONTRACT
1)
2)
3)
This is a new concept
Contract is designed to increase the efficiency and
effectiveness of water distribution networks and related
operations
Ensures that the leakage will be significantly reduced
and the reduced leakage levels will be maintained over
several years
7

8. ONCEPT OF PERFORMANCE-BASED CONTRACT
4)
5)
Contract significantly expands the role of the private
sector, from the simple execution of works to the
management and conservation of water distribution
networks
Performance Based Contract tries to address the issue
of inadequate incentives
6) Contractors are not paid directly for “inputs” or
physical works, but for the “output”: volume of
leakage reduced
8

9. ONCEPT OF PERFORMANCE-BASED CONTRACT
7)
Contractor is responsible for designing and carrying
out the actions he believes are necessary in order to
comply with the contract.
8)
Under the performance-based contract, the Contractor
has a strong financial incentive to be efficient .
9)
To maximize profits, the Contractor must reduce his
activities to the least possible volume of intelligently
designed interventions but also that pre-defined
outputs are achieved and maintained over time.
9

10. ONCEPT OF PERFORMANCE-BASED CONTRACT
10)
Necessary for the Contactor to have a good
management capacity having the means to define,
optimize and carry out in a timely basis the
physical interventions which are needed in the
short, medium and long term, to guarantee
efficiency
11) The role of the Employer is to enforce the contract
by verifying achieved leakage reduction, as well as
all other legislation and regulations the Contractor
must comply with.
10

11. BENIFICIARIES OF THE NEW CONCEPT
1.
Customers of Water Utility:
•
Customers will be able to know the service
level they will get for their water tariff.
•
Improved water quality and services
•
More new customers supplied
11

12. BENIFICIARIES OF THE NEW CONCEPT
2. Water Utility
•
Benefit from the cost-efficient water loss reduction
•
Able to sell saved volume of water to existing and
new customers without investment in new water
treatment plan
•
Opportunity for apply of new technology in
management of water supply systems to improve
the efficiency of general management
12

13. BENIFICIARIES OF THE NEW CONCEPT
3. Contractors
and other private enterprises:
•
The new type of contract opens up new business opportunities, in which
longer contract periods provide amore stable business environment.
4.
Future generations perhaps benefit most, since they will not
have to pay for excessive capacity of new water production
facilities.
13

14. APPLICATION OF NEW CONCEPT IN
HCMC NRW PROJECT
The performance-based contract has
been officially used in SAWACO from
2006 under Ho Chi Minh City Nonrevenue Water Management Project –
IDA credit
14

15. APPLICATION OF NEW CONCEPT IN
HCMC NRW PROJECT
The Project divided the water distribution
network of HCMC into six (6) zones with
totally estimated 500 District Metered Areas
(DMAs).
15

16. ZONE 3
ZONE 4
::
ZONE 2
ZONE 1
ZONE 6
ZONE 5
16

17. APPLICATION OF NEW CONCEPT IN
HCMC NRW PROJECT
The Project will establish around 200
DMAs in Zone 1 and Zone 2 and the
Performance-based Contract applies in
Zone 1.
17

18. CONTRACT AREA: ZONE 1
Zone 1: by Contractor
Zone 2: by SAWACO
This will give an opportunity
to compare the efficiency in
leakage reduction in the two
Zones.
ZONE 2
ZONE 1
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19. PERFORMANCE-BASED LEAKAGE
REDUCTION AND MANAGEMENT
CONTRACT
(Zone 1)
19

20. CONTRACT ELEMENTS

Establishment of District Metered Areas (DMA Establishment Works)

Leakage Reduction and Management Services

System Expansion Works (install service connections for new customers
within contract area)

Emergency and Unforeseen Works (leak repairs on mains outside contract
area …)

Transfer of Technology
20

21. LEAKAGE REDUCTION & MANAGEMENT

Leakage reduction and management is the
key element of the contract reflecting the
public-private partnership

The Contractor has to execute all works,
provide all personnel, services, equipment
and materials required to achieve the
contractual targets.
21

22. LEAKAGE REDUCTION & MANAGEMENT

A special and new point in this Contract: Contractor
will not be paid directly for “inputs” but for “output”:
volume of leakage reduced.

By bidding, the Contractor will get “performance
fee” at unit rate per m3 of water saved, paid on the
basis of quarterly billings according to the volume
of water saved in respective quarters and unit rate
per illegal connection detected.
22

23. LIQUIDATED DAMAGES UNDER
CONTRACT
Liquidated damages will be applied if, for any
reasons attributable to the Contractor:

Quarterly DMA establishment targets are not met;

Annual minimum leakage reduction targets are not
met;

Leakage levels in established DMAs increase more
than the required levels under the Contract
23

24. ALLOCATION OF RISKS
CONTRACTOR’S RISKS
1.
Unqualified personnel mobilized
2.
New working environment and conditions: night
works in complicated traffic and flood in HCMC
3.
Difference in culture, habits, and language.
24

25. ALLOCATION OF RISKS
CONTRACTOR’S RISKS
4.
Coordination and support of water supply joint stock
companies and customers
5.
Not in time assistant from Transport Department in license of
excavation permits
6.
Changes in laws and regulations and inflation during the
Contract period
25

26. ALLOCATION OF RISKS
EMPLOYER’S RISKS
1.
Capability of coordination, management of network, and
strong support from stakeholders in execution of the Contract
2.
Inaccurate maps and drawings
3.
Contract indemnity for late response to eligible requests from
the Contractor, especially in payment.
26

27. ALLOCATION OF RISKS
EMPLOYER’S RISKS
4.
Changes in laws and regulations during Contract period
5.
Inflation causing additional costs for contract execution
6.
Support of customers both in day time and night time
7.
Not in time assistant from Transport Department in license of
excavation permits
27

28. ALLOCATION OF RISKS
EMPLOYER’S RISKS
8.
It may be a risk that the Contractor will request for
indemnity for delays caused by late settlements of
competent authorities for proposals from the
Employer, Contractor and Consultant as well as
delays caused by the Employer.
9.
Risk of loan cutting from the World Bank in case of
delayed contract execution, causing adverse
impacts to the overall project.
28

29. The above mentioned management and allocation of
risks will be a constant effort from the relevant parties
during the execution of the Contract as well as the
Project so that the Project will be successfully carried
out and benefits both the public and the private sides.
More new customers will be connected to the supply
network thanks to the saved volume of water from
NRW reduction and this is also one of the most
important objectives of the Public – Private Partnership
(PPP).
29

30. NEW TENDENCY OF JOINT VENTURE WITH
NRW REDUCTION INVESTORS

Currently there is a new tendency that many foreign
investors with high qualifications and experience in
water loss reduction expect to cooperate with
SAWACO in investment in reduction of non-revenue
water in Zone 3 and Zone 4 under the joint venture
association.

Investors will carry out projects with their own finance
and recover their investments. Profits will be
distributed on the basis of the agreement between
SAWACO and investors acceptable to competent
authorities.
30

31. NEW TENDENCY OF JOINT VENTURE WITH
NRW REDUCTION INVESTORS

SAWACO has been submitted this to the People’s
Committee of HCMC for its acceptance as a basis policy
for SAWACO to proceed with negotiations with foreign
investors.
31

32. Zone 3 and Zone 4
ZONE 3
ZONE 4
32
::

33. SAIGON WATER CORPORATION
------oOo------
THANK YOU FOR YOUR ATTENTION !
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