Hanoi yet to decide pricing of water from controversial Duong river waterworks

The Hanoi government has not decided the price of water supplied by a company with input from the Duong river, Chairman of the Hanoi People's Committee Nguyen Duc Chung said on November 15.

The mayor stressed that the municipal government had consulted with the Ministry of Finance and the rate of VND10,246 (US$0.44) per cubic meter of water is preliminary, not the charge that end users have to pay.

In the time ahead, when the investor carries out the project settlement, there will be an audit for the project. Then, the official production cost by Duong River Surface Water Plant will be determined.

The Hanoi mayor affirmed the safe water pricing has been transparent and implies no murky interests. The municipal government creates all favorable conditions for investors to timely supply clean water for the city’s residents, especially the construction of the entire water pipeline system to reach districts as far away as Thanh Oai, My Duc, Ha Dong, Dong Anh, among others.

Inside Duong River Surface Water Treatment Plant in Hanoi. Photo: Quoc Tuan

Earlier, at a press conference, Nguyen Viet Ha, director of the Hanoi Department of Finance, also affirmed that up to now, the clean water pricing of Duong river waterworks has not been determined because the project has not been finalized.

"Therefore, the Hanoi government has not provided any subsidy for this business and relevant units," said Ha.

The Hanoi government is negotiating with the Duong river waterworks and distribution units, on the principle that the wholesale price is not higher than the retail price, Ha added.

"The rate of US$0.44 per cubic meter is designed from temporary calculation, not a rate that end consumers have to pay," Ha stressed.

He explained that Duong River Surface Water Company also factored the interest on its VND3,998 billion (US$172.3 million) loan, which accounted for 20% of the production cost, into the wholesale price of its water.

Duong River Surface Water Company, the company behind the project, itself spent VND1 trillion (US$43.1 million) on compensating local residents for site clearance and relocation, Do Thi Kim Lien, the company’s chairwoman, told Tuoi Tre newspaper on November 13.

“We only invested in Duong river waterworks because the Hanoi government agreed to pay VND10,246 (US$0.44) per cubic meter of water. Otherwise, it wouldn’t have made sense for us to invest nearly VND5 trillion (US$215 million) in the project,” Lien told Tuoi Tre, explaining that the hefty cost of the plant is the driving factor behind its high water rate.

Work on the VND4,998 billion (US$215.4 million) Duong River Surface Water Treatment Plant, the largest waterworks in Vietnam's northern region, began in Hanoi’s outlying Gia Lam district in 2017.

The plant first began supplying clean water to a vast portions of the capital city in October 2018 when the first phase of construction was completed, just 15 months after its ground breaking.

While Duong River Surface Water Plant JSC currently sells water to distributors at VND7,700 (US$0.33) per cubic meter, Da River Water Investment JSC offers its safe water for the slightly lower price of VND5,000 (US$0.22) per cubic meter.

Controversy over the cost of treated water arose when a document was revealed saying that the Hanoi People’s Committee approved a plan in July 2017 to purchase water from Duong River Surface Water Plant JSC at a significantly higher rate, US$0.44, and resell it to distributors at subsidized costs.