DNP Water

completed

The Sponsor is Dong Nai Plastic Company (“DNP”) which was established in 1996 and has been listed in Hanoi Stock Exchange since 2006.  It is one of the large local manufacturers and distributors of plastic products, including plastic pipes for the water industry in Vietnam. Currently, DNP Plastics has 5 plastic factories located in various provinces throughout Vietnam.   The shareholding of DNP is diversified and there are mainly individual investors. Following the recent focus by the Government of Vietnam on private sector participation in the state-owned enterprises including the sale thereof, DNP has expanded into the water sector.  This has included acquisition of water treatment and supply companies, and development of similar greenfield operations.  These activities have recently been consolidated into a separate subsidiary, DNP Water (or “the company”) of which DNP is the majority shareholder.  To support the ongoing expansion of the company, IFC is considering a convertible loan in DNP Water.DNP’s existing water treatment and supply operations (directly and indirectly owned) include: i) 71% ownership of the Binh Hiep water company located in the Binh Thuan province; ii) 53% ownership of the Dong Tam water plant located in the Tien Giang province; iii) 26% ownership stake in the Long An water company located in the Long An province; iv) 30% ownership of the Nhi Thanh water project Long An province; and v) 33% ownership of the Bac Giang water project located in the Bac Giang province. The company’s activities cover 240,000 m 3 /day of treatment and / or supply capacity.Typical supply operations associated with the operations include a bulk water supply main which varies in distance depending on the area of supply, with the individual municipalities then having an off-take from the main line. Construction of the Nhi Thanh project is yet to commence, while that for the Bac Giang project has recently commenced and is being managed by a team from DNP Water.The technology and approach to water treatment at all facilities are widely used globally and proven to provide reasonable assurance of meeting water quality standards for potable water. Typically, this includes: i) water extraction via surface water (although one of the projects referenced above includes a small treatment facility reliant on groundwater extraction) and initial screening to remove debris and vegetation; ii) transfer of water to settlement ponds for initial sedimentation; iii) sedimentation using chemical coagulation/flocculation; iv) multimedia/sand filtration; and v) disinfection using chlorine. Thereafter, the water is discharged directly into the supply system.  Thus, aside from the aspects related to chlorine use which are discussed in the sections that follow, the water treatment process itself is of limited risk.