Thu Duc Water Project (Second Contract)

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In December 2005, US$ 92 million BOO project of Thu Duc potable water treatment plant reached financial closure. The project was awarded in November of 2004 to Thu Duc Water BOO Corp(TDW) with total registered capital of US$ 30 million (VND 500 billion) to replace the foreign investors and resume construction of the water plant(Thu Duc Water Project, no 2657) in Thu Duc district. TDW was led by Ho Chi Minh City Infrastructure Investment Joint Stock Company (CII)(40%) and five other companies including the General Construction Corporation No. 1(20%), the Ho Chi Minh City Investment Fund for Urban Development(16%), the Refrigeration Electrical Engineering Joint Stock Company (REE)(10%), the Thu Duc Housing Development Joint Stock Company(10%) and the Water and Environment Joint Stock Company (WACO)(4%). The total cost of the project was expected to be US$92 million (VND 1.55 trillion). This potable water treatment plant project with a daily capacity of 300,000 cubic meters involved a development of two water-pumping stations, a clean water reservoir and a water treatment facility and a water pipeline under the BOO scheme. All the output will be wholesaled to Saigon Water Supply Corp. (SAWACO) at a fixed price of 16 U.S. cents per cubic meter in the first 10 years to supply for districts 2, 7, 9 and Nha Be. The project was financed through a loan contract of 12 year term US$62 million(VND 1.05 trillion) with the Vietnam Development Assistance Fund, including two years of grace, at an annual interest rate of 7.8%. In May 2009, TDW started supplying water to three districts east of HCMC with initial daily output of 100,000 cubic meters. In September 2010, the plant was put into operation. In December 2011, the Manila Water Company bought 49% stake in the Thu Doc Water Corp. EPC Contractor Issues In September 2005, TDW awarded the EPC contract to South Korea's Hyundai Rotem. The construction work began in the same month, which was expected to be done in 22 months. However, in August 2008, TDW announced that it would revoke the Hyundai Rotem’s guarantee deposit worth US$5.7 million, alleging that Hyndai Rotem was reluctant to execute the work and did not mobilize workers to finish the project according to the required progress. In Septermber 2008, TDW unilaterally terminated the contract with Hyundai Rotem and in March 2009, Truong Khac Hoanh, deputy director of TDW, made clear of its stance that TDW decided to terminate the contract because Hyundai Rotem failed to renew its credit guarantees as initially committed, and slowed down the progress of the whole project. In September 2009, Prime Minister Nguyen Tan Dung instructed Ho Chi Minh City leadership to order TDW to refund contract guarantee money worth US$5.7 million to Hyundai Rotem. And TDW was also asked to pay Hyundai Rotem in accordance with the volume of work the contractor had completed, which was 91%. In December 2011, the Manila Water Company bought 49% stake in the Thu Doc Water Corp. - this was updated on project 2657 - which has been cancelled.