Economic – Financial Matters

7.6. Economic – Financial Matters

1. 
   Land use. electricity consumption and staff
   

The data related to treatment process indicated that:

• 
  Compare with the respective data in Japan (reference documents as below) found that the electricity consumption in Vietnam is lower. One of the reasons may be that the concentrations of influent in Vietnam as presented above are low and lower than those in Japan.
  
• 
  The electricity consumption in Hai Duong is too low that required to check.
  

2. 
   Average O & M cost per 1 m3 waste water treated
   

Recently, the Ministry of Construction issued Decision No.451/QD-BXD dated 21/4/2015 stipulated investment rate and cost norm for wastewater treatment. The cost norm is only for reference and did not used for signing contract and liquidation towards costs of domestic wastewater treatment. It includes direct costs, overhead, profit rate and VAT but excludes the depreciation costs of fixed assets. The decision also stipulated that when determining the unit cost per 1 m3 of treated wastewater must be based on technical and economic norms that approved by the PPCs as decentralized levels as well as the relevant regulations but do not exceed the costs as stated in this Decision.

Compared with the costs as stipulated in the MoC’s Decision found that the operation costs of almost utilities excluding Dak Lak and Binh Duong were lower than stated in this Decision.

3. 
   Ratio of approved sewerage fee to submitted one:
   

• 
  The approved fees that suitable with the social - economic development for each period, compliance with the capital investment aimed at improving service quality with increase in the roadmap to ensure the management. operation& maintenance and portion of investment costs to be are recovered;
  
• 
  The local budgets should ensure to cover the costs relating to management. O&M in case the revenues of wastewater services lower than the actual cost;
  
• 
  For domestic wastewater, the fees are calculated based on the volume of wastewater.
  

• 
  2/13 utilities with low rate that below 1 as including Bac Ninh (0.21) and Dak Lak: (0.17)
  
• 
  The remaining utilities (11/13) with rate as 1 or approximately 1
  

4. 
   Revenue and Cost Recovery
   

The cost recovery ratio defined as the revenue to costs excluding depreciation. It found that:

• 
  5 utilities without relevant data: Bac Giang. Hai Duong. Lam Dong. Phu My Hung and Binh Duong
  
• 
  Among 8 utilities with relevant data as:
  

• 
  3/8 utilities are below 1 (revenue lower than costs excluding depreciation): Ha Long (87%). Da Nang (95%). HCMC (95%);
  
• 
  3/8 utilities are approximately equal to 1 including Ha noi. Quang Binh and Soc Trang;
  
• 
  Only 2/8 utilities are greater 1 but not high: Bac Ninh (1.6) and Dak Lak (1.3)
  

5. 
   Ratio of actual revenue received/Revenue in O&M contracts
   

• 
  5 utilities did not provided relevant data: Bac Giang. Hai Duong. Lam Dong. Phu My Hung and Binh Duong
  
• 
  Among 8 utilities provided data:
  

• 
  5 utilities received 100%: Ha Noi. Quang Binh. Da Nang. HCMC. Soc Trang
  
• 
  3 utilities received below 100% as Ha Long (96%), Dak Lak (85%) and Bac Ninh (67%). These utilities will have difficulties in operation.
  

6. 
   Debt service ratio:
   

7. 
   Ratio of fixed assets
   

• 
  Dak Lak: the investment rate estimated at 3.7 million VND/person or 14.97 million/m3/day (using biological technology, capacity of 8.150 m3/day). In reference with MoC’s decision No.451/QĐ: the investment rate for domestic wastewater treatment using biological technology with capacity of 5,000 – 10,000 m3/day estimated at 9  12 million/ m3/day.
  
• 
  Lam Dong: with investment rate of 7.3 million VND/person or 27.6 million/m3/day (using TF and biological technology. capacity of 7,400 m3/day).