The International Finance Corporation (IFC), the private lending arm of the World Bank Group, has committed a $15.3 million in the form of a convertible loan to DNP Water Joint Stock Company to support clean water supply for urban households in Vietnam, the IFC announced on January 9.
The Vietnam-based private company aims to expand the supply of clean water to urban households and increase its treatment and supply capacity by five times to one million cubic meters per day by the next eight years.
“IFC’s extensive water sector expertise will further help us bring international best practices to the Vietnamese water sector and improve our sustainability standards,” said Vu Dinh Do, chairman of DNP Water.
Vietnam has seen foreign investment in the water treatment space limited to provincial use and large-scale plants in big cities while many local-owned private water treatment plants are set up as a small-scale projects.
Meanwhile, only about 35 percent of the Vietnamese population is connected to piped water.
Manila Water Company, Salcon and Acuatico are among some of the foreign players that are present in Vietnam’s water treatment space.
World Bank estimates that Vietnam needs investments worth $1 billion per year up to 2020 for urban water supply to meet its current and future growth demand. While the government is facing fiscal constraints, it has called for more private financing to meet the clean water demand.
The proceedings of the IFC investment will be used to fund the construction of new bulk water treatment plants and the acquisition of privatized water supply companies.
The financing will support the growth of the company and “improve access to clean water in mainly second- and third-tier cities in Vietnam”.
“IFC’s financing in a private company will help reduce the capital investment burden on the government. It will further accelerate the leveraging of the private sector for critical infrastructure, and champion the growth of local entrepreneurs,” said Kyle Kelhofer, IFC senior country manager for Vietnam, Cambodia and Lao PDR.
To date, IFC has made up to 55 investments totaling $2.2 billion including mobilization over the last 10 years.