Belgische Technische Coöperatie

Naamloze vennootschap van publiek recht met sociaal oogmerk

Coopération Technique Belge
Société Anonyme de droit public à finalité sociale

FORMULATION REPORT
FOR THE WATER SUPPLY AND SANITATION PROGRAMME IN BINH DINH PROVINCE
DGDC CODE: NN 3004523 NAVISION CODE: VIE 07 035 11

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CONTENTS
CONTENTS............................................................................................................................. 2 ABBREVIATIONS................................................................................................................... 4 1. ADOPTED OPERATING PROCEDURE...................................................................... 5 1.1 1.2
1.2.1 1.2.2 1.2.3

History of the formulation............................................................................................................. 5 Methodology of the formulation .................................................................................................. 5
Composition of the formulation team ....................................................................................................5 Activities of the formulation team...........................................................................................................6 List of persons met during the formulation...........................................................................................6

1.3
1.3.1

Validation of the identification...................................................................................................... 7
Project components ...................................................................................................................................7

2. 3.

ANALYTICAL RECORD OF THE INTERVENTION...............................................10 SECTORAL CONTEXT .................................................................................................11 3.1 3.2
3.2.1 3.2.2

General............................................................................................................................................ 11 Belgian strategy .............................................................................................................................. 11
Belgian experience in the sector of water and sanitation .................................................................. 11 Paris Declaration...................................................................................................................................... 12

3.3
3.3.1 3.3.2 3.3.3

Analysis of the other donors projects in the sectors................................................................ 12
Rural water supply................................................................................................................................... 12 Sanitation and Solid Waste Management............................................................................................. 13 Lessons Learned relevant for Program Design .................................................................................. 14

3.4
3.4.1 3.4.2 3.4.3

Institutional framework................................................................................................................ 15
Introduction ............................................................................................................................................. 15 Water and sanitation sectors.................................................................................................................. 15 National Execution ................................................................................................................................. 16

3.5
3.5.1 3.5.2

General context of Binh Dinh Province.................................................................................... 17
Location and natural conditions............................................................................................................ 17 Socio-economic conditions.................................................................................................................... 17

3.6
3.6.1 3.6.2 3.6.3

Water supply .................................................................................................................................. 18
Institutional framework.......................................................................................................................... 18 Policy framework..................................................................................................................................... 19 Rural water supply in Binh Dinh Province ......................................................................................... 21

3.7
3.7.1 3.7.2 3.7.3

Solid waste...................................................................................................................................... 22
Institutional framework.......................................................................................................................... 22 Policy framework..................................................................................................................................... 23 Sanitation and solid waste management in Binh Dinh province ..................................................... 24

4.

ADDITIONAL STUDIES .............................................................................................. 27 4.1 4.2 Institutional analysis...................................................................................................................... 27 Basic design reviews...................................................................................................................... 27

5. 6. 7.

TECHNICAL AND FINANCIAL FILE....................................................................... 28 RISK ANALYSIS............................................................................................................. 29 CROSS CUTTING ISSUES............................................................................................ 32

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7.1 7.2 8.

Environment.................................................................................................................................. 32 Gender/ Social economy/ Children’s rights/ HIV/AIDS..................................................... 32

REFERENCES............................................................................................................... 33

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ABBREVIATIONS
ADB AusAID BTC CEMDI CERWASS DANIDA DARD DGDC DoF DoNRE DPIU DWRM FR GoV HRD ICP IEC IRBM IS IWRM JSC LWR MARD MDG MPI MoC MoNRE NE NTP NWRC NWRS PCERWASS PPC PPMU PPP PWMMP SC SEDP SWMPD TNA TOR USSAP URENCO VDG VND WB WSSP WR Asian Development Bank Australian Agency for International Development Belgian Technical Cooperation Centre for Environmental Monitoring Data and Information Centre for Rural Water Supply and Sanitation Danish International Development Assistance Department of Agriculture and Rural development Directorate General of Development Cooperation Department of Finance Department of Natural Resources and Environment District Project Implementation Unit Department of Water Resources Management (MoNRE) For Reference Government of Vietnam Human Resources Development Indicative Cooperation Program Information, Education, Communication Integrated River Basin Management Identification Study Integrated Water Resources Management Join Stock Company Law on Water Resources Ministry of Agriculture and Rural Development Millennium Development Goals Ministry of Planning and Investment Ministry of Construction Ministry of Natural Resources and Environment National Execution National Target Program National Water Resources Council National Water Resources Strategy Provincial Center for Rural Water Supply and Sanitation Provincial People’s Committee Provincial Project Management Unit Public private partnership Provincial Waste Management Master Plan Steering Committee Socio-Economic Development Plan Solid Waste master Plans of the 4 districts Training Needs Assessment Terms of Reference Unified Sanitation Strategy and Action Plan Urban Environment Companies Vietnamese Development Goals Vietnamese Dong World Bank Water Supply and Sanitation Program in Binh Dinh Province Water Resources

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1. ADOPTED OPERATING PROCEDURE 1.1 HISTORY OF THE FORMULATION
The Indicative Cooperation Programme (ICP), signed on the 8th of March 2007 by the Joint Commission, focuses on two main sectors: (1) capacity building and institutional strengthening and (2) support for water and sanitation programmes (55-60 % of the budget). In September 2007, two separate identification studies were finalised in the water and sanitation sector: 1. Identification study for water supply and sanitation in Phu Cat District & Rehabilitation of Hoc Mon Reservoir in Phu My District – Binh Dinh Province. 2. Identification study for solid waste management in four districts of An Nhon, Tay Son, Phu My and Hoai Nhon – Binh Dinh Province. The two identifications were approved during the Extended Joint Working Team Meeting of 5 October 2007 for a total budget of 5 million EUR. The Extended Joint Working Team Meeting proposed a global formulation for the whole programme. On the 26th of October 2007, the DGDC invited BTC to start the formulation of the programme. An Institutional and organizational analysis was organized in the framework of the formulation mission from the 3rd to the 18th of May 2008. A first draft report was submitted at the end of that month, and a second one in June. BTC organized a formulation mission dealing with the institutional modalities during the same period. A last mission was organized from the 12th to the 25th of September 2008. In parallel, a series of technical review studies were required. The review of the basic design of the rural water supply projects took place from the 26th of May until the 2nd of June. The review of the landfills basic design was organized from the 18 August to the 4th of September. Mid October the Belgium Government decided to allocate an extra envelope of 2,5 million euros to the program.

1.2 METHODOLOGY OF THE FORMULATION
1.2.1 Composition of the formulation team Water policies and capacity development expert – SECO consulting firm Capacity assessment and development, institutional expert – DHV consulting firm Formulation manager – BTC HQ Program Coordinator BTC Hanoi Desk, GEO – BTC HQ Advisor Basic infrastructure – BTC HQ Mr. Nguyen Cong Thanh Mr. John De Bresser Mr. Benoit Legrand Overall coordination: Mr. Jan Van Lint Mrs Ann Dedeurwaerdere Ms An Eijkelenburg

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1.2.2 • • • •

Activities of the formulation team

Briefing with the BTC Resident Representation Briefing with the Belgium Embassy Meeting with other donors Meeting with related departments in Binh Dinh Province: PPC, DPI, DoF, pCERWASS, Urban Water Company, DoC, URENCO, Hoai Nhon, Phu My, Phu Cat, An Nhon, Tay Son DPCs. List of persons met during the formulation Mr. T. Smis, Mr. J. Van Lint, Mrs. Cap Thi Van Anh Mr. Patrick De Bouck Mr. Mai Xuan Ha, Head of the Economic Unit Mr. Nguyen Minh Tam, Deputy Head,; Mr. Ho Dac Chuong, Director; Mr. Vo Nguyen Hong, Director; Mr. Dao Quy Tieu, Deputy Director; Mr. Ngo Hoang Nam, Director; Mr. Thanh, Chief Accountant Mr. Viet, Vice Chairman; Mr. Anh, Head of Environmental Resource Department; Mr. Van, chairman of Hoai Duc Commune (landfill location); Mr. Thu, Chairman of people Council of Hoai Duc commune; Mr. Truong, party secretary of Hoai Duc Commune; Mr. Son, Accountant Mr. Nam, Chairman; Mr. Tra, Director Rural & Agricultural Unit; Mr. Mai, Director District Project Management Unit; Mr. Huy, Chairman of the agricultural cooperative (Hoc Mon reservoir) Mr. Phung, Vice-Chairman; Mr. Quang, Vice-Chairman; Mr. Tho, Head of the DPC Office; Ms. Linh, Head Finance Unit; Mr.Tu, Head Rural & Agricultural Unit; Mr. Tam, Expert at DPC Mr. Tam, Chairman; Mr. Toat, Vice-Chairman; Mr. Vuong, Chairman of People’s Council; Mr. Nam, Chairman CPC of Landfill location; Mr. Tung, Head Infrastructure Unit; Mr. Hoang, Deputy Head DPC Office; Mr. Trung, Head Finance & Planning Unit; Mr. Lam, Expert Financial Unit Mr. Lot, Vice-Chairman; Mr. Loi, PMU Construction/Investment Office; Mr. Quang, Head DPC Office

1.2.3

BTC Hanoi: Belgian Embassy: DPI Binh Dinh: PCERWASS: UWC Quy Nhon: DoC: URENCO: Hoai Nhon DPC:

Phu My DPC:

Phu Cat DPC:

An Nhon DPC:

Tay Son DPC:

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1.3 VALIDATION OF THE IDENTIFICATION
1.3.1 Project components From the earliest stage it was decided to integrate both identification reports "Identification study for water supply and sanitation in Phu Cat district and rehabilitation of Hoc Mon reservoir in Phu My district, Binh Dinh province" and "Identification study for solid waste management in four districts of An Nhon, Tay Son, Phu My and Hoai Nhon, Binh Dinh province" completed in September 2007 into one single program. Most of their content was confirmed by the formulation. However, a series of adaptations described below were decided. 1.3.1.1 Water supply schemes

The Phu Cat rural water supply project is considered as the first priority for the present program. It should provide water to five communes (Cat Thang, Cat Chanh and Cat Tien – Phu Cat district – Phuoc Thang and Phuoc Hoa – Tuy Phuoc district), which is appropriate when considering the present lack of drinking water supply facilities in those communes. They comprise a significant number of poor households (between 14-20%), similarly to other communes. The well fields for this water supply scheme will be in Cat Nhon commune; from the well, the pipes will run through Cat Tuong commune. These two communes were not part of the initial program but have identical water supply constraints. Resistance from inhabitants from these communes might occur during construction and even operations of the scheme, if these communes are not provided with piped water. Therefore, the formulation team considered including also these two communes in the project design, although their implementation could be phased and supported at a later stage by other sources of funding. The extra funds provided by Belgium in October 2008 should be sufficient to integrate these two communes from the start. The second project foreseen under the water component is the rehabilitation of the spillway and the irrigation canals of the Hoc Mon dam, including the increase of the reservoir capacity. Although the review of preliminary designs revealed that the budget would be insufficient to cover this project, it was decided to conduct the detail design of all requested projects in order to make selection based on more accurate cost estimates. The complementary grant should allow considering also the water scheme that was originally foreseen in order to provide safe drinking water to My Chau commune. The formulation mission recommends starting the detail design of both rural water schemes, to be financed by the Belgium Study Fund, as soon as possible, while considering the recommendations of the Basic design review. To support this investment project, capacity building and awareness raising activities will be added, as it appears from the IOCA study that these 'soft' activities are essential to guarantee the sustainability of the program. 1.3.1.2 Solid waste in 4 districts The local authority stressed the importance of building a proper landfill for each district. This would significantly improve the environmental conditions of the urban areas of the Province. Incorporating the sanitation issue into the project would bring into play the project’s synergy and completeness, insuring living condition improvement, enhancing life quality and contributing to poverty reduction. The formulation team confirmed the necessity of such investments but requested integrating them within a coherent strategic plan of solid waste management for the province. The formulation team also reminded to the local authorities the fact that building several landfills within a radius of 50km

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is not cost-efficient; providing one landfill for at least two districts would reduce significantly the O & M costs. Based on this principle, building a landfill in An Nhon district, only ten kilometer from the existing landfill of Tay Son that should be upgraded and enlarged, does not seen appropriate. On the other hand, the landfill of Hoai Nhon will be around 25km far from the existing landfill of Phu My that also will have to be upgraded. Considering the distance from the waste sources and their accessibility, the definition of the most cost-efficient solution in terms of O & M and transport for these two landfills would require in-depth analysis. Based on these considerations, it was decided to drop An Nhon landfill from the list of the projects supported by the Belgian grant, while, still conducting a solid waste Master Plan for that district. On the other hand, it appeared that the solid waste collection in the four-targeted districts is partial, around 60% of the households being covered by the present collection system. Furthermore, recycling as well as awareness raising activities are limited, composting is of poor quality, while illegal dumping being high. All these remarks suggest the necessity of a comprehensive approach of the solid waste management, including collection, awareness raising, separation of the waste at source, recycling, as well as landfill planning and management in order to define the most effective way to improve the sanitary conditions of the 4 selected districts. The program proposes to start with designing a Solid Waste Management Plan (SWMP) in each of the 4 districts, while reviewing the provincial SWMP that should be completed in October 2008. To speed up the process, the Belgian Study Fund should finance these studies. Simultaneously, the Basic Designs of the landfills need to be corrected and their Detailed Designs elaborated. Only after approval of the SWMPs of the 4 districts, the Detail Designs of the 3 remaining landfills and the related cost estimations, the Steering Committee will take a final decision on which landfills will be financed by the program and what will be their starting size, depending on their coverage area. The sanitary component of the project will therefore not be a pure investment project but will also integrate comprehensive strategic studies, capacity building and awareness raising activities. Such an association of 'soft' activities with 'hard' investment will ensure a more comprehensive approach towards solid waste management of the province. 1.3.1.3 Operation and Management of the WS and SWM schemes The Identification Reports highlighted to pay due attention to creating and institutionalising operation and maintenance capacity of the schemes. The work done so far was mainly related to the preparation of the basic and detailed designs of the works, in other words, to the physical infrastructures that are part of the intended program. On the other hand, clarifying and agreeing on the managing concept of the operations and maintenance function of the works will be a long and complex process that would imply further delays to the start of the project activities. It is proposed to include them within the project itself and to consider them as one result to be achieved. 1.3.1.4 Implementation modalities The capacity of the local authorities to manage the present program through national execution modalities is confirmed by the formulation mission. However, looking into the complex organization of the administrative structure, clarification of the responsibilities has to be made. The project PPMU will be hosted at DPI. PCERWASS at DARD will take the lead of the construction phase of the rural water supply component. The DPIUs at district level will be in charge of the landfill construction.

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The project will open a master account in euros and one account for each project component in Vietnam dong at a Provincial Commercial Bank. Control of the disbursements will be made by the Treasury, while informing the local office of MoF. Yearly internal Government audit will be made, while external audits will be conducted every six months during the first 18 months, in order to guarantee a close control at the project start. These audits are also to be considered as means to strengthen the local capacities in project management, procurement and finance. Upon positive evaluation, audits will than be made annually. The need of a capacity building component was underlined leading to the development of training and exposure to alternative construction technique but also O & M modalities. It appeared also that, beside the needs of regular audits and controlling tools to limit potential misuse of the funds, ways to limit the risks of slower disbursement had to be found. It is therefore proposed to extend the project duration to five years, as well as the validity of the Specific Agreement to six years.

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2. ANALYTICAL RECORD OF THE INTERVENTION
DGDC number Partner institution Specific Agreement Duration Estimated starting date of intervention Partner’s contribution Belgian contribution Overall Objective 3004523 Navision code BTC VIE0703501

MPI, MARD, Binh Dinh PPC, Phu Cat, An Nhon, Tay Son, Phu My, Hoai Nhon DPCs 72 months March 2009 1,450,000 € 7,500,000 € To contribute to poverty reduction, enhancing public health and improving living conditions and quality of life of the people of the target areas To improve the quality of life of the population of some communes of 6 districts of Binh Dinh (Phu Cat, Phu My, Tuy Phuoc, Tay Son, An Nhon, and Hoai Nhon districts) through the provision of efficient facilities for both irrigation and drinking water as well as solid waste management, including appropriate capacity building, awareness raising and operation and maintenance modalities. • Agencies in charge of planning, design and implementation of the rural water schemes and the solid waste management systems are reinforced. • A strategy to raise awareness on the use of safe drinking water and on resource preservation as well as on environment protection through proper collection and treatment of solid waste is set up. • Cost efficient rural water systems designed for both flooding and dry seasons, for 5 + 2 communes are implemented, while, possibly, Hoc Mon dam, its spillway and the related irrigation canals are rehabilitated, with efficient operation & maintenance modalities and secured funding. • Environmental friendly infrastructures to treat solid waste for the target areas of part or all 3 target districts (Tay Son, Phu My and Hoai Nhon districts) are provided with efficient operation & maintenance modalities and secured funding. Project duration 60 months

Specific Objective

Results

From the original project fiches, the following major elements have been adapted: • Extension of the project duration from 3 to 5 years as well as of the specific agreement from 3 to 6 years; • Increase of the Belgian contribution up to 7.5 million euros; • Revision of the specific objectives of the program; • Inclusion of the capacity building and awareness raising results; • Exclusion of the landfill of An Nhon from the list of projects that could be supported by the Belgian contribution.

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3. SECTORAL CONTEXT 3.1 GENERAL
Since recent years Vietnam is experiencing fast socio-economic development, rapid urbanization and industrialization, following a shift to a more market-based economy. As a result, the traditional water resources for rural and urban inhabitants are under intense pressure, while the solid waste management became a major environmental issue. The demand for water for domestic and industrial purposes is vastly increasing; surface water resources, such as rivers, lakes, streams have been polluted as industrial, agricultural, aqua-cultural and domestic waste are being discharged to the water bodies without treatment. Similarly, solid waste production is sharply increasing due to change of mode of consumption and production.

3.2 BELGIAN STRATEGY
The Vietnamese Comprehensive Poverty Reduction and Growth Strategy (CPRGS) is the basis for the Belgian Strategy in the country. Two main tracks were established in the country strategy paper: structural reform and poverty reduction. The Indicative Cooperation Programme (ICP) 2007-2010 covers two sectors: (1) capacity building and institutional strengthening and (2) support for water and sanitation programmes (55-60 % of the budget). 3.2.1 Belgian experience in the sector of water and sanitation

In the sector of Water and sanitation and Environment, the Vietnam-Belgium ICPs intervene(d) in the sector through the following 5 projects: • The “Tan Hoa-Lo Gom Canal Sanitation and Urban Upgrading Project” looked at environmental degradation resulting from unregulated explosive urbanization in Ho Chi Minh City. The project tested pilot approaches to solid waste collection, waste water treatment, resettlement options for poor households, slum upgrading and environmental education. The project has been handed over to the local authorities and an attempted was made for institutional integration of the PMU. The project “Access to running water for Phu My town in Binh Dinh Province” combines the installation of a water supply network, exploiting ground water resources, with environmental education and sanitation activities aimed at protecting the acquifer. Phu My town is a small sized town serving as district capital. The project will set-up a water utility company and will reinforce its management capacity to operate the network on a financially sustainable base. The project “Sanitation in Tuy Hoa town in Phu Yen Province” will address all aspects of solid waste management and disposal of a provincial capital, including construction of a modern sanitary waste disposal site. A strategic waste management plan will guide management and help prioritize needed investments in collection infrastructure. A “Sanitation project for the towns Phan Ri Cua & Tuy Phong in Binh Thuan Province” will rehabilitate water supply; clean up both towns and reorganize solid waste collection and disposal; improve wastewater drainage and improve the living conditions in the poor communities living in dusty unpaved alleyways without sanitation facilities.

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The “Capacity building in assessing and managing water resources program” aims at making a significant contribution to reducing the current capacity deficiencies at MoNRE, the DoNRe's in 7 provinces, including Binh Dinh, and at the involved district offices. The program will provide a comprehensive picture of the water conditions, establish an interactive data base, develop and pilot test the concept of integrated water resources management and will generate guidelines for conducting impact-full public awareness campaigns and train central and provincial staff. Paris Declaration

3.2.2

The donor community, including Belgium, through the Hanoi Core Statement (HCS), endorsed in 2006 a localized version of the Paris Declaration on Aid Effectiveness. While Belgium is one of the few donors in Vietnam who has truly completely untied its aid and is well appreciated for its very participatory approach, the bilateral program does not score well yet on the Harmonisation & Alignment indicators of the HCS. This can be explained by the fact that projects remain the dominant implementation modality and the strict financial follow-up imposed by the Belgian budgetary authorities. This favors the setting-up of parallel PMU structures. Likewise, the introduction of multi-donor monitoring and evaluation approaches is more geared towards program approaches rather than the classical project approach. Despite the fact that the majority of cooperation portfolio exists of classical project, BTC is involved in multi-donor monitoring of one of the first Sectoral Budget Support interventions, namely in the education sector. As a small donor, Belgium could increase its part in using this modality on decentralized levels, linking the intervention with other activities at that level (e.g. governance). In line with this strategy, Belgium is now favoring the national execution modalities for the implementation of its bilateral projects.

3.3 ANALYSIS OF THE OTHER DONORS PROJECTS IN THE
SECTORS
3.3.1 Rural water supply

3.3.1.1 NTP II DANIDA, together with the Dutch Government and AusAID, are the main supporters of the Budget Support National Target Program on Rural Water Supply and Sanitation (NTP II). Therefore, most of the Program activities are executed by the government and follow government procedures, including procurement and financial management procedures. However, there is a small portion of the donor resources executed by donors to finance a technical assistance component, to build up institutional capacities for both central and provincial implementing agencies. As this is new approach to both Vietnam and donors, the Program is piloting in 9 provinces and if successful, the NTP II will be replicated in all 64 provinces of Vietnam. 3.3.1.2 Red Delta Rural Water supply and sanitation project The World Bank is currently providing a credit of US$46 million for implementation of the Red River Delta Rural Water Supply and Sanitation Project in four provinces, namely Nam Dinh, Thai Binh, Hai Duong and Ninh Binh. The project is focusing on helping the rural population of those provinces to sustainable access to safe water supply and sanitation services. The Project also focuses

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on institutional development in the sector by introducing provincial Rural Water Supply Joint Stock Companies to be the owner and manager of all rural piped water supply schemes in the provinces. 3.3.1.3 Water Supply and Sanitation for the Small Towns Program The Ministry for Foreign Affairs of Finland (MFA) was the first supporter to the Vietnam water sector, back in late 1980s. Since then, a number of water supply projects/programs have been implemented with Finnish financial support, such as the four phases of the Hanoi Water Supply Program and three phases of the Hai Phong Water Supply and Sanitation Program. Currently, the MFA is providing a grant (Euro 19.0 millions) to carry out part of the Water Supply and Sanitation for the Small Towns Program. MFA is appraising the second phase of this Program, which is planned for commencement in 2009. Key features of the Program will be: (i) application of appropriate technology for wastewater treatment in small and district towns; (ii) testing various types of management models for district town water supply and sanitation facilities; and (iii) testing new financing mechanisms for water supply and sanitation projects in small and district towns by creating a fund for small and district town water supply and sanitation in the Vietnam Development Bank (former Development Assistance Funds). 3.3.2 Sanitation and Solid Waste Management

3.3.2.1 Three Cities sanitation Project - WB The World Bank financed the Three Cities Sanitation Project (110 million USD), for Ha Long, Hai Phong and Da Nang. The project was focused on the wastewater and solid waste management subsectors in those three cities. On solid waste management, the project financed collection systems, including transfer stations and sanitary land fills. On the institutional development side, the project recommended URENCO gradually outsourcing parts of the services (collection and transportation of waste) to the private sector. Landfills, however, remain the responsibility of URENCO. 3.3.2.2 Coastal Environmental Sanitation project In the central region, the World Bank is financing the Coastal Environmental Sanitation Project (120 million USD) for Nha Trang, Quy Nhon and Dong Hoi cities. The project is focused on the wastewater and solid waste management sub-sectors. The approach of this project is similar with the three cities sanitation project. 3.3.2.3 Small Towns Water Supply and Sanitation Project In 2007, the Asian Development Bank signed a Loan Agreement with the Vietnamese Government to provide financial support of US$ 53.2 million for the implementation of the Small Towns Water Supply and Sanitation Project in the 5 provinces of the Central Region, namely Ninh Thuan, Daknong, Khanh Hoa, Binh Thuan and Phi Yen. It is expected that about 13.300 households will benefit from improved water supply, 105.000 households from improved sanitation and 30.700 households will have access to solid waste management services. Key features of the project are (i) integrated water supply, wastewater and solid waste management for small towns in one supported project; (ii) one service provider in the small towns, which will provide all the three types of the public services.

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3.3.3

Lessons Learned relevant for Program Design

3.3.3.1 Demand-based service delivery Supply-side management of water supply and inadequate attention to the beneficiaries’ willingness to pay have led to over-designed systems that were unaffordable to the beneficiaries, especially the poor. Therefore, close consultation with and involvement of the customers will be a key condition for successful rural water supply schemes and domestic waste management schemes. 3.3.3.2 Financial sustainability Higher but affordable tariffs are critical for improving the sector’s financial sustainability. Without adequate revenues water and solid waste companies cannot maintain their physical assets. Willingness-to-pay surveys in Vietnam have indicated a greater willingness to pay among the public – at condition that quality services are provided – than the readiness of the provincial governments to charge their inhabitants. 3.3.3.3 Correct incentives Correct incentives must be provided for rural water supply and solid waste management schemes to work. Proper incentives for the paying customers in terms of connections to the system and fulfilling expected service levels. Similarly, correct incentives are expected for the O&M entity, while awareness raising is required to convince the households to use the proposed paying services. 3.3.3.4 Competition The sector appears to get ready for providing openings for the involvement of other than the existing utility companies including the private sector. However, the involvement of the private sector participation should still be selective and be carefully managed. Despite the legal basis for private sector participation in the sector provided for by Decrees 59/CP and 117/CP, actual handson experiences are still limited. 3.3.3.5 Innovative RWSS ownership and management models Pilot schemes have partly shown the feasibility and also the readiness of provincial authorities to apply innovative and new RWSS ownership and management models. Examples are the developments surrounding the Joint Stock Company (JSC), including the Commune-level Stockholding Body involving several communes. Unfortunately, these experiences are too recent for providing lessons learned. 3.3.3.6 Project implementation: national execution During the last decade various pilot projects have been implemented using a national execution modality. As a result, variations exist regarding the level of national execution and no singular modality has prevailed. Also, the Vietnamese governance system provides for a significant level of flexibility when it comes to designing national execution modalities. Basically, the level of trust the donor is willing to adhere to the main partner organizations on the basis of a capacity and accountability assessment, and its readiness and in-house program management capacity, determines the level of national execution that is being opted for. The main lessons that can be learnt from other donors with regards to national execution are the following: • All donors apply the national execution modality. Some of these, such as the WB, still require the financial reporting to be done in a pre-described format and manner. Others follow existing Vietnamese government procedures.

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All donors include a capacity building component to the projects they fund; the capacity building is partly focused on strengthening the project/program implementing institutions through the provision of hardware, software, technical assistance and training, and partly on strengthening the institutions responsible for O&M of the facilities that are being constructed during the program/project.

3.3.3.7 Targeted capacity building Parallel to the application of a national execution modality, recent donor-funded projects include a capacity building component to mitigate specific weaknesses among the partner organizations.

3.4 INSTITUTIONAL FRAMEWORK
3.4.1 Introduction The Vietnamese government administration system is divided into three levels including 64 Provinces, more than 700 District Towns1, and over 10,000 Communes. Each local government administration has a representative body (the People’s Council) and the executive body (the People’s Committee)2. As a result of increased decentralization, the central government is undergoing a reform to shift some of the policy and planning functions to the People’s Committees at the provincial and district levels. The responsibility for planning, implementation, and operation of facilities is split; large urban centres and a number of provincial governments enjoy a certain degree of autonomy, although major decisions still need the Prime Minster’s approval. Overall, the interrelations between different levels of government are complex in terms of supervision, accountability, reporting, and allocation of tax revenues. Decision-making is carried out through consensus building and consultation. When decisions are required, the lead ministry will seek the opinions of the other relevant ministries and eventually, the opinions of the relevant People’s Committees and departments. Likewise, the Provincial People’s Committees will request opinions from the relevant departments before making important decisions. While this consultation process is extremely important, this has created a highly bureaucratic process where the lines of responsibility are blurred and the approval process can be cumbersome. 3.4.2 Water and sanitation sectors

3.4.2.1 Central Government The central government ministries are responsible for sector planning, development and appraisal of major projects. The lead ministry in the urban water supply and sanitation sector is the Ministry of Construction (MoC), which has primary technical oversight of the sector. Rural water supply and sanitation in Vietnam is guided by the National Rural Clean Water Supply and Sanitation Strategy up to Year 2020 (RWSS 2020), launched in 2000. Responsibility for the sector currently falls under the Center for Rural Water Supply and Environmental Sanitation (“CERWASS” within the Ministry of Agriculture and Rural Development (MARD).The Ministry of Agriculture and Rural Development (MARD) complements this role. It is responsible for water supply and sanitation in rural areas.
1 2

Many of the large urban areas are made up of a number of Districts. Although the People’s Council and People’s Committee are set out as separate bodies, they often have overlapping membership. The People’s Council are elected by the local people. The People’s Council selects the chair and vicechairs of the People’s Committee.

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The Ministry of Planning and Investment (MPI) and the Ministry of Finance (MoF) are actively involved in the financial and economic aspects of sector development. The MPI is not only involved in the overall allocation of resources and investment planning among sectors, but it is also in the appraisal of investment of category “A” projects, the ones above 100 billion VND3. The Department of Material Pricing of Government (DMP) is in charge of the setting price framework for basic goods and materials. Based on the price framework, the People’s Council at provincial level reviews and approves water supply and sanitation tariffs. Subsequently, the People Committee formally decides on the tariff to be applied in the province. The Ministry of Natural Resource and Environment (MoNRE) and its provincial departments (DoNREs) are mandatory responsible for ground and surface water resource management, monitoring quantity and quality of water sources, controlling wastewater dischargers into water bodies and collecting the environment fees. The Ministry of Health (MoH) as a related ministry sets the drinking water quality standards. 3.4.2.2 Provincial and District Government Provincial-level People Committees perform the state management of water supply and sanitation activities in the province. In compliance with the national policies and regulations, the People’s Committees at provincial level define the functions and tasks and decentralize the management of water supply and sanitation activities to professional agencies (such as the DoC, DARD and other departments) and People’s Committees at lower levels. While implementing the national policies and strategies at local levels, the local government as well as the professional departments are encouraged to provide feedback on shortcomings and implementation difficulties to the ministries for the improvement of strategies and policies. The Department of Planning and Investment’s (DPI) role is to plan investments in the sector in the province in coordination with the DPCs and sector agencies. DPI coordinates project identification and formulation and also implementation if projects/ programs operate across various state management organizations. The Department of Construction (DoC) acts as a professional body to advise and assist provinciallevel People’s Committees in performing the state management of water supply and sanitation in their localities. In a similar fashion and in compliance with national and provincial government strategies, policies and regulations, the People’s Committees of urban centers organize the planning, formulation and investment of the construction of water supply and sanitation systems as well as the delivery (including the management) of water supply and sanitation services. The People’s Committees also participate in regional planning on water supply and sanitation, select units for the management and operation thereof, arrange contracts and supervise the performance laid down in those contracts. 3.4.3 National Execution

National execution modalities have been in the centre of several donor activities during the last decade. While international financing agencies, such as the World Bank, continued to keep a parallel project and financial management system to the Vietnamese one, the New Zealand Aid went furthest by channelling its funds for the Early Childhood Project in Bind Dinh Province directly into
B Class projects between 52 to 100 billion VND are the responsibility of the Province, while C class projects, under 52 billion VND could be approved at the district level.
3

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the provincial treasury. With regards to this program, the experience was very encouraging. This was explained by the strong qualifications and commitment of the Vietnamese project manager. Unfortunately, quantifiable data are still missing to evaluate this intervention as a proper evaluation is programmed not before October 2008. In the case of its other projects (Livelihood Program), the experiences differ considerably. Confident with this form of modalities, the ICP 2007-2010 endorses national execution as the implementation modality for the new programs. All credit/loan projects from both multilateral donors (WB, ADB) and bilateral donor agencies (JBIC, KfW, AfD etc.) as well as budget support program (NTPII) are executed nationally. However, donor agencies always provide technical support in parallel with financial support to build up capacity of both (i) the national implementing agencies, ensuring transparent procurement and financial management, and (ii) the proposed agencies responsible for the O&M of the constructed facilities. In order to guarantee the success of programs implemented through national execution modalities, the institutional review emphasised on the necessity of capacity reinforcement of the provincial agencies in charge of the project execution in order to better plan and design the investment projects according to the population needs and wiliness to pay the services, have an exposure to alternative design and O & M modalities, while providing more effective and sustainable means to run and maintain the systems.

3.5 GENERAL CONTEXT OF BINH DINH PROVINCE
3.5.1 Location and natural conditions Binh Dinh is one of the five coastal provinces of the South Central region. There are 10 districts and one provincial city. The mountainous area represents 70% of the province with slope above 25° C going mainly from West to East, while delta area accounts for 15%. The average temperature is of 27.4°C (max: 39.1°C – min. 15.5°C) with an average humidity of 80%. The yearly rainfall is about 1.700mm in the delta area and 2.000mm in the mountainous area. The rainy season, lasting from October to December, causes regular flooding in the coastal districts. The drought period prolongs from February to August, causing difficulty for agriculture and other production. There are four rivers running through the province – Lai Giang, Con, La Tinh and Ha Thanh – all originating from the mountains, flowing from West to East to the littoral lagoons. They are all dry during the dry season. So far, there is neither systematic survey on both surface and underground water conditions in the province neither a master plan for its management. Available information are collected from the ongoing projects. They indicate that the minimum depth of the aquifer is between 1.8m to 8m deep, its bottom being between 15 to 35m, with a thickness of 3 to 19m. 3.5.2 Socio-economic conditions

3.5.2.1 Characteristics of the province The total population of the province is of 1,566,000 inhabitants, with more than 50% in working age. The average density is of 260 inhab/km² and a total area of 6,025km². The provincial capital and the socio-economic hearth of the Province, is Quy Nhon, a second class category city, with a total population of around 264,800 inhabitants for a surface area of 284km², with railways and airport facilities. The seaport of Quy Nhon is one of the ten major ports of Vietnam. The provincial GDP in 2006 was 12,314 billion dongs, with and average growth rate of 9.48% since 1995. The

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GPD growth rate in 2007 was of 12.5%; agriculture accounting for 34.2% of the provincial GDP, while industry and construction representing 31.8% and the services 34%. According to the 2006 statistics, the urban population of the province is of 409,000 inhabitants, which accounts for 26.1% of the total. The 13 urban areas are mainly located along the Highways nr°1, the spinal column of the country, and the Highways 19. Their population varies between 5,000 to 20,000, all being in urban class V. 1,157,000 people are located within the 127 communes and 10 districts of the rural areas, accounting for 73.9% of Binh Dinh Province. The rural population, living on rice, vegetable and aquaculture production, are mainly located in the coastal and delta regions, which have a high population density. These areas are enjoying some infrastructure investment projects, such as water supply systems and electric networks. The mountainous areas are underdeveloped. Their population are not distributed evenly, being mainly concentrated along riverbanks, such as An Lao and Kim Son rivers. They are living mainly from rice production. When located along the road network, some revenues are than also coming from commercial activities. Ethnic minorities are occupying the most remote areas, which are even less developed. The existing industries are related to agricultural, forestry and fishery product processing, consumer goods, construction materials, and mineral. There are 44 small-scale industrial zones in the province. 3.5.2.2 Conditions of the project districts The districts within which the project has a focus are mainly related to agriculture, forestry and fishery production. But the socio-economic structure varies according to their location. Tay Son and An Nhon districts in the West part of the province are concentrated on agriculture and industrial activities. The coastal districts of Phu Cat, Phu My and Hoai Nhon are more related to aquaculture and agriculture activities. Poverty rates from commune to commune can vary from 8.8% in An Nhon district up to 20.2% in Phu Cat district.

3.6 WATER SUPPLY
3.6.1 Institutional framework In the water supply and sanitation sector the responsibility for the service provision for inhabitants in both urban and rural areas lies with the Provincial People’s Committees and People’s Councils, as they have direct responsibility for the social welfare of the people within their jurisdiction. As urban water supply and sanitation is generally organized at the provincial and district levels, for rural water supply and sanitation, the community management model is dominant for the operation and maintenance phase while the provincial Center for Rural Water Supply and Sanitation (pCERWASS) under DARD is responsible for the investment phase. pCERWASS manages all investments in rural water supply funded from different sources (UNICEF, National Target Program – NTP, and other donor funded projects) in the province. After the construction has been completed, the rural water supply facilities are handed over by pCERWASS to communes or villages for operation and maintenance. pCERWASS may also operate and maintain some piped water schemes after the construction phase. Overall experiences demonstrate that most of the investments in rural water supply are not costeffective as many schemes, especially large piped water supply schemes, after a few years of operation show breakdowns due to poor maintenance. The poor maintenance is due to the lack of appropriate funds, but also due to the lack of skills of the operators. Analyzing this situation, the

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World Bank recommended applying an enterprise management model for piped water schemes in rural areas, an approach applied in the World Bank funded rural water supply and sanitation project in the Red River delta region. The idea is to establish a Joint Stock Company (joint with shared ownership between the government and the water users) at the provincial level to invest, operate and maintain all piped rural water schemes in the province. Recently, also some private water supply companies have been established to invest in and operate rural water supply schemes, responding to the rapidly increased demand of rural population on clean water, especially in regions with scarcity of fresh water resources or polluted water sources due to urbanization and industrialization. To provide rural sanitation and water supply for scarcely located households in rural areas, the government developed a support policy. This policy provides this group access to a credit system at the Social Policy Bank that allows them to getting a soft loan of up to 4 million VND (270 USD) to improve their households water supply and sanitation facilities. pCERWASS plays a role in helping these rural households in this process. It also occurs that households borrow from the Social Policy Bank and contribute to the construction of piped water schemes in a joint program with other sources of funding. Over the last seven years the provincial and district governments of Binh Dinh have made use of PMU’s. These are permanent units which main role is to prepare and manage the implementation of investment projects in the physical infrastructure of the sector. Where funds are available for sanitation awareness programs, the PMU involves DPC’s Environmental Unit and out sources the programs to the local branches of the Vietnam Women Association. As rural water supply schemes were handed over to the community after their construction, the O&M task was with those communities. Water supply companies (WSCs) rely more or less on the revenues from the water tariff and, in fact, most of the urban WSCs have been converted into single member limited companies. So far, water tariff remained lower than the willingness to pay of the users due to politic concerns on the ability to pay of the poorer. The Government’s thinking has now moved away from water being a social commodity towards water supply being a commercial undertaking and water to be charged for a price that not only secures adequate operations and maintenance but also a profitable undertaking. This policy not only provides a solid base for investments, but will also attract the involvement of the private sector which is highly needed to reach sector goals. To compensate the burden for the poor, the Government has arranged non-commercial lending provisions at the Social Policy Bank. On the other hand, the population in rural areas is not aware of its impacts on the environment degradation, the importance of preserving water resources and on hygienic behaviour, due to the limited impact of the awareness campaigns developed by the local authorities. 3.6.2 Policy framework

3.6.2.1 Urban water supply The proportion of people living in urban areas in Vietnam is one of the lowest in East Asia, comprising around 27% of the total population. This is anticipated to increase to 33% by 2010 due to migration from rural areas and the higher incomes available in urban areas. Piped water supplies are, on average, available to 50% of the urban population, but significant variations exist. The largest cities with populations exceeding one million have a coverage of 67%, whilst the smallest towns, which comprise 35% of the urban population, have coverage of only 11%. Thus there is a significant demand to improve water services across the urban sector as a whole, and particularly in the smallest

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towns. The Government's policies and strategies for the water and sanitation sector (WSS) are outlined in the "Orientation for Urban Water Supply Development" and the "Orientation for the Development of Urban Sewerage and Drainage to 2020" approved by the Prime Minister in May 1998 and March 1999 respectively. Key objectives of the policies and strategies are to: • • • • • • Rapidly expand coverage to achieve 100% by 2020; Achieve greater commercialisation of the water supply sector; Modernize technology and equipment; Improve protection of water resources and the environment; Enhance human resource development; and Mobilize contributions from all sectors of the economy and community.

A 2001 benchmark survey by the Vietnam Water & Sanitation Association (VWSA) on the provincial/municipal water supply companies (WSCs), which are ‘public services enterprises’, revealed a mixed performance. Sector strengths included: • • • • • Collection rates are extremely high (above 90%, with collection periods of under 30 days); Working ratios (the ratio of total operating expenses to total operating revenues) are low; Most WSCs fully cover O&M costs; Some innovative WSC managers and their local authorities have adopted sound commercial practices; and Private entrepreneurs are investing their resources to develop the water supply in small towns.

The same survey came up with the following sector challenges: • Low coverage: On average, only 50% of urban residents have piped water supply, with the highest coverage in the largest cities; small towns have little. Of more than 700 district towns, only 200 have piped supply. Consumers without piped water use various sources, some of which adversely affect health and divert time from more productive tasks; The level of unaccounted-for-water (UAFW) is high, the result of past under-investment in maintenance; Staffing ratios are high compared to international practices and the region. Currently, this is not a serious problem because salaries are low, but, given Vietnam’s rapid economic growth, the issue must be addressed soon; More flexible design standards are needed, because those that are appropriate for major cities are too high for small towns, where demand and willingness to pay are much lower; and; Sanitation services lag behind water. As only a few municipal wastewater treatment plants exist, most residents use on-site facilities that are often poorly designed and produce pollution.

• • • •

3.6.2.2 Rural water supply With regards to rural water supply there are additional challenges in a number of areas, for example, in finding ways to serve the growing demand from rapidly transitioning “rural” areas in densely populated provinces. Also, there is a need to reflect the voice and choice of users, not only in selection of service levels, but also in how schemes are operated and maintained. Thirdly, rural water schemes managed by villages or communes are having a bad track record due to poor maintenance; this is the result of heavily under-funding and poor skills of the operators.

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By the end of 2005, the national coverage of safe water was estimated at approximately 62%. That meant that 38% of the population, almost all in rural areas, had not yet access to safe water4. In addition, out of the 62% of the rural population having access to safe water, less than 30% had access to clean water that meets national clean water standards, defined by the Ministry of Health. Generally, the quality of water supply and constructed facilities remains low and does not meet the requirements. Water pollution from salinity intrusion, livestock waste, trade village waste and chemicals used in agriculture is occurring and worsening in many areas causing risks to people’s health and daily practices. With regards to the sanitation sector, the introduction of waste treatment technologies and methods in rural areas and especially in trade villages has become an urgent issue. 50% of households nationwide have not got hygienic latrines and are using unhygienic latrines such as fishpond latrines, bucket latrines and dug latrines, thereby causing surface water pollution. Due to the low awareness of authorities at different levels and the fact that the people are poor, they tend to emphasize water supply rather than sanitation, and construction of new systems rather than taking advantage of existing facilities. In general, the creation of a clean water and environmental sanitation market is at an early stage, and policies to encourage investments and existing credit mechanisms generally fail to attract the participation of different economic sectors in the society, especially the private sector. The outcomes of the 2001 and 2005 surveys triggered the GoV to take further measures to improve water supply and sanitation conditions. This has in 2007 led to the issuing of decrees that spell out the policies to be applied in managing and developing the water supply and sanitation sector. The decrees shall be the basis for investments in the sector by public, private, national and international investors. In order to implement the sustainable development objective as well as international commitment to sustainable development the Government has issued the Decision 153/2004/QD-TTG dated August 17, 2004 on the Strategic Orientation for Sustainable Development, which set a basis for implementing the Strategy on Socio-Economic Development, for setting up development strategies and plans for different sectors and localities in order to harmonize economic development with implementing social progress and equality as well as environmental protection. 3.6.3 Rural water supply in Binh Dinh Province

Water supply and sanitation issues are of priority concern of the local authorities. The coastal districts are usually flooded during the rainy season. The consequent lack of clean and safe water is causing skin and digestion diseases (50 reported in 2006) and sore eyes (150 cases reported). During the dry season, other problems are occurring due to the lack of water, rainwater reservoirs and shallow wells being dry. So far, three projects in water supply have been implemented in Binh Dinh. The first was the project for upgrading the capacity of the Quy Nhon city’s water treatment plant through a loan from ADB. The second, in the framework of the VUWSDP, was related to seven water supply systems for nine towns of Binh Dinh: Bong Son-Tam Quan, Tang Bat Ho, Binh Duong, Go Gang-Ngo May, Dap Da, Binh Dinh, Tuy Phuoc, now under construction. The Belgian Government is the first donor to provide support in the rural water sector thanks to the construction of a water supply network in Phu My district and two irrigation projects, one related to the Cay Sung reservoir, the other to the Dai Son reservoir, for which construction started beginning of 2008.
4

Source: National Target program for Rural Water Supply and Sanitation (2006-2010).

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Some information related to the targeted communes and districts by the present program are indicated on the following table. Districts Pop. 2007 1 Tay Son 138,000 Beneficiary areas 2025 167,740 Description

2 An Nhon

191,900

3 Phu Cat 4 Tuy Phuoc

197,200 188,200

5 Phu My 6 Hoai Nhon

191,100 225,900

Phu Phong town 11km of existing water network Tay Phu, Tay Xuyen, No system for the rural areas Binh Nghi communes 233,520 Binh Dinh town Water supply schemes for both towns financed by WB; to be Dap Da town completed in 2008 Nhon Hung, Nhon Loc, Nhon Hoa, Nhon Tan, Nhon Tho communes 239,690 Cat Thang, Cat Chanh, No system available, pop takes Cat Tien communes water from rainwater tanks, shallow 228,750 Phuong Thang, Phuoc wells. Some HH have basic filtration facilities. These sources are Hoa dry in the dry season, flooded in the rainy season. Close to the see the aquifer might be saline. Some HH supported by Holland project to build biogas tanks. 232,280 My Duc, My Chau, Cat No system available, enough water Nhon and Cat Tuong only during rainy season. communes 274,580 Bong Son town Water scheme under construction supported by WB to be completed in 2008 Hoai Duc, Hoai Huong, Hoai Tan, Hoai Xuan communes

At present, the households of the rural areas are taking their water from informal systems without having to pay any fee. A survey defining the willingness to pay for safe drinking water from a regular source should be conducted. Drainage systems are only to be found in urban areas. Rainwater and wastewater from households are collected and discharged to the rivers without treatment. In rural communes, water is directly discharged into gardens, ponds, or small rivers. Sanitary facilities usually include septic tanks in a small proportion and only in urban areas as well as pour-flush latrines and single/double vault latrines. In most of the rural areas, the percentage of sanitary facilities does not exceed 40%.

3.7 SOLID WASTE
3.7.1 Institutional framework There are 3 separate sewerage and drainage companies in the largest cities of the country; Hanoi, Ho Chi Minh city and Hai Phong. In the other cities or provinces, wastewater services are either integrated with water supply or with urban environmental companies that are providing solid waste

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management services. All water supply companies (WSCs), sewerage & drainage companies (S&DCs) and urban environment companies (URENCOs) are established and owned by the Provincial People’s Committees or in larger cities by the City People’s Committees. In principle, they are responsible for providing water supply and sanitation services in all urban centers within the provinces, including district towns. In general, however, they can only provide services in provincial capital cities/towns. In theory, the WSCs, S&DCs and URENCOs are independent companies in terms of running their business. In practice there is a significant level of involvement by the provincial government in the management of these companies as they are owned by the PPC. For example, the central or provincial government must approve all investments regardless of size. Also, S&DCs and URENCOs are dependent on the provincial government to finance their operations, which obviously limits their independency. Beside those public utilities, recently, some newly private service providers have appeared as well as forms of public private partnership (PPP) to respond to the rapidly increased demand for water supply and solid waste management services. For example, two out of the four proposed program district towns in Binh Dinh (Hoai Nhon and Tay Son), already have private firms entered into service contracts with the District People’ Committees to provide solid waste management services in the district towns and surrounding communes. For the other two communes, solid waste management remained the task of URENCO. Similarly to the water sector, capacity building of the related agencies and efficient awareness raising campaigns are a necessity. Strategic plans of the solid waste management at provincial level are not common, leading to ad hoc operations, the local authorities not being aware of alternative and most efficient ways to collect and treat the waste, waste separation at source and recycling activities are not favoured, while illegal dumping is still the norm. The population in district towns has, because of its relative low density, still opportunities to dump household waste in public places close to their homes. This tendency might prevail even if a efficient waste collection system is offered, readinessto-pay for the services being low. Determining fee levels, as well as the necessity of professional awareness campaigns are therefore critical issues to look at. 3.7.2 Policy framework

The central government is aware of the growing challenge of solid waste collection and management in order to protect the environment. The Provincial People Committees are entitled to manage the solid waste collection within their juridical boundaries considering the national policy, which was defined by the Strategy of the National Solid Waste Management Strategy until 2020, issued on July 10, 1999 by the Prime Minister Decision 152/1999. Its purpose is to set up short term (2005) and long-term (2020) objectives on solid waste management. The short-term objectives include:
• • • •

Complete the planning of solid waste management in all provinces and cities of the country, with priority given to land fill technology; Separation of waste at source; About 75-90% of the generated solid waste to be collected and disposed safely; 100% of hazardous waste to be collected and disposed safely.

The long-term objectives focus on the following targets:

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• • • •

80-90% of generated waste to be collected and safety disposed; 100% of hospital wastes to be collected and safety disposed; Separation and recycling of all solid waste; Comprehensive sub-sector development, including legal framework, investments, technical assistance and inspection of all solid waste management activities.

A series of decrees have been issues for the last 8 years. They consider minimizing the role of the public service companies, while favoring the management of solid waste by the private sector, calculating the collection fees according to the O & M costs and the population affordability to pay, with the target that in 25 years time full coverage of the O & M costs should be insured by the users' fees, while favoring recycling and composting activities. Detail revision of the decrees is provided in the annexes. 3.7.3 Sanitation and solid waste management in Binh Dinh province The sanitation in the province is of major concern. In rural areas, solid waste are not collected but buried or dumped along surface water sources. Wastewater is collected only in urban areas but also still too often directly discharged in surface water sources. Around 60% only of the households have their own latrines, but only a third of these latrines have a septic tank. Only few houses have been equipped with biogas tanks. 3.7.3.1 Solid waste characteristics and treatment The daily-generated waste is of 0.2-0.3kg/person per day at present. It should be of 0.45kg/person/day in year 2022. Solid waste in only partially collected in urban areas. In the rural communes no collection system is available, households dig pits in their garden, burn the waste and/or do composting. Illegal dumping is also common along the irrigation channels and riverbanks. Solid waste and excreta are therefore swept away by floodwaters, causing diffuse pollution of all the areas. Hospital wastes of Tay Son and An Nhon are transported to Quy Nhon for treatment. Informal recycling has been reported to take place at all four target districts. There are a number of individual 'traders' buying recyclables from households and businesses and a few plastic recycling workshops of small scale operating in each district. Other collected recyclables are sold to Qui Nhon City. Except for Phu My, where there are no scavengers, there are a few – from 5 to 20, working at the dumpsites in other three districts. As a result of the project, the living of the existing scavengers may be affected negatively. Compensation measures should therefore be integrated in the program. The landfill of Quy Nhon, managed by URENCO, was built in 2001, using membrane technology. The landfill receives daily 300m³ (equal to around 250T/day) of waste. A third of the waste is used for fertilizer. The composting plant is located on 6.6ha in Long My landfill, which currently is losing money due to high O&M costs and incomplete separation of solid waste at source, which reduces the quality of compost and makes it unmarketable. The rest goes to the landfill. The landfill has a size of 6ha, a surface that cover the needs for 12 years for a population of 200,000 to 250,000 inhabitants. The operation costs are of 1.5 to 2 billions VND per year, without considering replacement costs of equipment.

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12 staffs of URENCO are in charge of recycling activities. URENCO is complaining that there is no separation at source, while willing to develop composting. There is therefore a clear request for favoring recycling and compost activities as well as separation at source, all requiring awareness raising of the users. 3.7.3.2 Users' fee PPC determines the household monthly charges. They were till last year of 10,000VND for houses located along a main street and of 7,000VND for houses along an alley. These fees have recently been increased up to 13,000 VND for the former and 7,000 VND for the latter. According to URENCO, in 2007 these fees were covering 50% of the operation cots of both the collection system and the landfill. The recent increase is not covering the inflation rate. Therefore, users' fees are now representing only 30% of the running costs. This evolution goes in contradiction with the Governmental decision, in agreement with WB in the framework of the Environmental Sanitation program, to cover all the operation costs by the collection fees in 25 years time. Only businesses sign a contract for waste collection, while no enforcement mechanism being in place to convince the HH to use the collection service. Following the experience of the BTC project of the PMU 415 in HCMC, solid waste collection contracts between HH, collectors and local authority should be included in an awareness raising component of the present program as a way to increase the collection coverage. 3.7.3.3 Solid waste condition at the 4 target districts The following tables give a description of the solid waste collection situation in the four originally targeted districts. District Situation 1 Tay Phu Phong town son Collection by a team managed by an agricultural cooperative. 6m³/day, 1 truck transports the waste to the landfill daily. DPC has the intention to create a public service company 2 An Binh Dinh & Dap Da towns Nhon Collection by a team managed by an agricultural cooperative. 12T/day collected 3 Phu Binh Duong & Phu My towns by a team under a private company My 4 Hoai Bong Son & tam quan towns, Hoai Tan, Hoai Duc & Hoai Hao Nhon communes. Nguyen Tin construction company in charge of collection & transportation 12-15T collected daily by 2 trucks (13 & 7 tons) Coverage 50%

60% 100% 26%

Local authorities (DoNRE) and mass organizations (Women Union, Youth Union…) are organizing annual environmental awareness campaigns (activities at specific dates such as environment day). These activities are insisting on the importance of using the existing collection systems. Although recognized as successful by the local authorities, the impact of these punctual activities is questioned by local and international expertises, which are stressing the importance of regular and coordinated campaigns through different media. 3.7.3.4 Master Plan and Basic design review Binh Dinh Province has commissioned the National Institute for Rural and urban Planning under the MoC to develop a Waste Management Master Plan for the province, to be completed by the end

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of 2008. A draft document was reviewed by the consultant in charge of the revision of the Basic design of the landfills. The WMMP proposes one landfill per district in the Province. This principle was questioned by the review team, especially since some of these landfills are placed just at the border of other districts. It is mainly a spatial plan and while it also estimates waste quantities, it does not include any plans for operation and development of the district waste management systems. The review team required the redaction of District Waste Management Plans as well as to revise the WMMP based on international standards. All four districts are assumed using the same equipment – 1 bulldozer, 2 5T compactor trucks, 1 excavator, 1 flat bed truck. The review team questioned this option, considering that it would be more reasonable using a tracked front end loader to replace both the bulldozer and the excavator and if a trailer could replace the flat bed truck. The Basic design assesses a staff of 40 people to manage each landfill, while 6 to 8 might be sufficient. Instead of an implementation work of 10 months, 15 to 18 months should be considered. 3.7.3.5 Other initiative in Binh Dinh Province Other interesting initiatives are taking place in Binh Dinh, although at small scale. Quy Nhon is nationally well known for a compost project in semi-rural area as well as for a waste separation at source initiative within 2 wards by children. The UNESCAP - Enda small scale composting station in Nhon Phu project was launched in 2005 at the periphery of Quy Nhon. Although having faced some difficulties at its infancy, this project has been particularly successful in encouraging communities in waste separation at source and in composting organic waste. A 3T composting facility was built based on the best practice experience of a project in Bangladesh. The facility is now financially sustainable. Such facility could be replicated in the rural and suburban districts, where the construction of landfill is economically not justified. The children of primary and secondary schools in two low income neighborhoods of the provincial capital, led by a young man, are regularly requesting to the households their waste plastic and papers ‘to buy books and drawing materials’ as an extra-curricula activity. At the start, the HH were willing to help by separating solid waste to give children what they were asking for, without receiving any particular explanation about the interest of waste selection. The initiator has then bit by bit raised awareness among the children, which are then providing the information to the HH. This approach helps to change the behavior of adults via children, which is considered effective in the local context.

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4. ADDITIONAL STUDIES 4.1 INSTITUTIONAL ANALYSIS
The analysis of the Institutional and organization capacity has been incorporated in the Formulation report and Technical and Financial file. Below, some highlights of the analysis are resumed. • • • • • • • The Vietnamese administration system is complex and vertical. Roles and responsibilities are not always clearly defined among numerous department agencies. Decision-making is carried out through consensus building and consultation, which is a time consuming process. A series of strategies, Laws and Decrees are guiding both rural water supply and sanitation sectors. They are some time redundant and even contradictory. The main ministries and departments in charge of water supply and sanitation sectors are: MoC, DoC, MARD, DARD, MPI, DPI, MoF, DoF, MoNRE, DoNRE, pCERWASS, PPC, DCP. Appropriate Vietnamese monitoring and accountability systems are in place for a significant level of national execution. Capacity Development are required on exposure to innovative development, JSC, contract management, operation and management, construction supervision, monitoring and reporting. Awareness raising activities on the environment preservation is a necessity.

4.2 BASIC DESIGN REVIEWS
The local authorities have approved basic designs of the rural water scheme and the four proposed landfills. The revision of the basic design of the Phu Cat and Phu My water system lead to a series of important remarks regarding data collection, calculation, design principles, costs estimates, financial recovery, that should be integrated during the detail design phase. Considering the usefulness of such exercise, a similar review on the basic design of the four landfills was conducted in August 2008 leading to the following remarks: • • • • • • • • • The basic design are of unusually poor quality, with numerous errors; The principle of one landfill per district is questionable; Incorrect assumptions and designs, especially regarding leachate treatment technologies due to lack of knowledge, leading to a non respect of the Vietnamese law requirements ; Contradiction between the EIA and the Basic designs; An Nhon landfill seems to be designed on incorrect information and is likely to be severely damaged by yearly floodwaters; No guarantee that the borehole drillings have actually taken place; International support requested to support reasonable waste management plans; Revised investment cost of 100,775.95 Million VND instead of 96,243.48; Awareness raising activities should be added to any investment program.

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5. TECHNICAL AND FINANCIAL FILE
See separate document.

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6. RISK ANALYSIS
Vietnam has a Country Performance and Institutional Assessment (CPIA) rating for 2006 of 3.8 (World Bank, 2007b), in comparison to an International Development Association (IDA) average of 2.8. According to BTC norms, any country with a CPIA rating of over 3.5 should use the national execution (NEX) modality, unless there is a strong case that can be made against it. The most relevant CPIA indicator in assessing Vietnam’s capabilities for NEX is arguably question 13, Quality of Budgetary and Financial Management. In 2006, Vietnam was rated 4.0 on this indicator, above the IDA average of 3.2. Based on this, the mission recommends that that this project be executed using NEX, the BTC standard for Vietnam. Two specific concerns are the high inflation rate registered on the one hand – it was of 8.6% year on year in August 2007, while being estimated to fall to 7.3% in 20085 - and the exchange rate fluctuation between the euro to the dollar. Both might affect the implementation of the activities. Other risks that may adversely impact on the program are described in the table below.
Item Comments Implementation risks Existing data not Although the project is not highly accurate, up-to-date related to the availability of data, and/or made importance of the access to reliable data available and exchange of information should be stressed Disagreement on parameters, standards, technology, methodology related to the assessments Geological/naturals constraints Chances to introduce new concepts in rural water and solid waste investment & management reduced due to the application of national execution modality Institutional risks Unclear distribution of tasks and responsibilities betweens various institutions that relate to the program Lack of Provincial leadership for
5

Level Low

Mitigation measures Capacity building of the technical staff of the related departments. As a result of Prime’s Minister decision 16/2007 environmental and water resource monitoring equipment have been installed in each DoNRE Exposure to good international and national practice by the TA team could convince the local authorities

Divergence of opinion may occur between program experts and local authorities regarding these issues

High

Technical constraints may occur due to natural conditions, such as water quality, soil permeability at the landfill sites… A large number of official standards are normalizing the design of investment projects, which reduce the possibility of experimenting alternative technologies

Low Medium

Technical measures could be taken if necessary By carefully monitoring the program and by given its none objection in key steps of the approval process, BTC could deploy technical assistance in a strategic manner and positively influence the program

Current overlaps of responsibilities among the different agencies lead to loss of time and unclear situation. Despite new decrees, ambiguous arrangements may continue

Medium

The vertical Vietnamese administration does not favor horizontal coordination

Medium

Clear mandates and division of tasks and responsibilities is expected from the new decrees. Exposure to international best practice, clearer decrees may clarify the administrative organization, while training programs will strengthen the defined agencies in charge of the Program execution modalities The TA staff will have an key role in coaching the stakeholders on the

Source: Country Report, The Economist Intelligence Unit, Sept 2007.

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coordinating the program The private sector as well as water users might not be interested in operating the schemes Reluctance of the DPC to consider the involvement of the private sector Management risks Timely access to data

on geographic areas. The private sector might not be interested in managing the landfills, while the customers would be reluctant of borrowing 20% of the investment costs and organize themselves in Commune-level Stock-Holding Body Intermediate administrative levels in Vietnam remain reluctant to develop public-private collaboration Medium

importance of local coordination that will have a benefit for all parties Large publicity towards the private sector with realistic financial stimulus from DPC on the top of the collection fees and professional communication to the water users could raise interests Exposure to examples of successful experiences might bring interests

Medium

Delays in approvals

Limited interest for environmental and awareness raising issues and innovative alternatives

Improved environmental condition and water resources management will depend on the smooth cooperation with key stakeholders in exchanging information. Reluctance to share data will reduce the efficiency of the program. The various detail design and studies foreseen within the program should be approved at the provincial level. However, some changes may occur in the future due to new procedure modalities under discussion requiring a higher decision level, which in turn may cause delays. The necessity that the society adopt more environmental friendly behavior as well as the interest of alternative approaches that may go in contradiction with old-fashion construction standards are not yet understood by all the stakeholders

Medium

The TA team will set-up communication channels among partner agencies

Medium

Close contact with the PPC and the related Ministries by the TA/RR team should facilitate the procedures

Low

Unnecessary interference

Lack of qualified staff at the Provincial and district departments Lack of cooperation in the awareness raising activities among the related agencies Inadequate incountry training capacity Effectiveness risks Low impact of the awareness

Provinces are now responsible for both planning and implementation; however some interference by the national level may still happen as strong centralized political system has a long history in Vietnam. Each department related to water resources, solid waste management, projects design and implementation have a limited number of staff that are not always highly educated Different agencies, even involved in the same sector are not used in coordinating their action, while not being professional Most of the topics covered by the program have largely been addressed in the past by the donors' community. Annually, one-shot awareness activities are organized with very short-term

Low

Changes of mentality on these issues require a long-term commitment. Bringing the environmental issues in the limelight of the decision makers and exposure to alternative solutions of both technical issues and O & M modalities experimented in Vietnam and maximizing the visibility of the results could convince some decision makers. Contacts and networking within Vietnam should bring new ideas up-front. The TA team, in coordination with PPC, may play a decisive role in strengthening the provincial agencies and gaining confidence in order to endorse their new responsibilities. Capacity building assessment will define the present skill levels and will inform the PPC in case additional skill manpower is required. Consensus and dialogue being part of the decision making process, development of a platform of dialogue, including the none-govt agencies as well as networking might be appreciated Extensive networking within Vietnam should allow identification of the proper trainers Involvement of an international expert on awareness and exposure to nationwide

Medium

Medium

Low

Medium

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campaigns Low impact of the capacity building program Sustainability risks No long-term application of the awareness activities Maintenance interventions not applied

impact. It could be anticipated that similar traditional activities would not change the local habits of the population Training might not be appropriate and/or sufficient to gain all the required skills

Low

best practice and implementation of professional pilot activities should raise interests Involvement of an international expert on capacity building and exposure to nationwide best practice. The training will be adjusted to the skill level and expectation of the audience The long-term strategy and guidelines and the training conducted should insure the technical sustainability of the intervention. Appropriate O & M modalities as well as monitoring tools and reporting as well as the consolidation of financial resource should guarantee the proper maintenance of the schemes. Extension of the Specific Agreement from 3 to 5 years Regular monitoring by the RR to push the project forward

The long-term awareness strategy might not be applied if there is no ownership The lack of maintenance of existing infrastructure is a problem accounted in many developing countries due to lack of funding and of political will.

Medium Medium

Fiduciary risks NEX might cause disbursement delays

National execution not properly controlled, local authorities not adequately fulfilling NEX responsibilities

National execution modalities gives the full responsibility to the local agencies to push the project forward while the role and responsibilities are not always clear. This process as well as the approval procedures of the investment projects may cause substantial delays National execution principles shall be applied for the management of funds; with the exception of budget lines related to the general means, including TA, monitoring and evaluation.

High

Medium

Adequate funds for awareness raising activities The flow funding of the VN contribution not clear DPC not in able to contribute 20% of the construction costs Investments projects budget insufficient

Organizing efficient awareness campaigns is costly. DoNRE has an annual budget for that purpose. Whether these funds are sufficient is questionable. The allocation of funds by the related district remains unclear Poor costs estimates and inflation might significantly increase the investment costs. Some activities will have to trop out from the program. High inflation and lack of accurate calculations of the basic design may imply an important cost increase of the investment projects

Medium

Medium

Application of the Vietnamese tendering procedures. Funds running through District Treasury. Carry out internal audits at provincial level and provide capacity building. No expenses can occur prior to the approval of the work plan and budget by the Steering Committee. Beside from internal DPI auditing procedures, external audit will occur once a year. Expenses that could not be justified shall be deducted from the next replenishment. If the funds are not managed in a transparent and appropriate way, the next installment can be suspended by the RR. Adapted pilot activities should have a demonstration effect that could spur the PPC to allocate more funds for the coming years. The Operation guideline should clarify the budget flow as well as the disbursement modalities Once the detail design and costs calculation are done, the district contribution will be blocked in the treasury, while the SC will decide which sub-projects will be financed Basic and detail design review should be carried out as soon as possible to allow the SC to prioritize the interventions in time.

Medium

High

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7. CROSS CUTTING ISSUES 7.1 ENVIRONMENT
Water resources and solid waste management being an integral part of environment issue, achieving the program results will have a direct impact on the quality of the environment. Guiding the preparation of Provincial Master Plans both on water and solid waste, while enhancing the local capacities and the population awareness will lead to more effective measures in controlling and mitigating pollution of local resources. Improved water resources planning and management will better secure the long-term, balanced availability of water for domestic, agricultural and industrial needs.

7.2 GENDER/ SOCIAL ECONOMY/ CHILDREN’S RIGHTS/ HIV/AIDS
The other transversal themes will not benefit to a similar extent from the program. However, improved water resources planning and management will secure the long-term availability of water for domestic, agricultural and industrial needs and therefore, to the well-being of the population, especially the women, that traditionally have a direct interest in the developing world of accessing to safe drinking water. On the other hand, a good management and treatment of solid waste could create new jobs and therefore generate income.

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8. REFERENCES
• • • • • • • • • • • • • • • • • • • • • • • • • • BTC, "Formulation report – capacity building in assessing and managing water resources program, Vietnam", November 2007 Comprehensive Poverty Reduction and Growth Strategy (CPRGS), 2002 De Bresser, J., "Insitutional and organisational analysis in the framework of the formulation of the water supply, the Hoc Mon reservoir rehabilitation and the solid waste management program in Binh Ding Province, Vietnam", Mission Memorandum, June 200! SECO, "draft review report of the basic design documents of the water supply and irrigation projects in Phu Cat and Phu My districts, Binh Dinh province", Hanoi, June 2008 Decree No. 67/2003/ND-CP, 13 June 2003 on environmental protection charges for waste water Decree 162/2003 on the regulation of water resource data collection, management and usage in 2003; Decree 149/2004/ND-CP on licensing for the exploitation and usage of water resources and the discharge of wastewater into water bodies Decree n°59/2007/ND-CP of April 9, 2007, on solid waste management Decree n°117/2007/ND-CP of July 11, 2007, on clean water production, supply and consumption Decree 88/CP, issued in 2007 on Wastewater Management for Urban and Industrial areas Decree No. 04/2007/ND-CP, 08 January 2007 addition and revision of some articles of Government Decree No. 67/2003/ND-CP, 13 June 2003 on environmental protection charges for wastewater Economist Intelligence Unit, Vietnam, Country Report, September 2007 Embassy of the Belgium Kingdom in Vietnam, "identification study for water supply and sanitation in Phu Cat district and rehabilitation of Hoc Mon reservoir in Phu My district, Binh Dinh province", Hanoi, September 2007 Embassy of the Belgium Kingdom in Vietnam, "identification study for solid waste management in four districts of An Nhon, Tay Son, Phu My and Hoai Nhon, Binh Dinh province", Hanoi, September 2007 EP&T, "Review of the Feasibility Studies for the project 'Solid waste treatment in four districts in Binh Dinh Province", 4 September 2008 Hanoi Core Statement on Aid Effectiveness, Ownership, Harmonization, Alignment, Results, 2006 Law on Water Resources (LWR), 1998 Law on Environmental Protection (LEP), 2005 National Rural Water Supply and Sanitation Strategy, 2000 National Urban Solid Waste Management Strategy, 2000 National Strategy for Environmental Protection, 2006 National Target Program phase II (NTPII) on Rural water supply and Sanitation and Hygiene, 2006 National Water Resources Strategy, 2006 Orientation for Urban Water Supply Development till 2020, 1998 Orientation for Urban Drainage and Sanitation Development till 2020, 1999 Paris Declaration on Aid Effectiveness, Ownership, Harmonization, Alignment, Results and Mutual Accountability, March 2005

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• • • • • •

Prime Minister Decision No. 113/2005/QD-TTg on the promulgation on of the Government’s action plan to implement the Resolution of the Political Bureau on socioeconomic development of Central region Sector Programme Support to Water, Sanitation and Hygiene Promotion in Viet Nam, 2006 Socio-Economic Development Plan 2006-2010 State of Clean water supply, Environmental protection and Rural people’s health in Viet Nam – Donor Review, 2005 Strategic Orientation for Sustainable Development in Viet Nam (Viet Nam Agenda 21), 2004 Viet Nam Water and Poverty Assessment: Setting the Picture and Defining Strategic Directions, John Soussan (unpublished Papers 2003)

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