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The Water Global Practice of the World Bank is helping the govern-ment of Vietnam design a program to develop a water supply system to achieve water security and enhance climate change resil-ience in the Mekong Delta region. The GIF is supporting this effort by funding studies critical for attracting private sector participation in this initiative.

EXPECTED PROJECT OUTCOMES

� Reliable and affordable water supply for 10 percent of Vietnam’s population

� Greater efficiency of water delivery operations in an environmentally sustainable way

� Lead to a private sector solution to Vietnam’s water supply challenges involving up to $1.7 billion in investments for treatment plants and pipelines

VIETNAMMekong Delta Water Security

TECHNICAL PARTNERS

LOWER MIDDLE INCOME *WATER & SANITATION CLIMATE-SMART

GIF FUNDING & LEVERAGE

GIF Project Definition Support:

$200,000

Anticipated GIF Project Preparation and Structuring Activity:

$1–2 million

Potential Private Investment Mobilized:

$200 million

The Global Infrastructure Facility, or GIF, is a partnership of governments, multilateral development banks and private sector financiers that facilitates private-sector investment in complex infrastructure projects in emerging economies. We serve as a platform through which governments collaborate with international financial institutions and private sector investors to design, structure and implement these complex projects.

The comprehensive project-preparation support provided by the GIF draws on the expertise of its advisory partners which includes commercial banks and institutional investors. The broad partnership ensures that well-structured and bankable infrastructure projects are brought to market in a way that meets the needs of governments and service users in a sustainable way.

www.globalinfrafacility.org 04/2018

BACKGROUND

Vietnam is vulnerable to climate change impact, includ-ing sea level rise, longer and more severe drought and flood and tropical cyclones. The Mekong Delta, an area of 40,000 square kilometers (about 12 percent of Vietnam’s land area), is particularly vulnerable to climate change risk because of its low elevation. This is exacerbated by human activities leading to water resources degradation.

Ten percent of Vietnam’s population is faces shortages of drinking water because of saline intrusion of surface water. They are now exclusively relying on ground water; however, exploitation of this resource beyond its sustain-able recharge capacity would result in falling in ground-water table, which will lead to land subsidence and further saline intrusion.

A pre-feasibility study concluded that the most viable future water supply for the region is through a regional bulk water supply scheme, with its water sourced from the Hau River sufficiently upstream to be safe from salinity issues for the foreseeable future.

The Vietnamese government has requested support from the World Bank’s Water Global Practices group to address these issues.

PROJECT FEATURES

Addressing the water supply issue would entail sourcing and treating raw water from the Hau River. Drinking water would be pumped to seven provinces southwest of the Hau River through a network of transmission pipe-lines. A capital cost estimate for this program is estimated to be up to $1.7 billion for treatment plants and pipe-

lines. Much of the cost is expected to be financed by the International Bank for Reconstruction and Development (IBRD) and other donors.

To determine the feasibility and optimal approach for accomplishing this goal, the Water Global Practice of the World Bank has requested a $200,000 grant from the GIF. The study will identify the optimal institutional setup for regional water supply and identify potential private sector interest in financing and operating some or all of the planned regional water supply infrastructure through public-private partnerships.

WHY GIF

� GIF funding in the institutional set up, which covers framework for development and procurement of private sectors involvement in the project, and PPP options are vital for two reasons. First, the Mekong Regional Water Security Project is too large for multilateral development banks to fund or finance alone. Second, any structures developed can serve as template for future provincial projects.

� The GIF is well-positioned to provide support to the World Bank Water Global Practice or any other future technical partners regarding private sector financing. This could include, for example, structur-ing IBRD loan financing, viability gap funding, or a World Bank guarantee. This is important because existing commercial structures and institutions are weak, which could hamper interest by the private sector.

� If PPP is proven to be viable, the next step would be to apply for support to prepare transactions for tendering to potential private sector partners.