PROJECT Development Facility
Request for PIPELINE ENTRY AND PDF Block B Approval
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Financing Plan (US$) | |
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GEF Allocation | |
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Project (estimated) |
5,000,000 |
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Project Co-financing Associated Financing |
110,000,000 60,000,000 |
| PDF A* |
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| PDF B** |
350,000 |
| PDF C |
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Total PDF Financing: |
350,000 |
Agency’s Project ID: PO82295
GEFSEC Project ID: 2758
Country: Vietnam
Project Title: Vietnam Coastal Cities Environmental Sanitation Project.
Related Program: World Bank/Global Environment Facility Pollution Reduction Investment Fund for Large Marine Ecosystems of East Asia.
GEF Agency: World Bank
Other Executing Agency(ies):
Project Duration: Five years
GEF Focal Area: International Waters
GEF Operational Program: OP10: Contaminant-based Program
GEF Strategic Priorities: IW1 - catalyzing policy reforms and pollution reduction measures; and IW3 - demonstrating, testing, and replicating innovative ways to reduce land-based pollution.
Estimated Starting Date (PDF-B): July 2005
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This proposal has been prepared in accordance with GEF policies and procedures. | |
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Steve Gorman IA/ExA Coordinator |
Robin Broadfield GEF Regional Coordinator |
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Date: May 16, 2005 |
Tel: 202 473 4355 |
Estimated WP Entry Date: December 2006
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Record of endorsement on behalf of the Government: |
| Name: |
Date: |
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Pham Khoi Nguyen, GEF Vietnam Chairman |
April 18, 2005 |
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Senior Vice Minister, MONRE, Vietnam |
PART I - Project Concept
1. Strategic Framework
East Asia’s rapid economic growth has been accompanied by significant environmental degradation. Land-based pollution of the region’s seas, coasts, estuaries and rivers is one of its most severe environmental problems and is degrading the region’s large marine ecosystems. To help the littoral states address this problem, the GEF and World Bank have agreed to establish a Pollution Reduction Investment Fund for the Large Marine Ecosystems of East Asia (the Fund), the objective of which is to scale-up investment in land-based water pollution reduction in the region’s coastal areas and major river basins. The Fund comprises an investment component that will co-finance innovative and potentially replicable components of World Bank pollution reduction investment projects that, both directly and through replication, will accelerate public pollution reduction in East Asian land-based pollution hot-spots, and a revolving fund(s) component that will provide reimbursable financial incentives to private pollution reduction investor/managers to catalyze more pollution reduction investment by the private sector. The Vietnam Coastal Cities Environmental Sanitation Project described herein is the third World Bank project proposed for GEF co-financing from the Fund’s investment component.
2. Project Rationale
Investments in wastewater treatment and pollution control in urban centers in Vietnam, including coastal cities such as Nha Trang (population 270,000), Quy Nonh (Pop 230,000) and Dong Hoi (Pop 95,000) which will be assisted by the project, have lagged far behind its rapid economic development, which is currently estimated at 7% p.a. And, due to its limited technical capacity, lack of awareness and aversion to risk, Vietnam has continued to invest exclusively in traditional, relatively high cost wastewater treatment technologies, which has constrained investment in wastewater processing facilities.
To maintain this higher than average growth, much of which is related to tourism, good environmental conditions are paramount. All the larger cities in the country are already undertaking sanitation investments, although none are yet operational. The project cities represent the next tier of cities in Vietnam to tackle environmental sanitation issues. Local governments have declared pollution reduction a priority and adopted a progressive, sub-regional approach to it. However, while they are willing to accelerate wastewater treatment investment, they have shied away from using more cost-effective modern technologies, such as chemically-enhanced primary treatment (CEPT), on the grounds that it has not been tried and proven in Vietnam. With GEF assistance, the project would demonstrate that approach, which has high replication potential not only for other coastal cities in Vietnam, but for all cities in the region that discharge to rivers and thence into the seas off their country’s coast. Hence it is an excellent candidate for support from the Fund.
3. Objectives
The project’s objectives are to reverse environmental degradation and improve the functioning of sanitation infrastructure in the above-stated coastal cities in Vietnam. Specifically:
i) Introduce wastewater treatment, with associated collection systems
ii) Improve the collection and ensure the safe disposal of solid waste; and
iii) Strengthen the capacity of the urban environmental companies (URENCO) to sustain the improvements made.
These measures would result in higher efficiency and economic growth potential in the project cities, as well as better public health, especially for poor residents.
4. Outputs
i) Drainage/Sewerage: Existing drainage/sewerage infrastructure in the cities is limited and generally “combined” (storm water and wastewater discharge to the same sewer/drain). Flooding occurs frequently in the wet season. The project will expand drainage/sewerage networks, provide additional hydraulic capacity, and the divert wastewater at storm overflow chambers located close to discharge points. Diverted wastewater will be collected in interceptor sewers which will discharge via pumping stations to a wastewater plants. The full extent of the investments in drainage is currently being determined by consultants but is likely to be around $100million.
ii) Wastewater Treatment. Most households rely on septic tanks for disposal of liquid wastes. These are effective to varying degrees and discharge to the ground or to surface drains. There is no off site wastewater treatment. In order to improve receiving water quality, wastewater treatment will be provided. The need for a total of six wastewater treatment plants has been identified, with oxidation ditches being the treatment process preferred by the Cities. However, decisions on process have been shaped by traditional engineering solutions and a reluctance to properly explore alternative technologies, such as chemically enhanced primary treatment (CEPT). With GEF support, this lower-cost treatment option would be demonstrated.
iii) Solid waste collection and disposal. For solid waste disposal, sanitary landfills incorporating leachate collection/treatment and gas collection (with either flaring, or possibly for power generation) will be adopted. Collection at the tertiary level will be labor-intensive, but the feasibility of contracting out collection and transfer of waste to the private sector will be evaluated.
iv) Strengthening of urban environmental companies (URENCOs). This will include an assessment of ways to enhance the autonomy, accountability and incentives of these providers. This will be partly institutional and partly capacity building support to the companies e.g. in financial and commercial management.
B - Country ownership
1. Country Eligibility
Vietnam is eligible for GEF assistance in the International Waters Focal Area through the World Bank.
2. Country Driven-ness
Vietnam’s “Orientation for the Development of Urban Sewerage and Drainage until 2020” aims to ensure that all urban areas would have suitable wastewater treatment facilities by 2020. In December 2003 the government issued a new environmental strategy which provided an intermediate target of 40% of urban wastewater to be treated by 2010. Thus, policy at the national level is clearly driving towards expanded wastewater treatment.
At the municipal level, the importance of tourism to economic development has increased attention to improving the environment, through better management of both solid and liquid wastes. All cities participating in the project understand the need to make progress on this issue and all have funded the preparation of project pre feasibility studies using their own resources.
The three participating municipal governments are committed to plans to install new wastewater treatment facilities in the City. They have demonstrated this commitment by funding the preparation of the pre feasibility study for the World Bank project, by establishing a Project Management Unit for project preparation and implementation, and have begun the process to set aside land for the sites of the wastewater plant.
Importantly, they are in the process of developing the investment plan for the Bank project in which investments will be made to ensure that secondary and tertiary drainage/sewer networks are constructed, and that barriers to households connecting to the network are eliminated or minimized. This is crucial, as there are examples where lack of attention to such issues has resulted in treatment plants without an adequate sewer network feeding into them.
C – Program and Policy Conformity
- Program design and Conformity
The proposed program is consistent with the GEF’s Operational Program (OP) 10, the Contaminant-based International Waters OP, in that it will demonstrate and encourage replication of innovative and best practice options to overcome the barriers to reducing land-based contamination of an international water body, the South China Sea. Its innovative features include: (a) construction of Vietnam’s first non traditional waste water treatment plant, which will demonstrate the technical applicability and cost-effectiveness of chemically-enhanced primary treatment technology within the country; and (b) promotion of a broader understanding of key issues and options related to appropriate waste water treatment, and specifically to this technology, including upgrading paths that follow the City’s economic development, beneficial reuse of biosolids from the process, cost effective nutrient removal, tolerance to saline intrusion – especially important in coastal cities, in addition to low capital and operating costs, and small land requirements. This improved understanding will be fostered by a workshop and study tour.
The project is also consistent with GEF Strategic Priorities (SP) 1 and 3 for the International Waters Focal Area in 2004-06. With respect to priority 1, it will facilitate the efforts of a nation that signed the Putrajaya Declaration of Regional Cooperation for the Sustainable Development of the Seas of East Asia to mobilize financial resources for implementing policy/institutional reforms and stress-reducing investments to address a priority trans-boundary water issue (land-based pollution of a shared water body) that is highlighted in the declaration. Furthermore, as called for by the SP, these resource mobilization efforts are mainstreamed into the regular program of a GEF agency, in this case the World Bank, under the framework of a strategic partnership among nations and the GEF agencies that support WSSD POI outcomes.
With respect to priority 3, the project will demonstrate the feasibility of innovative institutional mechanisms and technical solutions to accelerate investment in facilities that reduce the contamination of an international water body. Its technical solutions include low-cost options that will help financially constrained communities access environmentally-responsible sewage treatment, thus generating both local and global benefits.
- Project Design
Problem Statement
Unprecedented economic growth in East Asia has resulted in rapid urbanization, particularly in coastal regions. The urban population concentration in coastal regions, coupled with inadequate environmental investment, has caused the seas of East Asia to largely bear the brunt of the environmental impact of this development. The result is that land-based pollution of East Asia’s seas, coasts, estuaries and rivers is a severe problem that is well-recognized by all the countries in the region, including Vietnam.
More specifically, the rapid economic growth of Vietnam is putting a strain on existing drainage/sewerage infrastructure in the cities. Sanitation infrastructure is in poor condition, and deteriorating, as a result of prolonged under-investment, rapid urbanization, expanding tourism, and increasing wastewater loads. While there is a willingness to address this problem through this project and other pollution reduction iniatives, there is limited understanding and great mistrust of modern wastewater systems and technology and hence great reluctance to invest in it. The generally weak institutional capacity of the urban environmental companies (URENCOs) and the consequent risk aversion of their engineering staff is a further constraint. In combination these factors mean that newer technologies that may be more appropriate in the Vietnamese context are seen as more risky than those currently employed, and therefore are not properly considered or tried.
Local governments are also reluctant to increase wastewater and solid waste charges to the levels necessary to contribute to future investments. Hence there is a pressing need on financial sustainability grounds also to overcome the barriers to technical progress and to develop wastewater facilities that have low capital and operating costs, and can be upgraded in response to economic and social development..
Baseline Scenario
Many of the trends identified above - increased growth, poor sanitation conditions, coastal degradation, lack of investment in cleaning up - are a reflection of Vietnam’s development stage. In the worst case scenario, i.e. no Bank project, these trends will continue and the situation will only be exacerbated. In the baseline scenario, i.e. the Bank project but without GEF funding, the proposed baseline project will further develop/consolidate Vietnam’s urban environmental agenda technically (sewerage, waste water treatment and solid waste management), financially (cost recovering charges), and institutionally (efficient and effective service providers). i.e. the project will establish good sector practice in Vietnam. However lack of local experience with innovative solutions and client concerns about the use of “untried” technologies will limit the design of treatment facilities to conventional approaches adopted in developed country – which, due to their often relatively high complexity or cost, are not necessarily the most appropriate for Vietnam.
Alternative Scenario
The addition of GEF co-financing would support a significant strategic enhancement of the planned Bank Project. With GEF funding, the coastal cities would have the opportunity to “try and test” a pilot chemically enhanced primary waste water treatment plant, with facultative ponds. International experience shows that this low life-time cost technology, which is not currently used in Vietnam nor in most other east Asian countries, is cost effective and technically viable under local conditions. It has been successfully applied in Latin America, for example in Mexico City and Rio de Janeiro, as well as in Hong Kong, for example. But these cities have near first-World technical capacity and have invested on a very large scale. Hence these investments have not demonstrated that the technology is appropriate or cost-effective for Vietnam’s needs and capacity and thus, without GEF support, it will not try and test it. However, if it is offered GEF grant funds to co-finance a pilot CEPT facility that would demonstrate the technology’s technical applicability and cost-effectiveness within the Vietnam situation, the Vietnamese authorities have agreed to overcome their reluctance and try and test it and, if it is successful, to encourage replication of the technology for wastewater treatment in other Vietnamese cities and to help disseminate Vietnam’s experience with the technology around the East Asia region.
A pilot chemically enhanced primary waste water treatment plant would not be funded under the baseline project because it is a new technique that Vietnam is not familiar with and willing to invest in. Hence, GEF support will help Vietnam meet its wastewater treatment requirements through innovative new solutions, which Vietnam would be unlikely to undertake if not for the incremental cost support from GEF.
According to preliminary studies commissioned by the World Bank for the project, a chemically enhanced treatment plant (CEPT) is the least cost solution in capital costs and second lowest in operating costs (behind facultative ponds). Its East Asia clients, and specifically the Vietnamese, are however are opposed to applying it, because there is a perception that CEPT more complicated compared to oxidation ditches, and because it is viewed as a new, and untried/unproven technology. From the study, it is clear that CEPT has a number of advantages in Vietnam, including small footprint, low costs, relatively simple, high sludge production could be used beneficially, and as a step towards higher standards.
Importantly it is worthwhile to test out a range of processes in Vietnam as it embarks on the implementation of wastewater treatment facilities around the country. Failure to do so will lock the country into the application of developed country technologies where alternatives, such as CEPT, might be more appropriate.
- Sustainability (including financial sustainability)
The Government and the participating coastal cities are committed to enhancing wastewater treatment and reducing water borne pollution. The Government policy on this issue is clearly stated, and the cities have all established Project Management Units to prepare and implement the project. As noted earlier the cities have also funded the preparation of the pre feasibility studies using their own funds.
Financial sustainability is a key challenge, especially in the early days of improved wastewater treatment investment programs, when results are not yet evident. During this period households are not sure of the benefits arising from such investments, and yet are required to pay wastewater charges.
The government and the Bank project team understand this challenge. The Government is promoting cost recovery in the sector, and Bank team have placed significant emphasis on this issue seeking tariffs that cover O&M costs, plus at least depreciation of short lived assets. In addition, the proposed Bank project is planning to include a component on public awareness related to sanitation and payment for services. It is believed that improved consumer education will allow appropriate tariffs to be adopted.
- Replicability
The proposed GEF-supported activities have significant potential for replicability in Vietnam and throughout East Asia. Chemically enhanced primary wastewater treatment offers low capital costs, robust treatment performance, low operating costs, and a number of associated benefits including enhanced nutrient removal, potential for beneficial reuse of biosolids, tolerance of influent salinity, and a staged upgrade path to reflect economic development in each city. But the only East Asian cities in which it has been applied are Shanghai and Hong Kong, which have vastly superior capacities than any other cities in the region and have invested on a scale that is not appropriate for and hence not an effective demonstration to Vietnam, Indonesia or the Philippines.
A successful implementation of a CEPT based treatment plant in Vietnam would be the first demonstration of this technology on a scale appropriate to East Asia’s many medium-sized coastal cities, and would thus provide opportunities for widespread implementation across the country, as it starts to address a back log in wastewater treatment investments, and region-wide. Replication would be promoted through a range of routes including a) the demonstration effect of the plant itself, b) improved understanding of the CEPT process by local engineers and process designers, c) through the professional association (VWSA) and d) through government, donors and borrowers who will be able to better assess the appropriateness and cost effectiveness of the solution. The UNDP/IMO/GEF PEMSEA Project will facilitate the regional replication program.
- Stakeholder Involvement/Intended Beneficiaries
There are multiple beneficiaries for the GEF activities including: i) citizens in the city who will benefit from improved environmental conditions ii) customers of the wastewater company that will find lower tariffs and more reliable service from a more appropriate technical solution iii) local government that will have a treatment process that can be upgraded to reflect changes in economic conditions, iv) the country, and its wastewater professionals, who will have a working example of an alternative approach which is more appropriate for the Vietnamese situation.
During the preparation of the proposed project, there will be consultations with all of these key stakeholder groups. The results of the consultations will be recorded and analyzed, and an effort made to reach consensus on appropriate project design.
D - Financing
Total Estimated Project Cost: US$170 million:
o Counterpart Funding (Borrower): US$45 million
o IDA: US$120 million
o GEF: US$5 million
E - Institutional Coordination and Support
- Core Commitments and Linkages
The project is consistent with Vietnam’s waster and drainage strategy, which stresses service expansion, scaling up, and operational efficiency. It is also consistent with the trans-boundary diagnosis and strategic recommendations of the PEMSEA-facilitated Sustainable Development Strategy for the Seas of East Asia.
Furthermore, the project will directly respond to the Vietnam CAS theme of enhancing equitable, socially inclusive and sustainable development. It will give focus to poorer areas, thus narrowing the development gap and enhancing environmental sustainability. It will also help support the CAS theme of transition to a more market oriented economy by promoting private sector participation and developing self financing public utilities.
- Consultation, Coordination and Collaboration between and among Implementing Agencies, Executing Agencies, and the GEF Secretariat, if appropriate.
The project will liaise with the activities of the GEF/UNDP/IMO Partnership for Environmental Management of the Seas of East Asia (PEMSEA). PEMSEA oversees the aforementioned Putrajaya Declaration of Regional Cooperation for the Sustainable Development of the Seas of East Asia, which was endorsed by the government of Vietnam in December 2003, and which lays out a road-map for improving and sustaining the seas of East Asia. The project will also coordinate with the UNEP/GEF South China Sea Project, another country-driven marine pollution reduction program in the region.
- Implementation/Execution Arrangements
The implementing agency for the project will be the World Bank, through the East Asia Urban Sector Unit (EASUR), which is responsible for the overall Global Environment Facility Pollution Reduction Investment Fund for Large Marine Ecosystems of East Asia. The World Bank task team responsible for the Coastal Cities Environmental Sanitation Project will also supervise the GEF project.
Responsibility for project preparation will be with the Quy Nhon PMU. The PMU has representation from key city agencies or can access such agencies as needed. This will ensure coordination amongst the various city agencies involved in a project of this nature (e.g. finance, environment, construction, planning). In addition the PMU will, in parallel, be preparing the Bank funded project, which includes the pipe network feeding into the CEPT plant.
Once constructed and acceptance tests have been satisfactorily completed the CEPT plant will be operated by the Quy Nhon urban environment company.
PART II - Project Development Preparation
A - Description of Proposed PDF Activities
The activities during the PDF-B grant period are described below:
1. Activity 1: Preparation of Terms of Reference. An individual consultant will be selected to prepared detailed terms of reference for all subsequent consulting activities associated with the project.
2. Activity 2: Preparation of Feasibility Study for CEPT plant: An international firm will be selected to undertake a detailed feasibility study (FS) of the CEPT plant. The FS will be consistent with Government of Vietnam requirements and will be in sufficient detail to allow appraisal of the project by the GEF/World Bank team. The preparation of the FS will include preparation of Environmental Management Plans and Resettlement Action Plans all as required for Bank appraisal.
The FS will be prepared in draft for review with the municipal authorities in Quy Nhon before being finalized. Formal approval from the People’s Committee at the Province and City level will be provided before the preparation of detailed engineering designs and bid documents is started.
3. Activity 3: Prepare Detailed Engineering Designs and Bidding Documents: After approval of the FS by the People’s Committees the consultant will proceed to the preparation of detailed engineering designs and bidding documents. The bid documents will follow standard Bank procedures and will be cleared by the World Bank team prior to issue to potential contractors.
4. Activity 4: Procurement Support and Auditing: Individual consultants will be selected to assist the PMU in procurement of contractors for the CEPT treatment plant and auditing the grant activities.
5. Activity 5: Study Tour and Workshop: Key operational staff and representatives of the City and sector professionals in the country will travel to Latin America to visit operational CEPT treatment plant. A workshop will be held after the study tour for a wider audience in the country to a) introduce the CEPT process, alongside other treatment technologies b) report back on the study tour and c) provide a platform for sector professionals to discuss the CEPT technology.
B - PDF Block B Outputs
1. Terms of reference for consultants required to prepare FS, detailed engineering designs, bidding documents, procurement support and grant auditing.
2. Draft and Final Feasibility Studies for the Chemically Enhanced Primary Treatment wastewater plant for Quy Nhon city, suitable for World Bank and GEF appraisal
3. Draft and Final detailed engineering designs and bid documents for the Chemically Enhanced Primary Treatment wastewater plant for Quy Nhon city.
4. Workshop and study tour visit reports
C - Institutional Arrangements
The Quy Nhon PMU will execute the project activities, on behalf of the City of Quy Nhon. The PMU already has responsibility for preparation of the World Bank funded project and is therefore well placed to undertake this additional GEF responsibility, whose requirements generally follow those of the Bank.
The World Bank team responsible for preparation of the Coastal Cities project will review and provide no objections to the outputs provided by the various consultants selected by the PMU.
D - Timeline & Budget
See Annex 1. The PDF-funded activities are expected to begin immediately after GEF approval of the proposal in July 2005 and will be completed by December 2006. Consultant selection typically takes 6-9 months in Vietnam and this explains the extended timetable presented above. The World Bank team will work with the PMU to speed up the process as much as possible.
The intention is to submit the Vietnam investment component to the GEF Council in parallel with the preparation activities identified above, and based on the findings of the approved Feasibility Study. This is likely to be in summer 2006. The budget estimate for the PDF-B activities is presented in Annex 1.