Foreign investors cry foul, key Saigon wastewater treatment plant stalled

Workers construct a drainage system in Ho Chi Minh City. Photo by VnExpress/Quynh Tran.

The controversy has arisen from the contract being awarded to a consortium with a bid nearly $15 million higher than other submissions.

Vu Van Hoan, the city’s deputy chairman, announced the meeting to discuss the Nhieu Loc-Thi Nghe wastewater plant, which has been delayed for months after foreign bidders cried foul over the city’s decision to rule them out of the contract.

The Nhieu Loc-Thi Nghe wastewater plant is a key environmental project in the city with $278 million, or 90 percent of funding coming from a World Bank loan and the rest taken from the city’s budget.

After a bidding process, a consortium comprising two companies, Spanish firm Acciona and French firm Vinci, was awarded the contract in March.

But a consortium comprising two South Korean firms, Samsung and Kolon, and Japanese firm TSK, protested the awarding of the contract. It has come to light since that between March and May, the consortium had sent three letters to the Ministry of Security and other government bodies, saying the bidding process was not transparent.

Samsung-Kolon-TSK said it had underbid Acciona-Vinci by $14.7 million, but was not awarded the contract.

It also said the World Bank was incorrect in assessing that TSK owned more than 5 percent of the bidding consultant, Nippon Koei, which it considered a conflict of interest and a violation of the bank’s regulation. The consortium said that at the time of bidding, TSK owned just 2.32 percent of the consulting firm.

Another consortium, comprising South Korea firm Posco and French firm Suez, has also opposed the award, saying that its bid was not evaluated objectively in terms of technology and finance.

But HCMC responded that the complaints were not valid.

In a recent report to Prime Minister Nguyen Xuan Phuc, the HCMC People’s Committee said that the World Bank has conducted all bidding steps correctly to ensure transparency.

The World Bank also stood by its decision in awarding Acciona-Vinci the contract, and proposed that opposition to it be dealt with separately because construction of the wastewater plant has been delayed since March.

However, weighing into the controversy, the Department of Economic Security under the Ministry of Public Security said that the choice of Acciona-Vinci was not convincing as the differences in bids could cause losses of "hundreds of billions of dong" ($1=23,200) to the state budget.

It proposed that HCMC reviews the decision and report results to the PM.

The Nhieu Loc-Thi Nghe wastewater plant is part of a $524 million project to improve environmental sanitation in HCMC, a city of 13 million which is in dire need of a wastewater treatment upgrade as only 21 percent of discharge is treated in the city.

The project was originally scheduled to be constructed from 2015 to 2020, with funding from a $450 million loan from the World Bank and the rest from the city’s budget.