Service Delivery Assessment December 2014 100896 Water Supply and Sanitation in Vietnam Turning Finance into Services for the Future This report is the product of extensive collaboration and information sharing between many government agencies at national and provincial level, and development partners in Vietnam. A core team drawn from the Ministry of Construction and Ministry of Agriculture and Rural Development has been lead partners with the Water and Sanitation Program in this assessment sector. The authors acknowledge their valuable contribution as well as the information sharing and contributions during workshops by other sector stakeholders, including development partners. The Task Team Leader for the Service Delivery Assessment (SDA) in East Asia and the Pacific is Susanna Smets. The fol- lowing World Bank staff and consultants have provided valuable contributions to the service delivery assessment process and report: Jeremy Colin, U-Prime Rodriguez, Vinh Quang Nguyen, Iain Menzies, Hang Diem Nguyen, Almud Weitz, Sandra Giltner, Nguyen Trong Duong and Nguyen Danh Soan. The report was peer reviewed by the following World Bank staff and sector colleagues: Parameswaran Iyer, Lead Water and Sanitation Specialist, Lilian Pena Pereira Weiss, Sr. Water and Sani- tation Specialist, Sing Cho, Urban Specialist and Lalit Patra, Chief WASH section, UNICEF Vietnam. The SDA was carried out under the guidance of the World Bank’s Wa­ ter and Sanitation Program and local partners. This re- gional work, implemented through a country-led process, draws on the experience of water and sanitation SDAs conduct­ ed in more than 40 countries in Africa, Latin America, and South Asia. An SDA analysis has three main components: a review of past water and sanitation access, a costing model to as­ sess the ad- equacy of future investments, and a scorecard that allows diagnosis of bottlenecks along the service de­ livery pathways. SDA’s contribution is to answer not only whether past trends and future finance are sufficient to meet sector targets for infrastructure and hardware but also what specific issues need to be addressed to ensure that fi­ nance is effectively turned into accelerated and sustainable water supply and sanitation service delivery. The Water and Sanitation Program is a multi-donor partnership, part of the World Bank Group’s Water Global Practice, sup- porting poor people in obtaining affordable, safe, and sustainable access to water and sanitation services. WSP’s donors include Australia, Austria, Denmark, Finland, France, the Bill & Melinda Gates Foundation, Luxembourg, Netherlands, Nor- way, Sweden, Switzerland, United Kingdom, United States, and the World Bank. WSP reports are published to communicate the results of WSP’s work to the development community. Some sources cited may be informal documents that are not readily available. The findings, interpretations, and conclusions expressed herein are entirely those of the author and should not be attributed to the World Bank or its affiliated organizations, or to members of the Board of Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The bound- aries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of the World Bank Group concerning the legal status of any territory or the endorsement or acceptance of such boundaries. The material in this publication is copyrighted. Requests for permission to reproduce portions of it should be sent to world- bankwater@worldbank.org. WSP encourages the dissemination of its work and will normally grant permission promptly. For more information, please visit www.wsp.org. © 2014 International Bank for Reconstruction and Development/The World Bank Water Supply and Sanitation in Vietnam Turning Finance into Services for the Future Strategic Overview peri-urban areas. Outside of the major cities, the quality and Subsector 2020 Target reliability of supply is a challenge while in rural areas, in- Urban water supply (access to public piped 85% formal management arrangements rarely result in effective network) operation and maintenance in the long term. There are also Rural water supply (access to ‘clean’ water significant inequalities in access between richer and poorer 75% meeting Ministry of Health (MOH) standards) segments of the population. For example, while 95% of the Urban sanitation (proportion of wastewater treated) 45% richest urban quintile has a piped water connection in the yard, only 35% of the poorest have this level of service. Rural sanitation (use of ‘hygienic’ latrines meeting 85% In rural areas, just 3% of the poorest quintile has a house MOH standards) connection while for the richest quintile the figure is 43%.2 In the last two decades the Government of Vietnam has made Progress in sanitation and hygiene is lagging behind water considerable progress in improving water supply and sani- supply, and in urban areas the general absence of wastewa- tation in both urban and rural areas and rates of access to ter treatment and fecal sludge management is a significant improved services are now significantly higher than those in gap given the population density and the volume of waste- neighboring countries. Both the water supply and sanitation water produced. In rural areas, the sector does not yet have Millennium Development Goal (MDG) targets have been met, a coherent implementation strategy for taking sanitation according to Joint Monitoring Programme (JMP) reports.1 and hygiene promotion to scale, though it benefits from a national target program funded with multi-donor support. These achievements are impressive. The reliability of the data on which JMP figures are based is, however, disputed Although decentralization is quite advanced in Vietnam, and many stakeholders consider the access rates to be there are instances where central control still inhibits the overestimated. Weak monitoring systems and a multiplic- development of locally appropriate solutions, while gaps in ity of official data sources underlie widespread uncertainty the financial and human capacity of local service provid- over actual service coverage and functionality. A further ers are barriers to service improvement and expansion. In complication is that the Government of Vietnam has adopt- recent years, government has promoted the adoption of a ed targets and technical standards which are more ambi- commercial orientation in urban service provision, and some tious than those adopted by the JMP. The targets are sum- progress has been made in relation to water supply services marized below; meeting them will be difficult. but not for sanitation due to the limited scope for revenue generation. Provincial government still exercises significant There are major disparities in water supply access between control over utilities and, despite some promising policy regions and between big cities, smaller urban centers and initiatives, conditions are not yet attractive for large-scale 1 JMP (2013) 2 JMP-UNICEF special tabulation per wealth quintile, using MICS 2010/11 data iv Water Supply and Sanitation in Vietnam private sector participation. A more enabling environment sanitation (a total of estimated amount of 2.5% of GDP). is needed including, amongst other things, the establish- A large proportion of the investment requirements are for ment of a regulator and the introduction of commercially urban areas (around 87%). Furthermore, in the case of wa- viable tariff levels and performance contracts. Recently, the ter supply roughly 60% of the funding required is for the government has also introduced a socialization policy and replacement of existing assets. The anticipated public (do- associated decisions to increase private sector participa- mestic and external) finance for 2012-2014 demonstrates tion in the sector, both for urban and rural.3 This initiative the same direction towards high urban investments, with is in its early stages and, while it could potentially deliver around 90% directed to urban areas for sanitation and significant benefits to the sector, there are obstacles to be around 70% to urban areas for water supply. This highlights overcome in terms of commitment to policy implementa- an urgent need not only to increase overall sector funding tion, comprehensive legal framework, as well as public and but also to use public funding more effectively, by improving private sector capacity for contracting. the implementation of cost recovery policies and manage- ment—and hence sustainability—of existing infrastructure In order to meet the government’s ambitious targets, some and services. Crowding in private sector financing will be an 3.7 million people per year will need to gain access to water important element to reduce the financing gap, and actions supply sources that meet government standards, of which to improve the investment climate as mentioned above de- around half in rural and half in urban areas. In the case of serve priority. sanitation, about 1.6 million people per year will need ac- cess to wastewater treatment (in urban areas) and about In summary, the sector faces the daunting task of expand- 2.0 million to latrines that meet national standards (in rural ing service provision to reach the poorer un-served popula- areas). tion segments; keeping pace with growth; and at the same time putting measures in place to strengthen the effective- Average annual investments in the water supply and sanita- ness and sustainability of service provision, both technically tion sector of the government and donors from 2009-2011 and financially. were equivalent to roughly 0.2% of 2011 GDP. While ex- pected to rise to about 0.4% of GDP in 2012 to 2014, an- This Service Delivery Assessment has been conducted as a ticipated investments are insufficient to put the sector on multi-stakeholder process under leadership of the Govern- track to meet government targets for 2020. Meeting these ment of Vietnam. Agreed priority actions to tackle Vietnam’s would require capital expenditures of US$1.562 billion per water supply and sanitation challenges have been identified year for water supply and US$1.142 billion per year for to ensure finance is effectively turned into services: 3 Ministry of Construction Summary report on encouragement of private sector participation in water and urban environmental sanitation sector, Oct 2013; and Vietnam Development Partner Forum – Working Group report on private sector participation in rural water supply and sanitation, Nov 2013 Service Delivery Assessment v Sector-wide • Increase public funding for water supply and sanitation, especially for urban service provision outside of the major cities and for remote, underserved rural areas • Improve the management – especially cost recovery – for existing infrastructure and services provision, to reduce the financing gap for investment needed in infrastructure replacement • Conduct a public expenditure review for the water and sanitation sector, to identify critical obstacles to efficient resource utilization • Prioritize the needs of the poor in sector investments and operational strategies, such as by expanding results- based financing instruments and incentivize sustainable service delivery to poor and vulnerable communities • Streamline urban and rural access targets and monitoring frameworks, with greater attention to service functional- ity and use, and agree on common points of reference for all institutional stakeholders in the sector • Improve the policy and enabling environment, such as with respect to tariff reform and regulation, for private sector participation and develop capacities for private sector participation in both urban and rural services (on both public and private side) Rural Water Supply • Develop a capacity building strategy and implementation plan for National Target Programme for Rural Water Sup- ply and Sanitation phase 3 (NTP3), including developing a comprehensive technical support system to improve the functionality of schemes • Carry out a comprehensive review of the effectiveness of existing and alternative scheme management (and owner- ship) models • Develop and implement review recommendations to professionalize management and leverage private sector ca- pabilities • Develop provincial level plans for managing water quality at scheme level Urban Water Supply • Allow tariffs to reach commercially viable levels whereby utilities can achieve full cost recovery, through indepen- dent economic regulation • Increase autonomy for utilities, allowing them to increase operation and maintenance budgets to levels that enable adequate maintenance to be provided and sustained • Introduce incentives and obligations for utilities to improve the quality and reliability of service provision, by estab- lishing an independent regulator • Enhance access to commercial finance for utilities by providing government guarantees for utilities vi Water Supply and Sanitation in Vietnam Rural Sanitation and Hygiene • Identify effective operational strategies for sanitation and hygiene promotion that can be taken to scale under NTP3, including demand-led approaches for community socialization • Increase “software” spending, including staffing and operational budgets for provincial and local health line imple- mentation agencies • Facilitate increased private sector involvement in making desirable, low-cost toilets available for poor and under- served communities • Set up a systematic national capacity building program for sanitation and hygiene for health sector staff and other participating organizations including the Vietnam Women’s Union Urban Sanitation and Hygiene Expedite the adoption of the Draft Unified Sanitation Sector Strategy and Investment Pan (U3SAP). As part of this initiative: • Adopt a subsector investment plan and develop an urban sanitation financing strategy • Support the implementation of existing policy directives on the autonomy and commercial orientation of service providers (including combined water and wastewater utilities) • Develop the capacity of service providers so that existing policy provisions – particularly on financial sustainability – can be implemented and services improved • For new wastewater treatment plants, revise technical standards to adopt cost-effective technology and introduce incentives to maximize direct household connections to network Service Delivery Assessment vii Contents Acknowledgment ..................................................................................................................................................................ii Strategic Overview ..............................................................................................................................................................iv Contents ............................................................................................................................................................................ viii Abbreviations and Acronyms...............................................................................................................................................ix 1. Introduction................................................................................................................................................................... 1 2. Sector Overview: Coverage and Trends....................................................................................................................... 3 3. Reform Context........................................................................................................................................................... 10 4. Institutional Framework............................................................................................................................................... 13 5. Financing and its Implementation............................................................................................................................... 17 6. Sector Monitoring and Evaluation............................................................................................................................... 20 7. Subsector: Rural Water Supply................................................................................................................................... 22 8. Subsector: Urban Water Supply................................................................................................................................. 25 9. Subsector: Rural Sanitation and Hygiene................................................................................................................... 28 10. Subsector: Urban Sanitation and Hygiene.................................................................................................................. 32 11. Conclusion.................................................................................................................................................................. 36 Annex 1: Scorecard and Explanation ................................................................................................................................ 39 Annex 2: Assumptions and Inputs for Costing Model ....................................................................................................... 65 viii Water Supply and Sanitation in Vietnam Abbreviations and Acronyms ADB Asian Development Bank AUSAID Australian Aid CAPEX Capital Expenditure CLTS Community-led Total Sanitation DANIDA Danish International Development Agency DFID Department for International Development (UK Aid) IBNET The International Benchmarking Network for Water and Sanitation JMP UNICEF-WHO Joint Monitoring Programme MARD Ministry of Agriculture and Rural Development MDG Millennium Development Goals MOC Ministry of Construction MOH Ministry of Health NCERWASS National Centre for Rural Water Supply and Sanitation NCRWSS National Clean Rural Water Supply and Sanitation NGO Non-Governmental Organization NTP National Target Program pCERWASS Provincial Centre for Rural Water Supply and Sanitation pCPM Provincial Centre for Preventive Medicine PPC Provincial People’s Committee SDA Service Delivery Assessment U3SAP Unified Sanitation Sector Strategy and Action Plan VIHEMA Vietnam Health Environment Management Agency VBSP Vietnam Bank for Social Policy WSP World Bank’s Water and Sanitation Program Service Delivery Assessment ix 1. Introduction Water and sanitation Service Delivery Assessments (SDAs) The scorecard looks at nine building blocks of the service are taking place in seven countries in the East Asia and the delivery pathway, which correspond to specific functions Pacific region under the guidance of the World Bank’s Wa- classified in three categories: three functions that refer to ter and Sanitation Program (WSP) and local partners. This enabling conditions for putting services in place (policy de- regional work, implemented through a country-led process, velopment, planning new undertakings, budgeting), three draws on experience of water and sanitation SDAs con- actions that relate to developing the service (expenditure ducted in more than 40 countries in Africa, Latin America of funds, equity in the use of these funds, service output), and South Asia. and three functions that relate to sustaining these services (facility maintenance, expansion of infrastructure, use of the The SDA analysis has three main components: a review service). Each building block is assessed against specific of past water and sanitation coverage, a costing model to indicators and is scored from 0 to 3 accordingly. The score- assess the adequacy of future investments, and a score- card uses a simple color code to indicate building blocks card that allows diagnosis of bottlenecks along the service that are largely in place, acting as a driver for service de- delivery pathway. SDA’s contribution is to answer not only livery (score >2, green); building blocks that are a drag on whether past trends and future finance are sufficient to meet service delivery and that require attention (score 1–2, yel- sector targets for infrastructure and hardware but also what low); and building blocks that are inadequate, constituting specific issues need to be addressed to ensure that finance a barrier to service delivery and a priority for reform (score is effectively turned into accelerated and sustainable wa- <1, red). ter supply and sanitation service delivery. Bottlenecks can in fact occur throughout the service delivery pathway—all The SDA analysis relies on an intensive, facilitated consulta- the institutions, processes, and actors that translate sec- tion process, with government ownership and self-assess- tor funding into sustainable services. Where the pathway ment at its core. Through the SDA process, an evidence- is well developed, sector funding should turn into services based analysis has been conducted to better understand at the estimated unit costs. Where the pathway is not well what undermines progress in water supply and sanitation developed, investment requirements may be gross under- and what the Government of Vietnam can do to accelerate estimates because additional investment may be needed to progress. A series of meetings and urban and rural sub- “unblock” the bottlenecks in the pathway. sector workshops with core stakeholders from mid-2012 Service Delivery Assessment 1 to mid-2013, together with reviews of available data, bud- consultation with government and other sector stakehold- gets and reports, has provided the information on which the ers and confirmed in a workshop with government decision analysis in this report is based. Sources of evidence are ref- makers and other sector stakeholders in April 2013. This erenced in footnotes and at the end of this report; evidence report evaluates the service delivery pathway for all four on the scorecard and costing tool are found in the annexes. subsectors, locating the bottlenecks and presenting agreed priority actions to help address them. The analysis aims to help the Government of Vietnam as- sess how it can strengthen pathways for turning finance The Water and Sanitation Program, in collaboration with the into water supply and sanitation services in each of four Government of Vietnam and other stakeholders, produced subsectors. Specific priority actions were identified through this SDA report. 2 Water Supply and Sanitation in Vietnam 2. Sector Overview: Coverage Trends Coverage: Assessing Past Progress With a population now in excess of 88 million4, Vietnam is the world’s thirteenth most populous country. It has also experienced one of the world’s highest economic growth rates over the past two decades and recently graduated from low- to middle-income country status. This growth has been accompanied by a dramatic decline in the rate of poverty, which fell from 58% in the early 1990s to 14.5% by 2008.5 While living standards have improved for a large portion of the population, not every group has benefited in equal measure and by 2006, an average of 52% of ethnic minority group members continued to live in poverty. Data from the Joint Monitoring Programme6 (JMP) suggest that Vietnam has taken great strides in terms of increasing access to improved water supply and sanitation (see Figure 2.1). In the case of urban water supply, the 1990 access rate to improved facilities was already high at 88%, and by 2011 had reached 99%, with 58% having a house connection. Nevertheless, there are significant disparities in access and service quality between big cities and smaller urban cen- ters.7 Regarding sanitation, access to improved facilities in urban areas rose from 64% to 93% over the same period, with near–universal use of flush toilets, the majority of them connected to a septic tank or pit with the overflow discharg- ing into open drains. Less than 10% of urban wastewater In rural areas, access to improved water supply rose from is treated, however, and most towns and cities do not have 50% in 1990 to 94% by 2011, though only 9% have house a functioning wastewater treatment plant, though drainage connections. The most common types of improved source networks are generally extensive. Nearly all urban centers used are boreholes or tube wells, protected wells and rain- have combined stormwater/wastewater systems. water collection—each accounting for roughly one quarter 4 Estimated from the 2009 population as reported in the 2009 Vietnam Population and Housing Census, applying annual population growth rates of 3.4% and 0.4% for urban and rural areas, respectively. Population growth rates were obtained from the General Statistics Office. See Table A2.1 of Annex 2 for further details. 5 Badiani (2012) 6 JMP (2013) 7 ADB (2010) Service Delivery Assessment 3 of improved facilities.8 Access to improved toilet facility In the case of rural water supply, government documents rose from 30% to 67% over the same period, with open have variously reported coverage, and set targets and mon- defecation dropping from 44% to just 5% by 2011. Of the itoring indicators, in terms of ‘hygienic’, ‘clean’ and ‘safe’ improved toilets, the most common types are pour-flush to water, and the definitions applied to these terms have been a pit or septic tank (60%) followed by composting toilets subject to change. For the purposes of the SDA analysis, (21%) and pit latrines with slabs (17%). Of the unimproved the water supply baseline and target figures refer to ‘clean’ facilities, 66% are hanging latrines (over water) and 30% pit water, which is currently defined as water that meets the latrines without slabs. Ministry of Health quality standard QCVN 02-BYT, irrespec- tive of the technology used. This explains why government While the JMP data suggest that Vietnam has already met coverage figures for rural water supply are much lower than both its water and sanitation MDG targets, government those of the JMP, though for the lesser standard of ‘hygien- monitoring data indicates significantly lower coverage rates. ic’ water—which means, in short, water that would be safe Comparisons with JMP are, however, complicated since gov- for drinking after filtering or boiling—the gap between gov- ernment reports do not categorize water and sanitation fa- ernment and JMP coverage data is much smaller. cilities as ‘improved’ or ‘unimproved’ but use different, more stringent, criteria. Furthermore, a range of ‘official’ coverage In the case of household toilets, government records cover- figures can be found in various government reports, not all age with ‘hygienic’ toilets, for which four acceptable tech- of which categorise facilities on the same basis. Against this nology options are currently defined in government regula- somewhat confusing backdrop, stakeholders agreed on the tions9: composting latrines with sunken or raised vaults and baseline figures for 2011 shown in Table 2.1 for the purposes pour-flush latrines connected to a septic tank or soakage of this Service Delivery Assessment. pit(s). Figure 2.1 Progress in water supply and sanitation coverage Water Supply Sanitation Improved water supply coverage Improved sanitation coverage 1 100% 0.8 80% 0.6 60% 0.4 40% 0.2 20% 0 0% 1990 1995 2000 2005 2010 2015 2020 1990 1995 2000 2005 2010 2015 2020 JMP improved estimates MDG target JMP improved estimates MDG target 8 General Statistics Office (2011a) 9 MOH (2011) 4 Water Supply and Sanitation in Vietnam Table 2.1 Water supply and sanitation baselines and targets used in SDA costing Baseline Target Sub sector Base year Notes value (%) 2020 (%) Urban water supply Target: 90% for cities (category IV or higher) and 70% for 2011 76%a 85%b (Access to public piped water supply network) small towns (category V.) Rural water supply 2020 Target is still awaiting the approval of the Prime 2011 37%c 75%d (Access to clean water meeting MOH standards) Minister. U3SAP target: 60% for urban centers of category II and Urban sanitation 2009 10%e 45%e upwards (largest); 30% for urban centers of categories 3 (Proportion of wastewater treated) and IV; 10% of urban centers of category V (smallest) Rural sanitation 2020 Target is still awaiting the approval of the Prime 2011 55%f 85%g (Use of hygienic latrines meeting MOH standard) Minister. Notes. a MOC and the World Bank (2013) Vietnam Urban Water Supply Database 2011, Hanoi, March . Hanoi; b MOC (2009) Development Orientation of Water Supply for Urban and Industrial Areas up to 2025, Vision to 2050; c MARD (2012a) National Target Program on Rural Water Supply and Sanitation, Phase 2012-2015. Hanoi; d MARD (2012b) National Rural Clean Water Supply and Sanitation Strategy up to 2020. MARD and NCERWASS, Hanoi; e MOC (2012) Unified Sanitation Sector Strategy and Action Plan (U3SAP) for Vietnam. Draft Final Report. Hanoi; f MARD (2011) Report on the Results of Implementing the National Target Program (NTP2) for Rural Water Supply and Sanitation 2006-2010 and Main Content of the Program for 2011-2015. Hanoi; g MARD (2012b) National Rural Clean Water Supply and Sanitation Strategy up to 2020. MARD and NCERWASS, Hanoi. Cities in Vietnam are growing rapidly, with fast paced urban having a house connection, while for the lowest quintile, development occurring often without adequate planning 75% uses an improved supply but only 3% has a house for basic services. Low levels of wastewater treatment in connection. Turning to sanitation, while 100% of the rich- both urban and rural areas present a significant and grow- est quintile has access to an improved toilet facility, for ing challenge. Most households in urban areas rely on on- the lowest quintile the figure is just 42%.13 In the case site services including a septic tank or soakage pit, with the of hand washing, almost all households have a place for overflow discharging into waterways or drains. It is estimat- hand washing across all income groups. However, while ed that less than 10% of urban wastewater is treated, which the MICS found that only 2% of households in the rich- results not only from the small number of operational treat- est quintile had no soap available for hand washing, the ment plants in place but also from the fact that the bulk of figure was 30% for the poorest quintile. When zooming in solid material is retained at household level in septic tanks on the rural population, there are even greater disparities or pits. Anecdotal evidence suggests that these are emp- for between the lowest and richest quintiles, as compared tied only rarely, with septic sludge often dumped illegally to national level data. in canals and waterways.10 Given the extensive reliance on on-site facilities, fecal sludge management needs much greater attention by municipal authorities. These challeng- Investment Requirements: Testing the Sufficiency es are not unique to Vietnam, however, but affect much of of Finance South and Southeast Asia.11,12 Since Vietnam has already met the MDG targets, the analy- Access is affected by income level, ethnicity and location. sis here focuses on the investments required to reach na- Data from the Multiple Indicator Cluster Survey (MICS), for tional government targets set for 2020. Table 2.1 illustrates example, indicate that 99% of the richest quintile has ac- the baseline figures and targets used for each subsector cess to an improved source of drinking water, with 63% in the SDA costing. For urban water supply and sanitation, 10 Corning et al (2012) 11 AECOM and SKAT (2010) 12 AusAid and World Bank (2013) 13 General Statistics Office (2011a) Service Delivery Assessment 5 government has set targets according to the category of Firstly, rural sanitation promotion was somewhat marginal- town or city, based on size. The single urban target figure ized under the previous phase of the National Target Pro- used in each case for the analysis is derived from aggre- gram on Rural Water Supply and Sanitation that ended in gating these targets for categories of cities. Other assump- 2011, and progress was considerably less than had been tions and data used in the costing analysis are discussed in anticipated. While the Ministry of Agriculture and Rural De- Annex 2, such as the technology mix, unit costs and user velopment (MARD) and the Ministry of Health (MOH) are contributions, as well the method used to estimate recent beginning to redress the balance, there is a long way to go and anticipated levels of investments. in terms of developing effective implementation and promo- tional strategies and taking them to scale. Table 2.2 shows that, given the baseline and target cov- erage rates and an assumed annual population growth of Secondly, increasing the percentage of urban wastewater 1.3%, about 3.7 million persons per year will need to gain treated requires more than the construction of treatment access to water supply sources that meet government plants since most household toilets connect to the drain- standards, of which slightly more than half in rural areas. age/sewerage network via a septic tank or other sort of In the case of sanitation, about 2.0 and 1.6 million people soak pit; unless direct connections are made to the net- per year will need access to latrines that meet the national work, most excreta will continue to be stored at household standards (rural areas) and wastewater treatment facilities level and will remain untreated. Not only regulation but also (urban areas), respectively. This will be challenging not only promotion and communication campaigns, possibly offer- financially but also in operational and technical terms, for ing incentives, may be needed to encourage households to two key reasons. make new, direct connections to the network, or to ensure Table 2.2 Coverage and investment figuresa Annual capital Anticipated public CAPEX Population Anticipated Annual Coverage Target requirement 2012-2014 requiring household surplus (base year) 2020 access CAPEX (deficit) Total Public Domestic External Total % % ‘000/year US$ million/year Rural water supply 37% 75% 1,919 520 211 29 36 65 95 (360) Urban water supply 76% 85% 1,823 1,042 1,042 43 100 143 - (898) Water supply total 49% 80% 3,742 1,562 1,252 72 136 208 95 (1,258) Rural sanitation 55% 85% 2,008 372 63 10 16 26 127 (219) (on-site) Urban sanitation 10% 45% 1,546 771 771 41 164 205 - (565) (waste treatment) Sanitation total n.a b n.a b 3,553 1,142 834 51 181 231 127 (784) Sources: SDA costing. JMP (2013) Progress on Drinking Water and Sanitation: 2013 Update. UNICEF and WHO. Notes: a Columns may not add up due to rounding; b National average was not computed because of differences in the indicators used. 6 Water Supply and Sanitation in Vietnam that tanks and pits are periodically emptied by responsible lection, assumptions made and the sources of data used contractors and the septage treated. for this exercise. Combined with the assumptions on technology mix and Table 2.2 shows that anticipated annual CAPEX for water unit costs, population growth and targets translate to capi- supply and sanitation were estimated to be US$208 million tal expenditure (CAPEX) requirements for water supply of and US$231 million, respectively. The available information US$1.562 billion per year and US$1.142 billion per year also indicates a strong bias in expenditures in favor of urban for sanitation. A large proportion of the investment require- areas. In the case of sanitation, for example, the anticipated ments are for urban areas. For example, CAPEX require- public CAPEX of US$205 million per year in urban areas ments for urban water supply (U$1,042 billion per year) are is about 95% of the total for the sanitation sector, and for almost double the requirement in rural areas (US$520 million water supply, the urban share is around 70% of the total per year). This is explained solely by the higher per capita water spending. costs of facilities in urban areas, such as piped household connection and wastewater treatment facilities. Anticipated public and household investments for water sup- ply and sanitation are lower than required capital investments Collecting information on anticipated investments and by US$1.258 billion per year and US$784 million per year, comparing the results to CAPEX requirements allows the respectively. The absolute deficits in urban areas are also es- costing tool to generate estimates of financing gaps (or sur- timated to be at least two times larger than in rural areas. It pluses). Anticipated investments represent the annual con- should be noted that while households are expected to be tributions of the public and households from 2012 to 2014. main contributors of rural services, especially for their on-site Anticipated public investments represent the planned ex- sanitation facilities, the expected upfront household contri- penditures of government and development partners, while butions to wastewater treatment and collection infrastructure anticipated household investments are calculated as a fixed and piped water services are assumed to be zero (note: as share of total anticipated investments, representing the ex- per policy guidance, the tariffs are to recover full costs, which pected user self-investment and/or contribution. is not often the case, see section 8 and 10). The process of collecting and compiling information on This means that the real deficits in the rural areas are likely capital expenditures was difficult and subject to the fol- to be higher than the estimates here because anticipated in- lowing issues and limitations. First, capital expenditures vestments are projected to come mostly from households. of provinces and utilities were excluded from the analysis, Unlike anticipated public CAPEX, which is mostly based since these data are not available without doing large scale on budgets and in many cases supported by project docu- primary data collection. Second, there is some uncertainty ments, the anticipated household investment is an estimate surrounding the subsectoral data used in the analysis. and there is no assurance that it will actually materialize. Third, unlike anticipated investments of donors, there is Especially for rural sanitation, where there is only limited uncertainty around the anticipated investment level of hardware subsidy for poor and near-poor households under government in urban areas, as these were extrapolated NTP3, the anticipated household investment will depend to based on a 20% contribution to donor investments, rather a large extent on the ability of government to elicit this self- than derived directly from budgets. Annex 2 provides a investment through promotional, communications and mar- more detailed discussion of the challenges in the data col- keting initiatives. Service Delivery Assessment 7 Annual CAPEX requirements are composed of new and re- pressure on household finances where spending is required placement investments. Replacement investments, which on tariffs and household toilet facilities. This also provides represent expenditures for replacing worn-out capital, domi- a sense of the extent to which utilities need to generate nate annual CAPEX requirements in the case of water supply income to support their day-to-day operational expenses, (Figure 2.2) due to the high level of existing services. This is notwithstanding their need to generate sufficient income to not the case for sanitation, however, since the baseline rate of prepare for replacement and expansion investments. wastewater treatment in urban areas is low. Recognizing that Table 2.3 Annual operation and maintenance provincial and utility spending could not be assessed, com- requirements paring anticipated (average annual projected investments from 2012-2014) and recent investments (average annual Subsector O&M US$ million/year investments from 2009-2011)14 against required investment underscores the point that spending has not been, and is un- Rural water supply 46 likely to be, sufficient to meet the national targets for 2020. Urban water supply 210 Table 2.3 presents estimates of additional funding neces- Water supply total 256 sary for the annual operation and maintenance of water Rural sanitation 52 supply and sanitation facilities. It indicates that water sup- Urban sanitation 124 ply and sanitation require annual funds of US$256 million and US$176 million, respectively. Over three quarters are Sanitation total 176 expected to be required for urban areas and there could be Source: SDA Costing Note: Totals may not add-up due to rounding Figure 2.2 Required versus anticipated and recent expenditure Total water supply Total sanitation 1,800 1,200 Annual investment in million USD Annual investment in million USD 1,600 1,000 1,400 1,200 800 1,000 600 800 600 400 400 200 200 - - Total investment Anticipated Recent Total investment Anticipated Recent requirement investment investment requirement investment investment Household Domestic Replacement External New Source: SDA costing 14 Recent investments exclude the contribution of households as no information is available to verify these investment levels. 8 Water Supply and Sanitation in Vietnam 3. Reform Context The sector has undergone significant reform since doi moi to do so will increase as the trend in external support grad- economic reforms in 1986 (which sought to create a social- uates from capital grants to soft loans, and from there to ist-oriented market economy) and, more recently, decen- commercial rate loans. tralization. Central agencies are now responsible for policy making, sector monitoring and coordination, with provin- One critical element missing from the commercialization of cial governments owning and managing assets and pub- service provision has been the introduction of performance lic companies delivering networked water and sanitation targets for utilities and their enforcement by an independent services in urban areas. These arrangements, while logical, regulator. By 2010 most water supply companies were re- present coordination challenges and these are exacerbated covering their operation and maintenance costs, but opera- by the large number of government agencies that have re- tion and maintenance budgets are typically set so low that sponsibility for some aspect of water supply, sanitation or service quality suffers, contributing to widespread problems hygiene promotion. of poor water quality, low pressure and intermittent supply. To date few, if any, utilities have achieved full cost recovery. Following decentralization, an important challenge for the sec- A critical obstacle here has been the reluctance of PPCs to tor is how to strengthen the accountability of local government raise tariffs to commercially viable levels.15 and service providers both upwards in terms of compliance to agreed regulations and standards (which to date have not For urban sanitation (which here refers specifically to drain- been vigorously enforced) and downwards to service users. age and sewerage), Decree 88 of 2008 signalled that public service providers should develop a commercial orientation In the urban arena, the principal reform initiative in recent and to this end should generate revenue via a wastewater years has been a policy shift towards the commercialization tariff imposed on top of water bills. Implementing this policy of service provision, though there are some differences be- has been problematic, for a number of reasons. Firstly, in tween the provisions for water supply and for sanitation. In towns and cities with a dedicated sanitation and drainage the case of water supply, Decree 117 issued in 2007 intro- company, the company is in effect an operational unit of duced a requirement for public service providers to achieve the provincial government and funded not from revenue but full cost recovery and today provincial water utilities—in from annual budgets issued by the PPC. Secondly, dedi- principle—receive no operating subsidy from their Provin- cated sanitation and drainage companies cannot them- cial People’s Committee (PPC), though they can still access selves generate revenue since wastewater tariffs can be capital grants for new investments. The bulk of these have imposed only as a supplement to water supply charges. It been donor-funded in recent years, though the intention is is only combined water supply and sanitation companies, that utilities will also, in due course, access commercial fi- therefore, that can collect a wastewater tariff. Thirdly, while nance. So far only a few have done this, but the pressure Decree 88 envisaged that the wastewater tariff should be 15 ADB (2010) Service Delivery Assessment 9 set at a minimum of 10% of water supply charges, sub- Turning to rural water supply, sanitation and hygiene sequent directives have set 10% as the maximum level. promotion, the most significant policy initiative in recent This is grossly inadequate for the funding of drainage and years was the launch of a National Target Program (NTP) sewerage operations and leaves service providers entirely in 1999. The third phase (NTP3) was launched in 2012 and dependent on government subsidies to cover their basic will continue up to 2015. The bulk of government activity operational costs. and investment in the subsector occurs under the umbrel- la of the NTP which is supported by a multi-donor basket At the time of writing, a draft Unified Sanitation Sector Strat- fund and by NGOs that operate to some extent within the egy and Action Plan (‘U3SAP’) is awaiting Prime Minister’s NTP framework without providing funds directly to gov- approval. Developed by the Ministry of Construction (MOC) ernment. The transition from NTP2 to NTP3 also marked with support from the World Bank’s Water and Sanitation the introduction of some significant policy changes, in- Program (WSP), U3SAP sets out a strategy for progress in cluding measures to improve cost recovery and financial the subsector based on a streamlined policy, legal and in- sustainability; greater scope for private sector manage- stitutional framework (see Section10). If adopted and imple- ment of rural water supply schemes; and a move away mented, U3SAP could pave the way not only for increased from the blanket use of hardware subsides for household investment but also for improvements in coverage, service toilet—subsidies should now be provided only to the poor levels and sustainability of urban sanitation services. and near-poor. Table 3.1: Key dates in the reform of the sector in Vietnam Year Event 1999 Introduction of National Target Program for Rural Water Supply and Sanitation (NTP I). Adoption of first National Strategy for Rural Water supply and Sanitation, to 2020. Made technical provisions and established institutional 2000 arrangements and targets for the subsector. 2006 Start of NTP II (2006-2010). Decree 117 signals a policy shift towards the commercialization of urban water supply service provision. Full cost recovery is now expected 2007 and commercial law applies. Decree 88 directs that urban wastewater services should adopt a commercial orientation, though public sanitation companies remain 2008 under the direct control of provincial government. Orientation for the Development of Water Supply Services in Urban and Industrial Areas until 2025 and Vision to 2050 (including subsector 2009 targets). These reconfirmed a commercial orientation to water supply service provision, confirmed drainage and wastewater infrastructure as public goods, set targets for wastewater treatment for different categories of town/city and clarified institutional arrangements. Orientation for the Development of Drainage and Sewerage in Urban and Industrial Areas until 2025 and Vision to 2050 (including 2009 subsector targets). 2011 Draft revised National RWSS Strategy produced, currently awaiting formal adoption. 2012 Draft Unified Sanitation Sector Strategy and Action Plan produced, currently awaiting formal adoption. 2012 Launch of NTP3 with Ministry of Health taking lead role in sanitation promotion. 10 Water Supply and Sanitation in Vietnam Another new development integral to NTP3 is that, for the scorecard assesses the building blocks of service delivery first time, lead responsibility for sanitation promotion in rural in turn: three building blocks that relate to enabling servic- areas has been assigned unambiguously to the Ministry of es, three that relate to developing new services, and three Health, specifically the Vietnam Health and Environmental that relate to sustaining services. Each building block is as- Management Agency (VIHEMA) and the provincial Centers sessed against specific indicators and scored from 1 to 3 for Preventive Medicine (pCPMs), while MARD retains over- accordingly. all responsibility for delivery of the program. Sections 4 to 6 highlight progress and challenges within the This recent history puts the service delivery pathway in subsectors sector across three thematic areas: the institu- context, which can then be explored in detail using the tional framework, finance, and monitoring and evaluation. SDA scorecard, an assessment tool providing a snapshot The scorecards for each subsector are discussed in Sec- of reform progress along the service delivery pathway. The tions 7 to 10. Service Delivery Assessment 11 4. Institutional Framework Priority actions for institutional framework • Allow greater operational and financial autonomy for water and sanitation companies, within an effective regulatory framework including performance targets, incentives and sanctions. • Adopt and implement the draft Unified Sanitation Sector Strategy and Action Plan including, amongst other things, establishment of a national urban sanitation program and sector coordination and institutional framework. • Review the effectiveness of existing (and alternative) management models for rural water supply schemes and develop policy guidance for management strategy, extended regulation of rural piped schemes and mechanisms to encourage private sector participation. Decentralization has altered the role of central agencies, Urban Water Supply and Sanitation and national level ministries now focus on policy develop- ment and oversight of implementation rather than direct The Ministry of Construction is the lead agency for both control of service delivery. At the sub-national level, provin- urban water supply and sanitation with the Ministries of cial departments take on activities as defined by their corre- Planning and Investment and Finance playing roles in sponding national ministries, including the implementation coordinating investment, including managing the significant of national directives and local investment planning, under contribution of external support to the subsector. the authority of Provincial People’s Committees (PPCs). Urban water supply service providers are typically state- A critical challenge for the sector is for sub-national govern- owned enterprises with legally independent status and many ment to develop the capacity to fulfil its devolved role in the are combined water and drainage companies. While they are planning, development and management of services; and officially independent, in practice the companies are subject for effective instruments to be in place and mechanisms to to the authority of the PPCs, which control tariff levels but hold sub-national governments accountable for doing so. also investment decisions and senior staff appointments, Service providers, meanwhile, need greater operational and while the ownership of physical assets is not always clear. financial autonomy within an effective regulatory framework Each utility operates on the basis of service orders (effec- that defines performance targets, incentives and sanctions. tively contracts) issued by the provincial government. Until these conditions are established, the sector will re- main largely unattractive to potential private sector inves- A national policy initiative that has affected a range of pub- tors and operators. lic service providers including water utilities is referred to 12 Water Supply and Sanitation in Vietnam as “equitization”, meaning the conversion of a state-owned lead institution for the sector. Even within the field of urban enterprise into a public limited company or corporation. So wastewater, leadership and coordination is weak, with in- far just five water companies have been equitized and are vestment projects (most of them donor-funded) developed no longer state-owned. Equitization was introduced with- as stand-alone initiatives in the absence of a national strat- out establishing clearly defined and verifiable performance egy or program. The draft U3SAP proposes to resolve these indicators, or providing incentives to improve service cov- constraints through a number of measures including the es- erage and quality for all, and therefore has not yet deliv- tablishment of a National Steering Committee for Sanita- ered efficiency gains or performance improvement. Some tion under the Leadership of the Ministry of Construction, stakeholders also have expressed concern that equitized to improve coordination within government and between companies have diversified into non-core business areas. government agencies and development partners; and the As water companies are not required to ring fence their wa- introduction of national urban sanitation program to provide ter business accounts, this can expose them to high risks a comprehensive framework for government and external in case of bad investments, which then impact on the core investment.17 business.16 The private sector plays a growing role in urban areas with Compared with urban water supply, institutional arrange- four of the largest water supply companies moving towards ments for urban sanitation are diverse. Services in larger fully commercialized status and small-scale providers es- towns and cities are variously provided by combined water timated to account for roughly one third of water servic- supply and drainage companies and (in city centers) sani- es for the country as a whole. Large-scale involvement of tation and drainage companies operating as departments established private companies in service provision is still of the PPC. Urban sanitation services have suffered from limited, however, and largely confined to bulk water supply a lack of financial resources (providers being largely de- provision. Government policy favors private investment but pendent on operational grants from the PPC) and human with government retaining ownership of assets and having resource capacity. Having said this, most towns in Vietnam significant control over operations via tariff controls and the have no wastewater treatment plants and the sewer net- operational funding of sanitation companies, the environ- works in place are in fact combined stormwater/wastewater ment is not yet conducive for a significant increase in pri- systems. The amount of sanitation-related work undertaken vate sector participation. For the same reasons it is difficult by the companies is, therefore, quite limited and mostly in- for most water and sanitation companies to access com- volves dealing with blockages, overflows and drain repairs. mercial finance, as the perceived risks to the lender remain too high. The term ‘sanitation’ is interpreted quite broadly in Viet- nam, encompassing the management not only of human Rural Water Supply and Sanitation waste but also of commercial, industrial and agricultural wastewater; solid waste management; and general pol- The Ministry of Agriculture and Rural Development (MARD) lution control. As a result there are many ministries and is the lead agency for rural water through the Water Re- provincial departments that have a mandated role in some sources Directorate. A Standing Office with the Directorate aspect of sanitation, and these tend to develop strategies has responsibility for the overall coordination of NTP3 while and targets in isolation from one another, with no overall the National Centre for Rural Water Supply and Environ- 16 ADB (2010) 17 MOC (2012) Service Delivery Assessment 13 mental Sanitation (NCERWASS) plays a technical support How the management and sustainability of rural schemes role for the Program that includes water quality monitoring, can best be improved is the subject of much discussion in data collection and monitoring. The Ministry of Health is the the sector, though for larger piped schemes there is gen- lead agency for promoting household sanitation and hy- eral consensus that formalized arrangements are needed giene under NTP3 via the Health Environment Management whereby a service provider (possibly private) is appointed Agency (VIHEMA). The Ministry of Education and Training and held accountable for ensuring the quality and continu- is responsible for the provision of school WASH facilities ity of service. and hygiene promotion. At provincial level, NTP3 activities are overseen by pCERWASS, with the Health Department The 2012 Joint Annual Review of NTP3 recommended that managing sanitation promotion via the Provincial Centre for it should provide technical assistance to support small Preventive Medicine (pCPM). schemes managed by communities and cooperatives, as part of a comprehensive program of technical assistance Locally, mass organizations including the Vietnam Women’s for the program as a whole. There are other options, how- Union undertake mobilization activities and coordinate ever, and many village schemes developed under the recent community involvement in the financing, construction and World Bank-funded Mekong Water Resources Management management of facilities. The Vietnam Bank for Social Poli- Project are managed directly by pCERWASS with generally cies (VBSP) is also a significant player, providing subsidized good outcomes reported.18 Similar formalized management loans for sanitation and non-subsidized loans for water in approaches are developed for schemes implemented with rural areas. ADB support in six central provinces. Meanwhile the es- tablishment of Joint Stock companies has been piloted in The sustainability of many rural water supply schemes, the World Bank-funded Red River Delta Rural Water Sup- especially smaller ones, is predicated on community man- ply and Sanitation Project. Four companies have been es- agement. This has often proved to be ineffective, though tablished, with government retaining an 82% share and the detailed and reliable information on operation and mainte- remainder owned by customers. A comprehensive review nance outcomes is not available due to weaknesses in the of the performance of the various management models cur- sector monitoring system. The ownership of many small rently in operation could provide valuable insights to guide schemes is not clearly defined and, while Commune Peo- the development of strategies for the improved manage- ple’s Committees are supposed to guide the establishment ment and sustainability of rural water supply schemes. For of management boards, the members—drawn from villages the country as a whole, private sector organizations active within communes—often lack the skills needed to carry in the rural market are typically micro, small and medium out their tasks efficiently. The intention is for pCERWASS enterprises, ranging from individual operators of small to provide technical backup support, but there is little ac- schemes to utility-style companies providing piped water. countability for fulfilling this function. Many of these have emerged informally and neither tariffs nor quality standards are regulated. 18 Naughton (2013) 14 Water Supply and Sanitation in Vietnam Figure 4.1 Water and sanitation service provision in Vietnam: a simplified institutional overview (overall state management) RURAL SANITATION and URBAN SANITATION RURAL WATER SUPPLY URBAN WATER SUPPLY HYGIENE PROMOTION (WASTEWATER) Ministry of Agriculture and National Ministry of Health Ministry of Construction Rural Development Directorate of Water VIHEMA Resources nCERWASS (for NTP3) Provincial/City Provincial People’s Committee (PPC) Department of Agriculture Department oh Health Department of Construction and Rural Development District Health Division CPC and Service Community Providers Service Delivery Assessment 15 5. Financing and its Implementation Priority actions for financing and its implementation • Develop long-term subsector investment plans, as the basis to gradually increase public funding, especially for urban service provision outside the major cities and for remote, underserved rural areas. • Improve the monitoring of subsector investments expenditure, including investments at national and at provincial level and through utilities. • Carry out a Public Expenditure Review for the water and sanitation sector to improve efficiency of public spending (national and provincial). • Attracting private sector finance through facilitating access to (commercial) finance for utilities and addressing investment climate barriers. Investment Planning in urban wastewater, which should make a substantial im- pact in selected cities if it goes ahead. There is currently no medium or long-term sector invest- ment plan for urban water supply and instead, finance is As Vietnam has acquired middle income country status, the organized on a project-by-project basis. Urban water utili- nature of donor investment is changing and some European ties no longer receive direct operating subsidies from gov- donors are likely to withdraw before 2015. Official Develop- ernment, but grants and loans for capital investments are ment Assistance will therefore become less widely available still provided from time to time, both by government and and be structured differently, with reduced levels of grant donors. Recent investments have mostly been from domes- financing and concessional loans. tic sources. The Government of Vietnam is seeking increased invest- In the case of urban sanitation, most investments in the last ment from the private sector in both urban and rural wa- decade have been donor-funded and provided via projects ter supply and sanitation. A better enabling environment, in a few selected locations, but sewerage remains large- especially for regulation of tariffs, and a better investment ly undeveloped for the country as a whole. Instead, most climate is needed for the sector to become viable and at- households use on-site facilities built at their own expense. tractive to large scale commercial investors and operators. As with urban water supply there is no sector investment So far, few public utilities have been able to access com- plan, but the formulation of one is proposed in the Draft mercial finance. A critical obstacle here is the difficulties for Unified Sanitation Sector Strategy and Action Plan (U3SAP) utilities to obtain government guarantees, as well as weak 2013, currently awaiting government approval. Further- capabilities for public-private partnership contracting and more, ADB has offered a US$1 billion investment program management. 16 Water Supply and Sanitation in Vietnam For rural areas, investment plans are defined in the NTP3 tation operations are fully subsidized and thus combined document for 2011-2015. NTP3 currently has an indicative water and sanitation utilities receive subsidies for drainage budget of US$1.260 billion, with donor contributions ac- and sewerage operations, but not for water supply servic- counting for roughly one-sixth. Supporting donors include es. These subsidies are not explicitly identified, however, in AusAID, DANIDA and DFID, and the World Bank through its provincial government budgets. Program for Results (P4R) lending; a number of NGOs also participate, although off-budget. Sanitation and hygiene Under the Auditing Law, all water supply and sanitation promotion was a direct MARD responsibility under NTP2 companies are subject to annual audits. Rural water sup- and funding was marginalized compared to water supply al- ply and sanitation expenditure versus budget under NTP3 is locations. With MOH now taking lead responsibility for sani- also audited and reported on in a consolidated format for all tation, it is possible that funding will increase under NTP3, sources of domestic and official donor expenditure. though this has not happened so far.19 It was also found that subsector budgets and expenditure, Medium-term investment plans for rural water and sanita- especially as pertaining to sub-national spending are not tion are made under the umbrella of NTP3 but, according reported or consolidated in any way. Hence the financial to government stakeholders, tend to be ignored in program flows, inefficiencies and effectiveness of overall sector operations; instead the formulation of annual plans and spending remain difficult to assess, without conducting budgets is often done in disconnect from the medium-term public expenditure reviews specifically for the sector. plan, resulting in under allocation of resources, as was ex- pected based on the medium-term plan. Budget Adequacy Other challenges in the financing of rural water supply and sanitation include an over-emphasis on capital investment Figure 5.1 shows the different sources of finance for the at the expense of ‘soft’ activities such as the establishment four sectors. It indicates that households are expected of viable operation and maintenance arrangements; ca- to be the major source of funding for rural areas, and do- pacity building, and the implementation of promotion and nors for urban areas, with domestic budgets being smaller communications campaigns and business development for in comparison. There are substantial anticipated deficits sanitation. Other bottlenecks are delays in annual budget (shown in orange) for all sectors but especially in urban ar- allocations plus allocations that do not meet requirements; eas. However, the actual size of the deficits in rural areas and limited private sector investment. might be larger than the values presented here. The rea- son is the relatively large share of anticipated household investments (shown in light blue), which are estimates of Budget Transparency how much household financing is leveraged through partial subsidies under NTP3. The chances of these investments Since urban utilities should now be operating on a commer- materializing depend highly on the effectiveness of govern- cial basis, government does not subsidize any operation ment social mobilization and promotion programs to elicit and maintenance costs for urban water supply. Urban sani- self-investment by rural households. 19 AusAID et al (2012) Service Delivery Assessment 17 Figure 5.1. Total annual investment requirement and anticipated financing by source Rural water supply Urban water supply Rural sanitation Urban sanitation Total : $ 520,000,000 Total : $ 1,040,000,000 Total : $ 372,000,000 Total : $ 771,000,000 Per capita (new): $ 91 Per capita (new): $ 244 Per capita (new): $ 75 Per capita (new): $ 375 Domestic anticipated External anticipated Household anticipated Deficit investment investment investment Source: SDA costing. Note: the anticipated household investment in rural services are assumed Utilization of Budgets sector investment would deserve high priority to reduce the financing gap, as well as through increasing user financing For both urban and rural water supply and sanitation, de- through cost recovery tariffs and effective software activi- spite delayed transfers, domestic budgets are said to be ties. spent without severe bottlenecks. In urban areas, domestic water supply funds are mostly spent on land compensa- There is little evidence that domestic sources will be avail- tion and pre-investment activities including technical assis- able for urban and rural sanitation. Government expendi- tance. In the case of external funds, urban water supply ture on promotional activities will be essential in order to projects have been subject to extensive delays, hence dis- stimulate increased household investments in rural sanita- bursement has been slow. Fewer delays were reported in tion. This would be non-capital expenditure and is therefore rural water and sanitation projects under NTP2. not reflected in the pie charts. In the case of urban sanita- tion, coverage with on-site facilities is already high. Govern- In summary, given the deficits in public funding, and the ment has historically spent very little in this area and only current lack of fiscal space in the government budget, it modest investments are planned in the period up to 2020. is increasingly important for the Government of Vietnam to Again, though, some level of government expenditure on improve the efficiency and effectiveness of public spend- promotional and regulatory activities may be required in or- ing, which could be assessed through a sector specific der to encourage households to replace household facilities Public Expenditure Review. Moreover, leveraging private where necessary and to improve fecal sludge management. 18 Water Supply and Sanitation in Vietnam 6. Sector Monitoring and Evaluation Priority actions for sector monitoring and evaluation • Streamline urban and rural access targets and monitoring frameworks, and agree on common points of reference for all institutional stakeholders in the sector. • Ensure that monitoring systems track not only access to facilities but also performance of service levels, functional- ity and sustainability, the effectiveness of implementation processes and equity in resource allocation. • Introduce annual urban water supply and sanitation sector reviews and joint annual sector review processes (as is the case for rural). • Consider modifications of the rural sanitation monitoring systems to reflect commune-level indicators for eliminat- ing open defecation and accessing universal access to hygienic sanitation. Section 2 highlighted the difficulty in determining current lev- benchmarking project and is modelled on the global IBNET els of access to water and sanitation services in urban and framework for water and sanitation utility benchmarking. This rural areas, and the lack of detailed information on service is not yet operational and for now, monitoring information is quality and functionality. In part these problems arise from available from individual utilities but is not routinely collated the lack of definitive reference points for both urban and rural to provide a sector overview. For urban sanitation there is no monitoring data, as well as differences between government monitoring framework either for household facilities or city- and JMP criteria used to define access. Widely differing of- wide wastewater collection and treatment, though new ar- ficial figures are quoted in a range of government documents rangements are proposed under U3SAP. and the same applies to some sector targets as there is a tendency for each ministry with an interest in water or sanita- In the case of rural water and sanitation, the National Tar- tion to set their own objectives without reference to those get Program (NTP3) guides monitoring and reporting, and a already adopted by other government bodies. suite of indicators was established in 2008 with the inten- tion to collate and manage information in a comprehensive Monitoring frameworks and systems for both the urban and database. The indicators have subsequently been stream- rural subsectors are still in need of further development, al- lined (the original list being very long) and a new monitoring though in the last few years government has taken steps to system for rural water supply and sanitation monitoring was improve the relevance, reliability and regularity of monitoring. launched in 2012, including specific indicators on equity of service provision, and the roll-out is currently underway in For urban water supply, MOC has recently developed a mon- selected provinces. Harmonization of the equity indicators itoring framework that builds on an earlier World Bank utility of the nCERWASS monitoring system, with the list of poor Service Delivery Assessment 19 households as regularly updated by the Ministry of Labour As explained in sections 2 and 5, financial monitoring of the and Social Affairs, needs further attention. Lead responsibil- sector is not yet comprehensive. A general concern is that ity for the implementation of the monitoring lies with provin- government budgets and expenditure reports are not very cial offices of the Centre for Rural Water Supply and Sanita- detailed, making it very difficult to track what government tion, pCERWASS. It should be noted that as targets are set and development partners are contributing to the four for household level access, community-wide indicators for subsectors, and how the funds are utilized. Moreover, sub- sanitation are not yet routinely monitored. In addition to rou- national capital expenditure through provincial funds or tine monitoring, a Joint Annual Review is held for NTP, with utilities is not systematically reported and thus subsector government and development partners participating. funding is difficult to assess. 20 Water Supply and Sanitation in Vietnam 7. Subsector: Rural Water Supply Priority actions for rural water supply • Develop a capacity building strategy and implementation plan for NTP3, including developing a comprehensive technical support system to improve the functionality of schemes. • Carry out a comprehensive review of the effectiveness of existing and alternative scheme management (and own- ership) models. • Implement review recommendations to professionalize management and leverage private sector capabilities • Develop provincial level plans for managing water quality at scheme level. • Increase resources allocated for rural water supply, while operationalizing a focus on under-served poor and re- mote communities. A National Rural Clean Water Supply and Sanitation Strat- Annex 2), existing and target coverage rates of the gov- egy was adopted in 2000 and a draft revised version, ernment suggest that an additional 1.9 million people per designed to support the implementation of NTP3, was year will require access to water supplies that meet MOH finalized in 2012. This is currently awaiting government standards between 2011 and 2020. approval but its water supply and sanitation targets have been used for the purposes of the SDA analysis. Com- Figure 7.1 Rural water supply coverage pared to the original strategy the new draft lays greater emphasis on the sustainability of water supply schemes 100% Rural water supply coverage (in financial, operational and environmental terms) and on 80% improving access in hard-to-reach areas. 60% In sharp contrast to JMP reports indicating that the MDG 40% target for rural water supply has already been met, MARD20 reports that in 2011 just 37% the rural population had ac- 20% cess to ‘clean’ water; that is, water meeting quality stan- dards set by the Ministry of Health (see Figure 7.1). While 0% 1990 1995 2000 2010 2015 2020 there is not enough information from which to draw pro- jections based on past trends, it appears that the country, Government estimates Government target by its own standards, has a long way to go to meet the JMP, improved JMP, piped government target of 75% of the rural population using a Source: SDA costing. JMP (2013) Progress on Drinking Water Sanitation: 2013 Update. minimum of 60 liters per capita per day of clean water by UNICEF and WHO. MARD (2012a) National Target Program on Rural Water Supply and Sanitation, Phase 2012-2015. Hanoi MARD (2012b) National Rural Clean Water Supply and 2020.21 Despite a projected decline in rural population (see Sanitation Strategy up to 2020. MARD and NCERWASS, Hanoi. 20 MARD (2012a) 21 MARD (2012b) Service Delivery Assessment 21 The country needs to raise an estimated US$520 million Figure 7.2 Rural water financing: required, anticipated per year in order to meet its rural water supply targets for (2012 - 2014) and recent (2009 - 2011) 2020 (Figure 7.2). Recent and anticipated investments annual investments have not been, and are unlikely to be, sufficient to meet required spending, and the need to identify additional 600 government (and potentially the private sector) resources Annual investment in million USD is becoming more urgent since funding from two of the 500 three principal development partners will soon come to 400 an end (DFID by end 2013, DANIDA by end 2014). Esti- 300 mated investments from domestic (excluding households) and external sources from 2009 to 2011 were less than 200 10% of the requirement spending. Anticipated invest- 100 ments from 2012-2014 seem close enough to meet needs for new investments but are only about three-tenths the - total investment required. Estimates of anticipated invest- Total investment Anticipated Recent requirement investment investment ments are actually optimistic since roughly US$95 million per year of this amount is expected to come from rural Household Domestic Replacement households, which are expected to mainly self-invest in External New either boreholes, wells and rainwater harvesting systems, and/or contribute to piped system connections. Whether households actually make these investments depends largely on the ability of government, development partners Total : $ 520,000,000 and other institutions to convince households of the ben- Per capita (new): $ 91 efits of doing so and to provide enabling support such as access to loans. The NCERWSS Strategy also seeks to encourage greater private sector participation by promot- ing greater involvement in rural scheme management and co-investments, and market-based delivery of rural water supply services. The scorecard results show that the enabling and devel- oping services pillars are quite well developed, but critical Domestic anticipated Household anticipated challenges lie with the sustainability pillar. MARD noted investment investment in its review of NTP2 achievements that there were sig- External anticipated Deficit nificant challenges with water point design, construction, investment functionality and management,22 and the 2012 Joint An- Source: SDA costing nual Review of NTP323 echoed similar concerns with op- eration and maintenance. 22 MARD (2012a) 23 AusAID et al (2012) 22 Water Supply and Sanitation in Vietnam Figure 7.3 Rural water supply scorecard Enabling Developing Sustaining Policy Planning Budget Expenditure Equity Output Maintenance Expansion Outcomes 2.5 2.25 1.5 3 2 2.5 0.75 0.5 1.5 Scores under the sustainability pillar highlight a number of Monitoring specific deficiencies in the areas of maintenance and ex- pansion, for example: that registers of infrastructure as- Weaknesses in sector monitoring were outlined in sec- sets and their functionality are not regularly updated; spare tion 6. A particular concern with rural water supply is that, parts supply chains are not well established in all locations; following an effort to streamline the monitoring protocol, management entities are recognized but no public funds only eight parameters are now monitored, of which seven are made available to support them; and not sufficient is are concerned with coverage and one relates to the man- done to facilitate the expansion of existing piped schemes, agement model used. The system provides little informa- though this is envisaged in the NTP3 program document. tion, however, on service functionality and use or on water quality. Furthermore, the national monitoring database is Water quality and climate change updated only annually and cannot, therefore, inform semi- annual NTP progress reports. This limits its usefulness as A further concern with sustainability relates to water qual- a management tool. ity, which is central to the national target for 2020 and also subject to the impacts of climate change and rising sea Poverty focus levels. The Joint Annual Review (JAR) 2012 noted that in some parts of the country, water resources are increas- The NTP3 document states that the program will give ‘high ingly affected by salinity and chemical pollution, while priority to poor areas and poor people, specifically 62 re- infrastructure is affected by extreme weather events and mote and poor districts. So far, however, this focus has not flooding. In the dry season, groundwater levels drop and been operationalized and program allocations have been contaminant loads rise. Provincial strategies for water divided equally among the provinces, regardless of levels quality management vary widely and are poor in some lo- of access among the poor. As a result access to improved cations. The JAR 2012 recommended that provincial plans water source in the lowest quintile is 70% and highest for managing water quality at scheme level will need to be quintile is 99%, however, access to piped house connec- developed. In support of this, staff training in water qual- tions is only 3% for lowest quintile, and 43% for highest ity monitoring will be needed and all piped schemes will quintile of the rural population, illustrating the disparities require equipment for testing key parameters. in service levels.24 24 JMP/UNICEF Equity trees, special tabulation based on MICS 2011 Service Delivery Assessment 23 8. Subsector: Urban Water Supply Priority actions for urban water supply • Allow tariffs to reach commercially viable levels whereby utilities can achieve full cost recovery through indepen- dent economic regulation. • Increase autonomy for utilities, allowing them to increase operation and maintenance budgets to levels that enable adequate maintenance to be provided and sustained. • Enhance access to commercial finance for utilities by providing government guarantees for utilities. • Introduce incentives and obligations to improve the quality and reliability of service provision by establishing an independent regulator. The latest JMP report25 indicates that 99% of the urban a reasonable range, with non-revenue water at 20-25% for population had access to improved urban water supply the majority of utilities and the operating ratio falling in the by 2011, with 58% having water piped onto the premises. range 0.8 to 1.2, though declining due to the rising cost of However, MOC figures used in the current analysis show power and chemical supplies.27 A related constraint is that that in 2011, only about 76% of the urban population had most investment over the past two decades has gone into access to a public piped water supply network via a house expanding production (intake, treatment and transmission) connection or shared water point (see Figure 8.1). Evaluat- with less than 15% being directed at distribution improve- ed against a national target of 85% of the urban population ment.28 having network access26 and a projected urban population of 43.4 million people in 2020, some 1.7 million people per The country needs to raise an estimated US$1.042 billion year will need to gain access between the base and target per year in order to meet its targets for 2020 (Figure 8.2). years. More than half (57%) of these requirements are for replacing facilities that are at the end of their economic life (replace- Apart from access to the piped network, the quality and reli- ment investment).29 Anticipated investments, which are also ability of services is also a concern. While most households projected to come mostly from external sources, are esti- in the central areas of major cities have a twenty-four hour mated to be higher than recent investments. However, large supply service provision is much less reliable in other urban deficits are expected because anticipated investments are areas and a growing challenge lies in improving services in only about 14% of investment requirements. Funding is- small urban centers and fast growing district towns. Anec- sues are compounded by the finding in Section 2 that an dotal reports of poor water quality are widespread though additional US$210 million per year needs to be generated other performance indicators are reported as being within for operation and maintenance expenditure. 25 JMP (2013) 26 GOV (2009a) 27 World Bank/MOC (2013) 28 ADB (2010) 29 Replacement investment is expressed as an annual average to cover depreciation over the average lifetime of the overall technology for the scheme (see annex 2). 24 Water Supply and Sanitation in Vietnam Figure 8.1 Urban Water Supply Coverage Figure 8.2 Urban water supply financing: required, anticipated (2012 - 2014) and recent annual 100% invesments (2009 - 2011) Urban water supply coverage 80% Annual investment in million USD 1,200 60% 1,000 40% 800 20% 600 0% 400 1990 1995 2000 2005 2010 2015 2020 200 Government estimates Government target - JMP, improved JMP, piped Total investment Anticipated Recent requirement investment investment Household Domestic Replacement While recent policy directives call for cost recovery and the External New commercialization of service provision, tariffs for public wa- ter supply services remain too low in most provinces to en- able financially sustainable service provision—despite high Total : $ 1,040,000,000 collection rates and evidence that consumers are willing to Per capita (new): $ 244 pay more for good services. Instead, tariffs are held at ar- tificially low rates by PPCs, as a result there is little incen- Domestic anticipated tive for users to limit their consumption and no surpluses investment are generated to fund reserves for replacement costs and External anticipated service expansion. Even operation and maintenance costs investment are a challenge; many utilities report that these are recov- Household anticipated ered, but operation and maintenance budgets are set at investment Deficit rates which are very low by international comparisons, and do not enable utilities to maintain acceptable levels of ser- vice.30 Source: SDA costing. 30 ADB (2010) Service Delivery Assessment 25 Figure 8.3 Urban water supply scorecard Enabling Developing Sustaining Policy Planning Budget Expenditure Equity Output Maintenance Expansion Outcomes 3 1.125 0.5 2.5 1 1 1.5 1.5 3 The focus of subsector strategy is now shifting towards scores under budget also relate to the comprehensiveness measuring and benchmarking the performance of water and structure of the government budget, i.e. whether it companies and improving coverage in small towns and clearly identifies investments and subsidies for urban wa- peri-urban areas of the larger cities. The absence of reli- ter supply and whether it clearly identifies both domestic able monitoring data, weak regulation and a lack of prog- and official donor investment. In fact, urban water supply ress in implementing policy directives on service provider no longer features in national government budgets since autonomy and commercialization are critical challenges. At service providers receive no operational subsidies and any present, conditions are not attractive for large scale private capital grants are negotiated and administered at provincial sector management or investment in urban water supply, level. and there is little pressure on urban water and sanitation companies to expand service provision or improve quality Further along the scorecard, green scores for expenditure or cost-effectiveness. and user outcomes are encouraging though the yellow scores for other headings point to challenges, particular- Turning to the scorecard, the green score for policy under ly in the areas of equity, due to lack of special measures the enabling pillar highlights the fact the policy and insti- for targeting and meeting the needs of the poor, deliver- tutional framework for the subsector is fairly well defined, ing outputs, as progress towards national targets for piped while the modest score for planning reflects the fact that water supply are not on track, maintenance, pointing to the subsector does not have an investment plan, a national constraints on tariff levels and cost recovery, and expan- mechanism for coordinating multiple investments or an an- sion, due to limited autonomy and access to commercial nual multi-stakeholder subsector review. Meanwhile the red finance so that utilities especially in secondary towns can score for budget tends to confirm the finding of the finan- fund service expansions. cial analysis that the subsector is under-funded. However, 26 Water Supply and Sanitation in Vietnam 9. Subsector: Rural Sanitation and Hygiene Priority actions for rural sanitation and hygiene • Identify effective operational strategies for sanitation and hygiene promotion that can be taken to scale under NTP3, including demand-led approaches for promotion to achieve community-wide usage of hygienic sanitation. • Increase “software” spending, including staffing and operational budgets for provincial and local health line imple- mentation agencies. • Facilitate increased private sector involvement in making desirable, low-cost toilets available for poor and under- served communities. • Setup a systematic national capacity building program for sanitation and hygiene for health sector staff and other participating organizations including the Vietnam Women’s Union. • Increase the use of performance-based incentives to reach poor households, achieve commune-wide sanitation outcomes and incentivize provinces to increase spending on sanitation. The increase in rural sanitation coverage rates in Vietnam government targets suggest that an additional 2.0 million has been fairly rapid. Based on JMP data, access to im- people per year will require access to hygienic latrines be- proved sanitation rose from 30% of the rural population in tween 2011 and 2020. A large proportion of these are in 1990 to 67% in 2011 (Figure 9.1). Having already surpassed the poorest and hardest to reach parts of the country such the MDG target of 65%, access to improved sanitation as the mountainous northern and central regions as well facilities is likely to reach around 75% by 2015 if current as the Mekong Delta, where the use of unhygienic ‘hang- trends continue. ing’ latrines is common. The scorecard reflects the current inequality in access, reporting that access among the top Government estimates, based on more stringent technical wealth quintile is considerably higher than in the lowest. standards for household toilets, provide a less optimistic The NTP3 document also recognizes this and indicates that outlook. MARD31 reports that only about 55% of the 2011 subsidies and loans available under the program should be rural population had access to ‘hygienic’ latrines as defined targeted at poor and under-served communities and house- in government regulations. While there is not enough in- holds. formation from which to draw projections based on past trends, the country clearly has a long way to go to meet An estimated US$372 million per year is needed to meet the government target of 85% of the rural population us- the government target for 2020 (Figure 9.2). About 60% of ing a ‘hygienic’ latrine by 2020.32 Despite a projected de- this amount (US$ 221 million per year) is meant for replac- cline in the rural population, existing coverage rates and ing facilities. 31 MARD (2012a) 32 MARD (2012b) Service Delivery Assessment 27 Figure 9.1 Rural sanitation coverage Figure 9.2 Rural sanitation financing: required, 100% anticipated (2012 - 2014) and recent annual investment (2009 - 2011) Rural improved sanitation 80% 400 Annual investment in million USD coverage 60% 350 40% 300 20% 250 0% 200 1990 1995 2000 2005 2010 2015 2020 150 Government estimates Government target 50 JMP, improved JMP, improved + shared - Source: JMP 2013; MARD (2012a); MARD (2012b); SDA costing Total investment Anticipated Recent requirement investment investment Current and anticipated investments fall far short of the Household Domestic Replacement External Other New amount needed. Estimated recent investments (US$15 mil- lion per year) from domestic (excluding households) and ex- ternal sources from 2009 to 2011 were less than 5% of the Total : $ 372,000,000 requirement for the same period. Anticipated investments Per capita (new): $ 75 (US$153 million per year) from 2012-2014 are also small and barely enough to meet requirements for new invest- ments. These estimates are in fact optimistic since about Domestic anticipated investment US$127 million per year of the investments are assumed External anticipated to come from rural households, and whether this actually investment happens will depend strongly on the ability of government, Household anticipated development partners and other institutions to elicit house- investment hold investments in approved ‘hygienic’ facilities. Doing Deficit so will require intensive efforts on sanitation and hygiene promotion at scale using effective promotional approaches, Source: SDA costing while ensuring that facilities are affordable to poor house- holds. The NTP3 document indicates that the new program phase will pay much greater attention to sanitation and hy- Government has indicated that funding for sanitation and giene promotion than was the case under NTP2 and will hygiene promotion will increase, and the decision to assign prioritize support to poor and remote under-served com- responsibility to the Ministry of Health should help to ensure munities, although allocations both for software, hardware that the subject is not neglected in favor of water supply. (targeted subsidies), and available resources for the Viet- Progress will, however, depend on the support of provincial nam Bank for Social Policy (VBSP) loans have thus far been governments that control budget allocations; up to now few lower as expected at the onset of NTP3. have favored allocations to sanitation. The ongoing World 28 Water Supply and Sanitation in Vietnam Bank-supported Programming for Results (P4R) operation a complement to CLTS, and to help households graduate in the Red River Delta uses performance-based payments from simple latrines to more durable and hygienic options, from central government, which are released to provincial development agencies including (amongst others) SNV, government subject to the achievement of agreed results IDE, UNICEF and WSP are supporting initiatives in sanita- for both water supply and sanitation. Linking the two sub- tion marketing. These are relatively new developments and jects in this way has led to sanitation, a hitherto marginalized the previous neglect of sanitation and hygiene under NTP2 subject, being given much greater priority by the provin- and the absence of a coherent strategy for at-scale pro- cial government. There is, potentially, scope for extending motion campaigns explains the low rating for markets and the use of performance-based rewards to other provinces uptake in the ‘sustaining’ block of the scorecard. as a mechanism for accelerating progress towards NTP3 targets, as well as learning from other output-based pay- In 2012, the Ministry of Health developed a Rural Sanita- ments, such as incentives targeted at poor-households and tion and Hygiene Implementation Plan setting out practical communes, pioneered by East Meets West Foundation, in steps and objectives for delivering this component of NTP3. combination with output-based payments to local village These included: limiting the use of upfront and non-targeted motivators. As per the MICS 2011, improved access among sanitation subsidies; focusing on low-cost options to make rural lowest quintile is 34% and highest quintile is 98%.33 sanitation more accessible to the poor; using targeted com- munication programs and more effective sanitation promo- The use of hardware subsidies—direct or via subsidized tion methods; and collaborating with the Women’s Union and loans—has featured strongly in the subsector to date and VBSP to target poor households. While this was a positive a weakness of NTP2 was that these subsidies were not step, much remains to be done to identify effective operation- targeted at the poor. Loans from VBSP were also available al strategies that can be taken to scale under NTP3. Further- for household latrine construction and were instrumental in more, provincial budget allocations for the first half of 2013 the progress achieved, but again were not targeted at the did not reflect increased priority for sanitation under NTP3 poorest households. Efforts are now underway (with DFID and the 2012 JAR highlighted a disconnect between central support) to ensure a poverty orientation to loan provision planning in the MOH and implementation on the ground, with via VBSP and to secure increased availability of these low- limited understanding and capacities of local health depart- interest loans to rural households. ments of approaches such as CLTS and sanitation marketing and the case for transforming generic hardware subsidies to In recent years, the international NGO SNV and a number of targeted, partial incentives for the poor. This highlights the other development agencies have supported the introduc- need for a national orientation and capacity building plan for tion of Community-led Total Sanitation (CLTS) and govern- health department staff at provincial and local levels. ment has indicated support for its wider use in NTP3. As 33 JMP/UNICEF equity trees special tabulation based on MICS 2011 Service Delivery Assessment 29 Figure 9.3 Rural sanitation scorecard Enabling Developing Sustaining Policy Planning Budget Expenditure Equity Output Maintenance Expansion Use Outcomes 2.5 2.25 1 3 1.5 2 0.75 0.5 1.5 30 Water Supply and Sanitation in Vietnam 10. Subsector: Urban Sanitation and Hygiene Priority actions for urban sanitation and hygiene Expedite the adoption of the Draft Unified Sanitation Sector Strategy and Investment Pan (U3SAP). As part of this initiative: • Adopt a subsector investment plan, develop an urban sanitation financing and establish a national urban sanitation program, with clear sector coordination and institutional framework. • Support the implementation of existing policy directives on the autonomy and commercial orientation of service providers (including combined water and wastewater utilities). • Develop the capacity of service providers so that existing policy provisions – particularly on financial sustainability – can be implemented and services improved. • For new wastewater treatment plants, revise technical standards to adopt cost-effective technology and introduce incentives to maximize direct household connections to network. • Develop and adopt viable strategies for the improved management and treatment of fecal sludge, inclusive of the private sector. The JMP34 estimates that access to an improved toilet facility ter to a very high standard. Household pits and septic tanks, reached 93% in 2011 (Figure 10.1). While this figure seems meanwhile, tend to be emptied only rarely and hence func- encouraging, less than 10% of urban wastewater is treated tion inefficiently, and the removal of septic sludge is largely and very few towns or cities have a wastewater treatment unregulated so that a considerable amount of the material is plant. The bulk of drainage networks are in fact combined disposed of indiscriminately, without further treatment. drainage and sewage systems and often overflow in the rainy season, discharging pathogenic waste into the streets. All of the above highlights the need to introduce compre- hensive urban sanitation planning at town and city level that Where wastewater treatment plants exist, these tend to be responds to local realities and needs, identifies appropriate under-utilized since most household toilets are connected technology options and plans for the delivery and mainte- to a septic tank or pit that retains the bulk of the solids— nance of services, not simply hardware investments based only the overflow discharges into the drainage network, and on standard solutions. At the heart of this is the need for then mixes with storm water so that wastewater entering provincial authorities to recognize that improving urban the treatment plant is fairly dilute, in some cases meeting sanitation requires far more than building wastewater treat- discharge standards even before it is treated.35 This chal- ment plants; maximizing the number of direct connections lenges the current practice, when investments are made, of to sewers, and improving fecal sludge management, are building relatively expensive plants that can treat wastewa- also critical challenges.36 34 JMP (2013) 35 Corning et al (2012) Vietnam Waste Water Review for Urban Areas 36 With poor fecal sludge management being a widespread problem in the Southeast Asia region, WB and WSP are preparing a number of initiatives to develop and test options for improved practices at household and city levels. Service Delivery Assessment 31 Figure 10.1 Urban sanitation coverage Figure 10.2 Urban sanitation financing: required, anticipated (2012 - 2014) and recent annual investment (2009 - 2011) 100% Urban improved sanitation 80% 800 700 coverage Annual investment in million USD 60% 600 40% 500 20% 400 300 0% 1990 1995 2000 2005 2010 2015 2020 200 100 Government estimates JMP, improved + shared JMP, improved - Total investment Anticipated Recent requirement investment investment Household Domestic Replacement 100% External Other New Urban access to wastewater 80% treatment 60% Total : $ 771,000,000 Per capita (new): $ 375 40% 20% Domestic anticipated investment 0% External anticipated 1990 1995 2000 2005 2010 2015 2020 investment Government estimates Government target Household anticipated investment Deficit Source: SDA costing. JMP (2013) Progress on Drinking Water and Sanitation: 2013 Update. UNICEF and WHO. General Statistics Office (2010a) The 2009 Vietnam Population and Housing Census: Major Findings, Hanoi 38 Source: SDA costing Government targets for the subsector focus not on house- average of approximately 45% for all urban areas. With an hold facilities but on the percentage of wastewater treated. urban population that is expected to grow rapidly between SDA calculations are based on the draft U3SAP targets37 2009 and 2020, an additional 1.5 million people per year will for 2020 of 60% wastewater treatment for the largest cit- require access to wastewater treatment. ies, 30% for medium towns and 10% for small towns—an 37 MOC (2012) 38 Figure 10.1 uses the Census 1999-2009 data due to larger sample size and longer time span; according to the Household Living Standard Surveys (HLSS 2008), slightly different progress data are found that refer to an increase in access to improved sanitation by urban population from 85% in 2002 to 91% by 2008. 32 Water Supply and Sanitation in Vietnam The country needs to raise an estimated US$771 million per Under the ‘developing’ pillar, scorecard questions confirm year in order to meet its 2020 targets for urban sanitation that government has not so far adopted any mechanisms (Figure 10.2). With very few wastewater treatment plants, for ensuring the equitable allocation of sector funding at least relative to the population, almost three-fourths among service providers, which in turn do not normally ap- (US$580 million per year) of this amount is needed for new ply any special measures for involving or serving the poor, treatment facilities. The estimated investment requirements except in the case of donor-funded projects. Scores under are actually conservative because they focus on wastewa- this and the ‘sustaining’ pillar also confirm that there has ter treatment only and ignore replacement costs of exist- been limited progress so far in increasing the proportion of ing toilets and on-site treatment systems as well as the urban wastewater treated or in improving fecal sludge man- cost of making direct connections from household toilets agement, a subject which is largely neglected. Furthermore, to sewers. Annual anticipated investments are expected to no sector monitoring system is in place and therefore no cover only about 27% of the annual requirements. Addi- overview of trends in access and service quality is readily tional pressure on finances is also expected to come from available at national level. the estimated US$124 million per year in maintenance and operating expenditures (Section 2). The policy and institutional constraints on improving the op- erational effectiveness and financial viability of public water The Draft U3SAP recognizes these challenges and, amongst and sanitation companies were discussed in sections 3 and other things, prioritizes the formulation of a sector invest- 4 above. Revenue generation presents a fundamental chal- ment plan for urban wastewater. lenge; the wastewater charge levied by water and sanitation companies is capped at 10% of water bills while stand- The scorecard indicates that of all the four subsectors, ur- alone sanitation and drainage companies cannot impose any ban sanitation faces the greatest challenges, particularly in wastewater charge at all; instead they operate on the basis the ‘enabling’ and ‘developing’ pillars. Under ‘enabling,’ low of annual budgets allocated by the PPC. Furthermore, de- scores for planning and budgeting highlight the fact that spite the requirement to recover costs, water and sanitation subsector coordination is weak: there are no mechanisms for companies are required to remit the bulk of the revenue from coordination of government and donor inputs at national wastewater charges to the provincial government. There is a level, though coordination is better at project level, and strong argument, therefore, for integrating the delivery of ur- unlike the rural subsector, there is no national strategy or ban water and sanitation services within combined utilities.40 program, only stand-alone projects. While investment in ur- ban sanitation has grown in recent years, almost all of this The draft U3SAP sets out a raft of measures to address growth has been donor-funded; government expenditure – the constraints outlined above. Amongst other things it pro- both capital and operational—has been quite limited. Accu- poses the formulation of a Sector Investment Plan and es- rate data are not available here, but an ADB39 study states tablishment of a national urban sanitation program whereby that 80% of water supply and sanitation projects from 1993 towns and cities can access capital finance and technical to 2007 in Vietnam were financed by official development assistance, subject to the adoption of comprehensive ur- assistance. ban sanitation plans. 39 ADB (2009) 40 World Bank (2013) Urban Sanitation Review East Asia Service Delivery Assessment 33 Figure 10.3 Urban sanitation and hygiene scorecard Enabling Developing Sustaining Policy Planning Budget Expenditure Equity Output Maintenance Expansion Use Outcomes 3 0.375 0 2.5 0.5 0 0.375 1 1.5 34 Water Supply and Sanitation in Vietnam 11. Conclusion As part of the Service Delivery Assessment process, gov- cially cost recovery—and hence sustainability—of existing ernment stakeholders agreed on sector targets for 2020, infrastructure and services, so as to reduce replacement namely 75% access to rural water and 85% for urban areas costs, which form over 40% of the total requirements. An- by 2020. This means that an estimated 3.7 million people other element for reducing the financing gap is to create per year need to gain access to water supply sources that more favorable conditions for private sector participation meet government standards—of which slightly over half in the development and operation of services—both urban live in rural areas. In the case of sanitation, the rural tar- and rural. This should be accompanied by the establish- get is that 85% of the population will use hygienic toilets ment of an appropriate regulatory framework to drive qual- by 2020, equalling an estimated 2.0 million people annually ity, equity and efficiency in service provision. Moreover, that need to gain access to latrines according to the na- result-based financing instruments could help to deliver tional standards. For urban areas, an ambitious wastewater on outcomes and incentivize sub-national governments treatment target of 45% coverage by 2020 implies that 1.6 to target underserved areas and households. Appropri- million people per year need to gain access to wastewa- ate technology choice when making new investments, ter treatment facilities. These targets translate to capital particularly for large capital projects such as wastewater expenditure requirements of US$1.447 billion per year for treatment plants, is another factor to enable more efficient water supply and US$1.142 billion for sanitation, with al- use of available funds. In addition, existing inefficiencies most 90% of these investment requirements being for ur- in resource use could be considered through conducting ban areas. Anticipated financing falls far short of these re- a public expenditure review for the sector, so as to enable quirements and deficits are estimated to be US$797 million government at national and sub-national level to use sec- per year for water supply and US$490 million for sanitation. tor funding more effectively in future. On top of this, approximately US$245 million per year is required for the operation and maintenance of water supply An additional constraint facing the sector at present is that services and US$176 million for sanitation—again, much of the difficulty of government to track progress towards its it for urban areas. ambitious national targets, as well as monitoring financial flows. Consistent progress monitoring is hampered by dif- Whichever data sources are used, it is clear that Vietnam ferent systems, definitions, indicators and data sources. is not yet investing enough in the water supply and sani- A harmonized monitoring framework could drastically im- tation sector. The scale of investment needs could, how- prove sector diagnostics, planning as well as better steer- ever, be reduced by improving the management, espe- ing for results that emphasize sustainability and equity. Service Delivery Assessment 35 In summary, and in addition to specific subsector priority and operational strategies, such as by expanding re- actions, cross-cutting actions for the sector to resolve the sults-based financing instruments and incentivize sus- challenges highlighted by this Service Delivery Assessment tainable service delivery to poor communities are to: • Streamline urban and rural access targets and monitor- ing frameworks, with due attention to service function- • Increase public funding for water supply and sanita- ality and use, and agree on common points of refer- tion, especially for urban service provision outside of ence for all institutional stakeholders in the sector the major cities and for remote, underserved rural areas • Improve the policy and enabling environment, such as • Improve the management—especially cost recovery— with respect to tariff reform and regulation, to acceler- for existing infrastructure and services provision, to re- ate private sector participation and develop capacities duce the financing gap for investment needed in infra- for private sector participation in both urban and rural structure replacement services (on both public and private side) • Conduct a public expenditure review for the water and sanitation sector, to identify critical obstacles to effi- The below depicted scorecards for each of the subsectors cient resource utilization further emphasize the bottlenecks in the service delivery • Prioritize the needs of the poor in sector investments pathway to turn finance into sustainable services 36 Water Supply and Sanitation in Vietnam Figure 11.1 Subsector Scorecards RURAL WATER SUPPLY Enabling Developing Sustaining Policy Planning Budget Expenditure Equity Output Maintenance Expansion Use Outcomes 2.5 2.25 1.5 3 2 2.5 0.75 0.5 1.5 URBAN WATER SUPPLY Enabling Developing Sustaining Policy Planning Budget Expenditure Equity Output Maintenance Expansion Use Outcomes 3 1.125 0.5 2.5 1 1 1.5 1.5 3 RURAL SANITATION AND HYGIENE Enabling Developing Sustaining Policy Planning Budget Expenditure Equity Output Maintenance Expansion Use Outcomes 2.5 2.25 1 3 1.5 2 0.75 0.5 1.5 URBAN SANITATION AND HYGIENE Enabling Developing Sustaining Policy Planning Budget Expenditure Equity Output Maintenance Expansion Use Outcomes 3 0.375 0 2.5 0.5 0 0.375 1 1.5 Service Delivery Assessment 37 38 Water Supply and Sanitation in Vietnam Annex 1: Scorecard and Explanation Service Building Areas of evidence for Question High (1) Medium (0,5) Low (0) Score Explanation for score Source of evidence Delivery Cycle Block assessment RURAL SANITATION ENABLING Enabling Policy Sector targets Are there RSH access targets, for Targets for Targets for No rural 1 There are access targets in SEDP 2011-15, households and/or communities, in the rural household rural household sanitation SEDP (national, provincial) Vietnam Development Goals national level development plan? access and access in the targets in the but no ODF target. communities development development becoming ODF in plan plan the development plan Enabling Policy Sector Policy Is there a rural sanitation policy that is Policy officially Policy drafted No policy 1 Policy is effectively defined NRWSS Strategy up to 2020 agreed by stakeholders, approved by approved and and agreed but NTP 2,3 Documents PM Decision 366 / MoH government, and publicly available? publicly available not officially supported by Decision Rural Sanitation Action Plan/ approved No. 62 (access to credit) TPBS agreement for NTP3 and PM Decision 730 Programming for Results (P4R)/ (Sanitation Days) PM Decision No.62 to support implementation of NRWSSS. Enabling Policy Institutional Roles Are the institutional roles of rural Defined and Defined but not Not defined 0.5 Roles of line ministries NTP 2,3 documents. sanitation subsector players (national/ operationalized operationalized are defined but were not Inter-ministerial circular state and local government, service fully operationalized under 27/2013/TTLT/BNNPTNT-BYT- provider, regulator etc.) clearly defined NTP2 – better prospects BGDDT dated and operationalized? under NTP3 31/5/2013 (revised circular 93)./PM Decision 366-QD-TTg on Approval of NTP3 Document /Rural sanitation component No.3 under NTP3. Enabling Planning Fund flow coordination Does government have a process for Coordination Coordination Not defined/ no 1 JARs for NTP 2,3 Decree 131 on ODA Utilisation. coordinating multiple investments in process process process Annual Consultation Group Document of CG Group the subsector (domestic or donor, eg. defined and defined but not Meeting between GoV.and Meeting/Vietnam Partnership national grants, state budgets, donor operationalized operationalized donors / JARs. Development (VPD), AEF (Aid loans and grants etc)? Effective forum). Service Building Areas of evidence for Question High (1) Medium (0,5) Low (0) Score Explanation for score Source of evidence Delivery Cycle Block assessment Enabling Planning Investment Plan Is there a medium term investment Investment plan Exists but not Does not exist 0.5 Medium Term plans are NTP3 document, annual plan for rural sanitation based on based on priority used, or under made but tend to get MARD circulars requesting two national targets that is costed, prioritizes needs exists, is preparation ignored – annual plans year plans. / Rural Sanitation investment needs, is published and published and take preference and are Component No.3 / MOH used? used not always based on the Sanitation Action Plan (2012- medium term plan 2015). Enabling Planning Annual review Is there an annual multi-stakeholder Review of Review of No review 1 Joint Annual Sector Decree 131 on ODA utilisation review in place to monitor subsector performance performance but or setting of Reviews held for NTP 2,3 Aide-memoires of JARs WB, performance, to review progress and set and setting of no corrective corrective actions JARs under NTP2, NTP3. UNICEF– GoV Reports corrective actions? corrective actions actions implemented Enabling Planning HR Capacity Has an assessment been undertaken Assessment Assessment No assessment 0.5 Occasional small studies of the human resource needs in the undertaken and undertaken but undertaken undertaken by research subsector to meet the subsector actions being no action being institutions or professional target and is the action plan being implemented taken associations, but no implemented? government-led sector-wide assessment. No action resulted from the studies. Enabling Budget Adequency (of financing) Are the public financial commitments to More than Between 50- Less than 50% 0 Sanitation funding was NTP3 document, Rural the rural sanitation subsector sufficient 75% of what is 75% of needs of needs marginalised under NTP2. Sanitation Action Plan to meet the national targets for the needed Better prospects under 2011-15. subsector? NTP3 but funding has not JAR 2012 increased so far.; Enabling Budget Structure Does the budget structure permit Yes for Yes for No 0.5 National budget (including NTP3 document investments and subsidies (operational investment and investment but donor support) only shows GoV - Donor Agreement for costs, administration, debt service, for subsidies not subsidies investments, not subsidies NTP3 2011-15 . etc) for the rural sanitation sector to be NTP2 Completion Report, clearly identified? VIHEMA report on sanitation Component. Enabling Budget Comprehensive Does the government budget More than 75% Less than 50% 0.5 Budget tends to get Resolutions of National comprehensively cover domestic and of funds to of funds to increased by a fixed amount Assembly for NTP3 official donor investment/ subsidy to subsector on subsector on of 10% without reference to NTP3 Annual Plan of activities rural sanitation? budget budget actual needs. But in 2013 for it is to be reduced ~10% 2012, 2013 and 2014. on instruction of NA. Will not be sufficient to cover sanitation. 39 Service Delivery Assessment 40 Water Supply and Sanitation in Vietnam Service Building Areas of evidence for Question High (1) Medium (0,5) Low (0) Score Explanation for score Source of evidence Delivery Cycle Block assessment DEVELOPING Developing Expenditure Utilization of domestic What percentage of domestic funds Over 75% Between 50% Less than 50% 1 Domestic allocations are State Audit Report, funds budgeted for rural sanitation are spent and 75% low and easily spent (about NTP reports (3 year average)? 5% of NTP3 total excluding VIHEMA report on 2012 and 6 soft loans from VBSP). months 2013 Developing Expenditure Utilization of external What percentage of external funds Over 75% Between 50% Less than 50% 1 Sanitation allocations State Audit Report, funds budgeted for rural sanitation are spent and 75% were small under NTP2 NTP reports (3 year average)? (some provinces received nothing). Increased funding anticipated under NTP3 Developing Expenditure Reporting Is rural sanitation expenditure versus Yes for domestic Yes for domestic No 1 Yes. All financial reports NTP reports, JAR and State budget audited and reported on in a and donor expenditure follow formats issued by Audit Agency of Vietnam consolidated format for all sources of expenditure MPI and MOF. reports. domestic and official donor expenditure? Developing Equlity Local participation Are there clearly defined procedures Yes and Yes, but not No 0.5 Procedures defined in Inter-Ministerial Circular for informing, consulting with and systematically systematically Inter-Ministerial Circular between MARD, MOF, MOH and supporting local participation in applied applied between MARD, MoF, MoET made under PM Decision planning, budgeting and implementing MoH and MoET, and PM 135. (New update Circular for rural sanitation developments? Decision 135, but not fully 04/2013). participatory. NTPSO/ Decree 131 (management and MARD issue annual budget utilisation of ODA.) planning guidelines. Developing Equlity Budget allocation criteria Have criteria (or a formula) been Yes, applied Yes, but No 0.5 Inter-Ministerial Circulars Inter-Ministerial Circulars determined to allocate rural sanitation consistently not applied 48 and 80 define basis 48 and 80 define basis for funding equitably across rural consistently for funding allocations, as funding allocations. NTP3 also communities and is it being applied does NTP. Despite this, has criteria for allocations of consistently some poor communities budget for water supply and and provinces received no sanitation with involvement sanitation funding under of line ministries. / VIHEMA NTP2. sanitation report for 2012, 6 months 2013. Developing Equlity Reducing inequality Is there any (periodic) analysis carried Yes (periodic) Yes (periodic) No 0.5 Equity analysis included NTP and JAR reports. out to assess disparities in access and analysis analysis in NTP annual reports and Donor-GoV Technical Review are measures (policy or programmatic undertaken and undertaken but Joint Annual Reviews, but reports / Aide Memoires actions) to reduce inequalities taken as acted upon not acted upon no action taken a result? Developing Output Quantity Is the annual expansion of rural Over 75% of that Between 75% Less than 50% 0.5 Sanitation has not had NTP reports and NCERWASS households gaining access to safe needed to reach and 50% of of that needed to enough attention under NTP report on M+E system. sanitation sufficient to meet the sector targets that needed to reach targets until recently. NTP3 sets VIHEMA Sanitation Action Plan. subsector targets? achieve targets out targets but so far lacks funding to meet targets. Service Building Areas of evidence for Question High (1) Medium (0,5) Low (0) Score Explanation for score Source of evidence Delivery Cycle Block assessment Developing Output Capacity for promotion Is there enough capacity - staff, Yes, capacity Gaps in capacity Deficits in 0.5 Hand washing promotion Report on Improvement expertise, tools, materials - to deliver a exists and but approaches capacity and was taken to scale but not of Capacity Building for sanitation programme at scale, using approaches are generally being no community- latrine promotion. Local Implementing NTP by Water tailored community-based approaches? being used at used at scale based capacity for promotion is Supply and Sanitation (WASA) scale approaches at insufficient for scaling up, Association, 2011) scale but funding is not. Developing Output Reporting Does the government regularly monitor Quality, Quality or Neither 1 Status is reported annually NTP Completion Report and report on progress and quality quantity and quantity but does not cover ODF M+E Reports by NCERWASS of rural sanitation access, including disseminated status. Under NTP II, VIHEMA implementation reports. settlement-wide sanitation, and monitoring was poorly MoET school sanitation reports. disseminate the results? funded, but better under NTP3. ODF monitoring now at pilot stage (CLTS). SUSTAINING Sustaining Markets Supply-chain Does the supply-chain for sanitation Yes for quantity, Yes, but not for No 0.5 Not all locations are Report on IDE Workshop on products meet household needs (ready cost, standards all of quantity, reached through local Sanitation Marketing in NTP, availability, quantity and cost), satisfy and reach cost, standards supply chain, especially 2011. government standards and reach to and reach remote and mountainous Report on piloting of social un-served areas? areas; Supply chain is marketing by VIHEMA better in Mekong region. Sanitation Hardware Supply Chain Assessment in Rural areas of Vietnam- Report 2013 Sustaining Markets Private sector capacity Is there sufficient mason/artisan/small Yes for quantity Yes, for quantity Neither 1 Private sector capacity Report on IDE Workshop on business capacity to meet household and cost but not for cost and involvement varies Sanitation Marketing in NTP, needs (quantity, quality and cost)? according to location. 2011. Number of masons Study on Private sector available for latrine participation in RWSS Sector, construction increases WSP 2008. yearly via programmes. SNV Biogas programme reports. Sustaining Markets Private sector Does the government have programs to Yes, with various Yes, but either No promotion, 0.5 Only small scale preliminary NTP3 Document development promote and guide the domestic private components being developed guidance or work done so far on private Decision 131 on private sector sector and facilitate innovation for the or has gaps encouragement sector involvement. More involvement in RWSS. provision of sanitation services in rural will be done under NTP3. PM Decision 366 areas? MARD starting to promote PM Decision No.71/2010 on PPP in RWSS through PPP Investment and 2013 consultation workshops/ update version of Decision No. dialogue. 71/2010 on PPP 41 Service Delivery Assessment 42 Water Supply and Sanitation in Vietnam Service Building Areas of evidence for Question High (1) Medium (0,5) Low (0) Score Explanation for score Source of evidence Delivery Cycle Block assessment Sustaining Markets Management of Disaster Do local government or rural service Yes, the majority No. Only some No service 0.5 Little done on this to date. National Strategy for Climate Risk and Climate Change providers have plans for coping with of rural service service providers provider has a Some pilot research on change (PM Decision No.2319/ natural disasters and climate change? providers have a have a plan for climate action impact of climate change QD-TTg dated 05/12/2011. plan for disaster disaster risk plan or has on RWSS in Nam Dinh MARD Action Plan Framework risk management management undertaken a Province. for adaptation and mitigation of and climate and climate vulnerability climate change of agriculture change change or most assessment. and rural development sector service providers 2008-20. have undertaken a vulnerability assessment. Sustaining Up-take Support for expansion Are expenditures at the local level in line In line with policy In line with policy Not in line with 0 PPCs did not allocate NTP reports. with the national sanitation policy and and sufficient to but insufficient policy and sufficient funds to sanitation are they sufficient to achieve national achieve national to achieve insufficient to under NTP II. targets? targets national targets achieve national objectives Sustaining Up-take Incentives Has government (national or local) Policies and Some policies No policies or 0 NTP3 includes a sanitation Decision 730 (Sanitation Day) developed any policies, procedures or procedures and procedures procedures component but this is yet to programs to stimulate uptake of rural (instruments) (instruments) (instruments) be operationalised at scale. sanitation services and behaviors by developed developed but exist GoV has also introduced an households? and being not implemented annual National Sanitation implemented Day for which MoH must make action plans. Sustaining Up-take Behaviors Is the government generating and Research used Research used Research not 0.5 Some research was done Reports of the Hand Washing using evidence to monitor and to understand to understand used and no (led by MoH) under the Initiative. analyze household sanitation behavior behavior and behavior but no action Hand Washing Initiative. Quantitative Assessment of change and take action to improve take action action No formative research programmatic approaches to sustainability? across a variety at-scale done to inform sanitation in Vietnam. 2013 of behaviors sanitation behavior Consultant Report Sustaining User Subsector Is the subsector on track to meet the On-track Off-track but Off-track 0.5 MDG target has been JMP, NTP and VIHEMA reports. outcomes progress stated target? keeping up met but GoV has a more with population ambitious target for growth ‘hygienic’ latrines. The sector is not yet on track to meet this target. Sustaining User Equity of use What is the ratio of improved toilet Less than 2 Between 2 and 5 More than 5 0.5 improved access among UNICEF special tabulation outcomes access between the lowest and highest times times rural lowest quintile is 34% based for EAPRO; using MICS quintile in rural areas? and highest quintile is 98% 2010-2011 Sustaining User Hygienic use of quality What percentage of people living in More than 75% Between 50% Less than 50% 0.5 JMP 2013 says 67% for JMP 2013 reports outcomes facilities rural areas use improved toilet facilities of people use and 75% of of people use rural sanitation (excluding shared facilities)? toilets people use toilets toilets Service Building Areas of evidence for Question High (1) Medium (0,5) Low (0) Score Explanation for score Source of evidence Delivery Cycle Block assessment URBAN SANITATION ENABLING Enabling Policy Sector Targets Are there USH access targets Yes, targets for Targets for No urban 1 SEDP has a wastewater Vietnam Development Goals (household level and sewerage/ septage urban household urban household sanitation collection target but none (VDGs) management) in the national level access and access targets in the for household sanitation. Socio-Economic Development development plan? sewerage/ included in the development But it is no longer a Strategy 2011-2020 (SEDS) septage development plan key point of reference. National Strategy of management plan but no Orientation on urban Environmental Protection up to included in the sewerage drainage is the main 2020, Vision to 2030. development or septage reference. Orientation of Vietnam Drainage plan management PRSP has a different and Sanitation for Urban and targets included sanitation target, but it is Industrial Areas up to 2025, not widely used. Vision to 2050. See U3SAP Annex 2b) Comprehensive Strategy of Development and Poverty Reduction (2002). Unified Strategy of Sanitation Sector and Action Plan (U3SAP, Draft, 2012). Enabling Policy Sector Policy Is there an urban sanitation policy that Policy officially Policy drafted No policy 1 The various laws, decrees Law of Environment Protection is agreed by stakeholders, approved by approved and and agreed but etc. are equivalent to a (2005). government, and publicly available? publicly available not officially policy though they are not Law of Construction (2003). approved fully harmonized. Law of Water Resources (2012). Orientation of Vietnam Drainage and Sanitation for Urban and Industrial Areas up to 2025, Vision to 2050. Decree of Drainage and Sanitation for Urban and Industrial Areas (No.88/2007/ ND-CP). Enabling Policy Institutional Roles Are the institutional roles of urban Defined and Defined but not Not defined 1 For SDA purposes Orientation of Vietnam Drainage sanitation subsector players (national/ operationalized operationalized sanitation = management and Sanitation for Urban and state and local government, service of human waste only. Industrial Areas up to 2025, provider, regulator etc.) clearly defined Responsibility for this in Vision to 2050. and operationalized? urban areas is clearly Decree of Drainage and defined. Sanitation for Urban and Industrial Areas (No.88/2007/ ND-CP). 43 Service Delivery Assessment 44 Water Supply and Sanitation in Vietnam Service Building Areas of evidence for Question High (1) Medium (0,5) Low (0) Score Explanation for score Source of evidence Delivery Cycle Block assessment Enabling Planning Fund flow coordination Does government have a process for Coordination Coordination Not defined/ no 0. MPI annually coordinates Decree of Construction coordinating multiple investments in process process process multiple investments, Investment Management the subsector (domestic or donor, e.g. defined and defined but not but this is not clearly (No.12/2009/ND-CP). national grants, state budgets, donor operationalized operationalized communicated to provinces Decree of ODA Management loans and grants etc.)? and related institutions (No.13/2006/ND-CP). Prime Minister’s Decision of the Regulation for ODA on-lending (No.181/2007/QD-TTg). MPI’s Letter for Guidance on using Government state budget (No.9005/2012/BKHDT). Enabling Planning Invesment plans Is there a medium term investment Investment plan Exists but not 0 None yet but development Law of Urban planning (2009). plan for urban sanitation based on based on priority used, or under of a Sector Investment Orientation of Vietnam Drainage national targets that is costed, prioritizes needs exists, is preparation Plan for urban sanitation and Sanitation for Urban and investment needs, is published and published and is proposed in the Draft Industrial Areas up to 2025, used? used Unified Sanitation Sector Vision to 2050. Strategy and Action Plan Decree of Drainage and (U3SAP) 2013, currently Sanitation for Urban and awaiting government Industrial Areas (No.88/2007/ approval. ND-CP). Enabling Planning Annual review Is there an annual multi-stakeholder Review of Review of No review 0 Annual reviews are MPI’s Letter requesting review in place to monitor subsector performance performance or setting of conducted for externally- status reports of Investment performance, to review progress and set and setting of but no setting of corrective actions assisted projects but not for supervision and evaluation corrective actions? corrective actions corrective actions the subsector as a whole. (6058/2012/BKHDT) Enabling Planning HR Capacity Has an assessment been undertaken Assessment Assessment No assessment 0.5 A basic HR needs Unified Strategy of Sanitation of the human resource needs in the undertaken and undertaken but undertaken assessment was carried Sector and Action Plan (U3SAP, subsector to meet the subsector actions being no action being out as part of U3SAP Draft, 2012). target and is the action plan being implemented taken formulation but no action implemented? has been taken to date. Enabling Budget Adequacy Are the annual public financial More than Between 50- Less than 50% 0 Based on SDA financial Vietnam: Urban Services and commitments to the urban sanitation 75% of what is 75% of needs of needs analysis Water Supply and Sanitation subsector sufficient to meet national needed (ADB,2009). targets for the subsector? Water Supply and Sanitation Strategy Building on a Solid Foundation (WB, 2006). Service Building Areas of evidence for Question High (1) Medium (0,5) Low (0) Score Explanation for score Source of evidence Delivery Cycle Block assessment Enabling Budget Structure Does the budget structure permit Yes for Yes for No 0 Regular budgeting only Law of State Budget (2002). investments and subsidies (operational investment and investment but covers operational costs Prime Minister’s Decision - costs, administration, debt service, etc) for subsidies not subsidies of government offices, Allocation of regular annual for the urban sanitation sector to be salaries, not for service state budget (No.59/2010/ clearly identified? provision and maintenance QD-TTg). Decree of Drainage and Sanitation for Urban and Industrial Areas (No.88/2007/ ND-CP). Enabling Budget Comprehensive Does the government budget More than 75% Between 50- Less than 50% 0 Budget is very limited in Unified Strategy of Sanitation comprehensively cover domestic and of funds to 75% of funds of funds to scope (see above) Sector and Action Plan (U3SAP, official donor investment/subsidy to subsector on to subsector on subsector on Draft, 2012). urban sanitation? budget budget budget Vietnam: Urban Services and Water Supply and Sanitation (ADB,2009). Water Supply and Sanitation Strategy, Building on a Solid Foundation (WB, 2006). DEVELOPING Developing Expenditure Utilization of domestic What percentage of domestic funds Over 75% Between 50% Less than 50% 1 Small annual allocations Statistics Data Yearbook, 2011 funds budgeted for urban sanitation are spent and 75% hence high utilisation. SDA’s financial analysis. (3 year average)? Developing Expenditure Utilization of external What percentage of external funds Over 75% Between 50% Less than 50% 0.5 MOC reports confirm this. Fifteen years of ODA using in funds budgeted for urban sanitation are spent and 75% Vietnam (MPI report, 2012) (3 year average)? SDA’s financial analysis Developing Expenditure Reporting Is urban sanitation expenditure versus Yes for domestic Yes for domestic No 1 Audits do not cover O&M Sector financing report of WB, budget audited and reported on in a and donor expenditure expenditure. ADB, JICA etc. consolidated format for all sources of expenditure Law of State Budget Law domestic and official donor expenditure? (2012). Gov. Decision of Government auditing (No.04/2012/QD- KTNN). Various utility reports. Developing Equity Local participation Are there clearly defined procedures Yes and Yes, but not No 0.5 Participation of local MPI’s / MoF’s agreement for informing, consulting with and systematically systematically community generally letters for individual investment supporting local participation in applied applied happens only in ODA- projects. planning, budgeting and implementing funded projects. Various PPC’s Socio-Economic for urban sanitation developments? Annual Plans 45 Service Delivery Assessment 46 Water Supply and Sanitation in Vietnam Service Building Areas of evidence for Question High (1) Medium (0,5) Low (0) Score Explanation for score Source of evidence Delivery Cycle Block assessment Developing Equity Budget allocation criteria Have criteria (or a formula) been Yes, applied Yes, but No 0 No formula has been determined to allocate urban sanitation consistently not applied developed or is proposed at funding equitably to urban utilities consistently present. or service providers and among municipalities and is it being consistently applied? Developing Equity Reducing inequality Do local government or urban service Plans developed Plans developed No plans 0 No Various utility’s business annual providers (national or in 3 largest and implemented but not documented plans cities) have specific plans or measures implemented developed and implemented for serving the urban poor? Developing Output Quantity (access) Is the annual expansion of urban Over 75% of that Between 75% Less than 50% 0 Question is not very Unified Strategy of Sanitation households gaining access to safe needed to reach and 50% of of that needed to relevant since the Sector and Action Plan (U3SAP, sanitation sufficient to meet the sector targets that needed to reach targets great majority of urban Draft, 2012). subsector targets? achieve targets households already have an UNICEF / WHO JMP reports. improved toilet. But direct connections to sewerage networks are increasingly only slowly. Developing Output Quantity (treatment) Is the annual increase in the proportion For collection For collection but Not for collection 0 Annual investments in MOC’s Circular promulgating of fecal waste that is safely collected and for not for treatment. or treatment (or wastewater treatment are statistical and monitoring and treated growing at the pace treatment if no target) small for the country as a indicators in Construction sector required to meet the subsector targets whole, and little is being (No. 05/2012/TT-BXD). (for both on-site and sewerage)? done to improve fecal Provincial DoC’s annual reports. sludge management. The Vietnam Waterwater Review in Urban Areas (Draft report, WB, 2012). Developing Output Reporting Are there procedures and processes Quality, Quality or Neither 0 No procedures in Unified Strategy of Sanitation applied on a regular basis to monitor quantity and quantity place though MOC has Sector and Action Plan (U3SAP, urban sanitation access and the quality disseminated acknowledged the need. Draft, 2012). of services and is the information The Vietnam Wastewater disseminated? Review in Urban Areas (Draft report, WB, 2012) Workshop Proceedings – Waste water treatment and Sludge management in Vietnam (MoC, 2013) Service Building Areas of evidence for Question High (1) Medium (0,5) Low (0) Score Explanation for score Source of evidence Delivery Cycle Block assessment SUSTAINING Sustaining Maintenance Collection and treatment What is the proportion of total fecal Over 75% of Over 50% of Less than 50% 0 Widely accepted figure is Decrees on Environmental waste generated that gets safely that generated that generated of that generated below 10%. There are very Protection Fees (67/2003/ND- collected and treated? is collected and is collected from few wastewater treatment CP & 59/2013/ND-CP). treated the HH level plants in the country. Decree of Drainage and Sanitation for Urban and Industrial Areas (No.88/2007/ ND-CP). Sustaining Maintenance Cost recovery Are O&M costs of treatment systems O&M costs O&M costs are O&M costs not 0 O&M costs not met but Standard of domestic (beyond household level facilities) known and known and 50% known draft U3SAP proposes fee wastewater discharge (TCVN assessed/known and fully met by either >75% covered covered through revisions. 14:2008). cost recovery through user fees and/or through cost cost recovery local revenue or transfers? recovery Sustaining Maintenance Discharge Are there norms and standards for Exist and are Exist and majority Standards exist 0.5 Legal sanctions are The National Strategy of Climate wastewater discharge for septage and monitored under are monitored, but majority available but not generally Change Dealing (2011) sewerage treatment plants that are a regime of but there are no of plants are enforced. And there is systematically monitored under a regime sanctions sanctions not regularly not yet a standard for of sanctions (penalties)? monitored septage management / treatment but a septage management guideline is under preparation by MOC Sustaining Maintenance Management of Disaster Do local government or service providers Yes, the majority No. Only some No service 0 Only a few urban WSS Unified Strategy of Sanitation Risk and Climate Change (national or in 3 largest cities) have of urban service service providers provider has a projects have considered Sector and Action Plan (U3SAP, plans for coping with natural disasters providers have a have a plan for climate action climate change implications Draft, 2012). and climate change? plan for disaster disaster risk plan or has Worshop Proceedings - Private risk management management undertaken a sector participation in Vietnam and climate and climate vulnerability water and sanitation sector change change or most assessment. (WB/ Seawun, 2008) service providers Water and sanitation sector of have undertaken Vietnam (WHO/MoH, 2012). a vulnerability assessment. Sustaining Expansion Uptake Has government (national or local) Policies and Some policies No policies or 0.5 Little is being done at Provincial DoC’s annual reports. developed any policies, procedures or procedures and procedures procedures present except in a few Various utility’s business annual programs to stimulate uptake of urban (instruments) (instruments) (instruments) externally-assisted projects plans sanitation services and behaviors by developed developed but exist households? and being not implemented implemented 47 Service Delivery Assessment 48 Water Supply and Sanitation in Vietnam Service Building Areas of evidence for Question High (1) Medium (0,5) Low (0) Score Explanation for score Source of evidence Delivery Cycle Block assessment Sustaining Expansion Plans Do government/service providers Business plans Business plans No Business 0 Significant new investments Decisions promulgated by have business plans for expanding the for expansion for expansion Plans in only a few locations. Very indvidual provinces on the proportion of citywide fecal waste that is of collection & of collection & little being done to improve sanitaton investment support safely collected and treated? treatment being treatment under fecal sludge management and socialisation implemented preparation Worshop Proceedings - Private sector participation in Vietnam water and sanitation sector (WB/ Seawun, 2008) Investment for the infrastructure projects in Vietnam (MPI’s Workshop presentation, 2011) Sustaining Expansion Private sector Does the government have ongoing Yes, various In development, No 0.5 Limited activity in this area, Unified Strategy of Sanitation development programs and measures to strengthen components few components for example a BOT waste Sector and Action Plan (U3SAP, the domestic private sector for the water treatment plant in Draft, 2012). provision of sanitation services in urban Yen So, Hanoi. Associated or peri-urban areas? financial mechanism and cost recovery issues are challenging. Sustaining User Is the subsector on track to meet the On-track Off-track but Off-track 0 There is a major funding Feasibility studies for new Outcomes stated target? keeping up gap, no investment plan investment / rehabilitation with population and draft national strategy / extention of drainage and growth (U3SAP) is yet to be sanitation systems; Socio- approved and adopted. economic survey reports as Target for wastewater well as Willingness to connect treatment is still far off reports in various cities and towns. Sustaining User Equity of use What is the ratio of improved toilet Less than 2 Between 2 and 5 More than 5 1 Lowest quintile has 62% JMP special tabulation using Outcomes access between the lowest and highest times times access to improved MICs 2010/2011 quintile in urban areas? sanitation; highest quintile 100% access to improved sanitation; so factor is 1.6 Sustaining User Use of facilities What percentage of people living in More than 90% More than 75% Less than 75% 0.5 94% reported by JMP MOC’s Circular promulgating Outcomes urban areas use improved toilet facilities of people of people of people 2012 (for 2010). However, statistical and monitoring (excluding shared facilities)? most households have indicators in Construction sector septic tanks and septage (No 05/2012/TT-BXD). management is poor, hence Provincial DOC’s annual reports. the medium score awarded The Vietnam Wastewater Review in Urban Areas (Draft report, WB, 2012) JAR Aide Memoire, 2012. Service Building Areas of evidence for Question High (1) Medium (0,5) Low (0) Score Explanation for score Source of evidence Delivery Cycle Block assessment RURAL WATER SUPPLY ENABLING Enabling Policy Sector targets Are there RWS access targets in the Yes, there are There are No targets in the 1 Targets in SEDP and VDGs. SEDP, Vietnam Development national level development plan? targets for rural national development (Also in updated NRWSS Goals, National Target water supply in targets in the plan Strategy to 2020, and NT Programme for New Rural the development development P3. Development 2010-20 includes plan plan but none for 2 RWSS indicators rural water. Enabling Policy Sector policy Is there a rural water policy that is Policy officially Policy drafted No policy 1 Policy is effectively defined NRWSS Strategy up to 2020, agreed by stakeholders, approved by approved and and agreed but by: NTP 2,3 documents with vision to 2030 government, and is publicly available? publicly available not officially / Decree 62 (access to PM Decision 366 approved approved credit) and PM Decision NTP3 / Program for results- 31/2009/ QD-TTg on RWS based (P4R) PM Decision No.62 to encourage Investment to support imple-mentation of and management of NRWSSS (updated in 2013) / WSS systems / National Decision 131/QD-TTg, PM Framework on HH water Decision 71/2010 on PPP. treatment and storage approved by MARD Enabling Policy Instuttional Roles Are the institutional roles of rural water Defined and Defined but not Not defined 0.5 Roles well defined but not NTP documents, Inter- subsector players (national/state & local operationalized operationalized fully operationalized, for Ministerial Circulars TT government, service provider, regulator example MoET not fully No.80/2007/TTLT-BTC-NN and etc.) clearly defined and operationalized? involved in school water TT 48/2008 and TT 93/2007/ supply. MoH/DoH in some TTLT /BNN-BYT-BGDDT under provinces not involved in PM Decision 277(now replaced by Inter-ministerial Circulars No.04/2013/TTLT/BNNPTNT- BYT-BGDDT and No.27/2013/ TTLT/BNN-BYT-BGDDT under PM Decision 366. Enabling Planning Fund flow coordination Does government have a process for Coordination Coordination Not defined/ no 1 JARs held for NTP 2,3. Decree 131 on ODA utilisation. coordinating multiple investments in process process process Aid Effectiveness Forum Annual CG Meeting report (MPI the subsector (domestic or donor, eg. defined and defined but not has twice-yearly meeting is in charge on behalf of GoV. National grants, state budgets, donor operationalized operationalized (government and donors). JAR reports and Aide Memoires. loans and grants etc.)? Enabling Planning Invesment plan Is there a medium term investment plan Investment plan Exists but not Does not exist 0.5 Medium Term plans are NTP3 document, annual MARD for rural water based on national targets based on priority used, or under made but tend to get circulars requesting two year that is costed, prioritizes investment needs exists, is preparation ignored – annual plans plans. needs, is published and used? published and take preference and are NTP Activity Plan 2013 -2015. used not always based on the MPI Circular on preparation of medium term plan. annual plan. 49 Service Delivery Assessment 50 Water Supply and Sanitation in Vietnam Service Building Areas of evidence for Question High (1) Medium (0,5) Low (0) Score Explanation for score Source of evidence Delivery Cycle Block assessment Enabling Planning Annual review What percentage of domestic funds Review of Review of No review 1 JARS for NTP2,3. There are Decree 131 on ODA utilisation. budgeted for rural water are spent (3 performance performance or setting of in fact six monthly events: Technical Review reports. year average)? and setting of but no setting of corrective actions (one review mission and Agreements between GoV and corrective actions corrective actions one technical review) with donors. involvement of MARD, MoH, Reports on GoV.- donors MoET, MPI, MoF, donors. assessment (UNICEF-MoH, WB-GoV). Enabling Planning HR Capacity Has an assessment been undertaken Assessment Assessment No assessment 0.5 Occasional small studies of the human resource needs in the undertaken and undertaken but undertaken undertaken by research subsector to meet the subsector actions being no action being institutions or professional target and is the action plan being implemented taken associations, but no implemented? government-led sector-wide assessment. No action resulted from the small studies Enabling Budget Adquency Are the public financial commitments More than Between 50- Less than 50% 0 Confirmed by financial NTP 2, 3 docs. to the rural water subsector sufficient 75% of what is 75% of needs of needs model. Demand is high Output of SDA financial model. to meet the national targets for the needed and funding insufficient. / Reports of NTPSO on annual subsector? Most funds for meeting implementation of plan of targets come from donors activities. and soft loans taken by users, not public financial commitment. Enabling Budget Structure Does the budget structure permit the Yes for Yes for No 1 National budget (including NTP3 document investments and subsidies (operational investment and investment but donor support) only shows GoV – donor agreement for costs, administration, debt service, etc.) for subsidies not subsidies investments, not subsidies. NTP3 2011-15 for the rural water sector to be clearly Subsidies are applied NTP2 completion report, identified? differently in different sanitation component (VIHEMA). programs. Enabling Budget Comprehensive Does the government budget More than 75% Between 50- Less than 50% 0.5 Budget is normally Resolutions of National comprehensively cover domestic and of funds to 75% of funds of funds to increased by 10% p.a. Assembly for NTP3. official donor investment/ subsidy to subsector on to subsector on subsector on without reference to actual NTP3 Annual Plan of activities rural water? budget budget budget needs. But for 2013 it will for reduced about 10% on 2012, 2013 and 2014 NA request. Water supply accounts for 70-80% of total RWSS budget. Service Building Areas of evidence for Question High (1) Medium (0,5) Low (0) Score Explanation for score Source of evidence Delivery Cycle Block assessment DEVELOPING Developing Expenditure Utilization of domestic What percentage of domestic funds Over 75% Between 50% Less than 50% 1 Domestic funding is small State Audit Report, funds budgeted for rural water are spent (3 and 75% and therefore easily spent. Annual Budget allocation year average)? information announcement by MPI to provinces and NTP SO NTP reports on annual implementation and budget disbursement. Developing Expenditure Utilization of external What percentage of external funds Over 75% Between 50% Less than 50% 1 Donors and government State audit reports. Annual funds budgeted for rural water are spent (3 and 75% have prioritized water Joint GoV-Donors Review year average)? supply within NTP. Fewer Reports. / Agreement between delays in rural water GoV. and Donors on annual projects compared to budget allocation. / NTP Report urban. Reports show that on implementation of Annual external budget accounts Workplan. for 14-16% and 80-90% of allocated spent mainly grant ODA, loan from WB, ADB spent percentage is a slightly lower Developing Expenditure Reporting Is rural water expenditure versus Yes, for domestic Yes, for domestic No 1 Yes. All financial reports NTP, JAR and State Auditing budget audited and reported on in a and donor expenditure follow formats issued by Agency of Vietnam reports. consolidated format for all sources of expenditure MPI and MOF. domestic and official donor expenditure? Developing Equity Local participation Are there clearly defined procedures Yes and Yes, but not No 0.5 Procedures defined in Inter-Ministerial Circular for informing, consulting with and systematically systematically Inter-Ministerial Circular between MARD, MOF, MOH supporting local participation in applied applied (04/2013 and 27/2013) and MoET and Inter-ministerial planning, budgeting and implementing between MARD, MOF, Circular between Mard, MPI for rural water developments? MPI and between MARD, and MoF made under PM MOH and MoET, and PM Decision 135/2009/QD-TTg on Decision 135, Directives of Management and Direction of Relevant Ministries to local NTP; Decree 131 (management provinces for preparation and utilisation of ODA.). of plan, budget allocation and implementation. But in practice was not fully participatory. 51 Service Delivery Assessment 52 Water Supply and Sanitation in Vietnam Service Building Areas of evidence for Question High (1) Medium (0,5) Low (0) Score Explanation for score Source of evidence Delivery Cycle Block assessment Developing Equity Budget allocation criteria Have criteria (or a formula) been Yes, applied Yes, but No 1 Inter-Ministerial Circulars Inter-Ministerial Circulars 48 determined to allocate rural water consistently not applied 48 and 80 define basis and 80 define basis for funding funding equitably to rural communities consistently for funding allocations, allocations. NTP3 also has and is it being applied consistently? as does NTP. Criteria are criteria for allocations (now being applied. The criteria revised by Inter-ministerial for budget allocation based Circulars 03/2013 and on scores (water supply- 27/2013) budget for investment and recurrent budget for sanitation) are revised and agreed by the 3 line ministries. Developing Equity Reducing inequality Is there periodic analysis to assess Yes, periodic Yes, periodic No 0.5 Equity analysis included NTP and JAR reports. whether allocation criteria and local analysis analysis in NTP annual reports and MPI letter stating annual budget participation procedures set by published and published but not JARs, but no action taken. allocation for each province. government have been adhered to and acted upon acted upon Recently line ministries are reducing disparities in access? agreed on criteria for NTP3 budget allocations to each component, but MPI did not follow this. Developing Output Quantity Is the annual number of new systems Over 75% of that Over 50% of that Less than 50% 0.5 Funds are inadequate to NTP reports and NCERWASS built (and systems replaced) sufficient needed to reach needed to reach of that needed meet demand for new report on M+E system. to meet sector targets? (including sector targets sector targets to reach sector systems and upgrading. Individual assessment reports output by government directly as well as targets on status of piped water through contractors and NGOs) systems. Developing Output Quality of water Are there drinking water quality Standards Standards No 1 Yes. Done by CPMs except NTP reports. standards for rural water and are all new exist and new exist but new for private sector schemes. MoH Report on water quality installations tested? installations installations not A specific requirement for management of WSS. tested tested newly built schemes. Developing Output Reporting Is the number of new schemes and their Yes, with Yes, but without No 1 Yes, but location including Annual NTP Programme report. locations reported in a consolidated full listing of a full listing of the title and location name, / National M+E Indicators format each year? locations locations but not GPS co-ordinates. Report. SUSTAINING Sustaining Maintenance Functionality Are there regular asset register updates Asset register Asset register Neither 0 No. Update of rural Status report on piped of rural water infrastructure including and regular but no updating water asset register and water supply systems. / their functional status? updating of of functionality functionality only carried NTP2 Completion Report on functionality out in the provinces where Management models (p.45 – service providers operate as P51 Vietnamese Version Hanoi private companies. 2011) Service Building Areas of evidence for Question High (1) Medium (0,5) Low (0) Score Explanation for score Source of evidence Delivery Cycle Block assessment Sustaining Maintenance Cost recovery Is there a national policy on O&M costs O&M policy O&M policy No O&M policy, 0.5 Policy exists but full cost PM Decision 131 and are O&M costs known and covered exists, costs are exists, costs are costs not known recovery not achieved - Circulars 95 and 100. from subsidies and/or user fees? assessed and estimated and PPC sets tariff and pays Circular 54/2013 issued by >75% covered >50% covered operating subsidy where the MoF on management, use necessary. and exploitation of piped water supply systems. Sustaining Maintenance Spare parts chain Is there a system defined for spare Systems defined Systems defined Systems not 0.5 Not established in all NTP 2 Completion Report. parts supply chain that is effective in all and spares but spares not defined locations. Better in delta Report on Operational Status places? available in available up to areas than mountains. of Water Supply Schemes by >50% of villages 50% of villages National Water Resources Institute, 2011. Sustaining Maintenance Management of Disaster Do rural service providers have plans Yes, the majority No. Only some No service 0 Little done on this to date EMWF Report on study of Risk and Climate Change for coping with natural disasters and of rural service service providers provider has a beyond donor-funded climate change adaptation in climate change? providers have a have a plan for climate action research study on climate Central South provinces. plan for disaster disaster risk plan or has change adaption. Nothing Study Report on Impact of Sea risk management management undertaken a implemented yet. Level raise on WSS in Nam and climate and climate vulnerability Dinh. change change or most assessment. service providers have undertaken a vulnerability assessment. Sustaining Expansion Investment support Are piped systems in rural areas Recognized and Recognized but Neither 0.5 Management entities for Report on operational status (of existing recognized as management entities and supported not supported schemes are officially of water supply schemes by services) given technical and financial support recognized but no funds are National Water Resources to expand their systems either by local offered to support them. Institute, 2011. government or larger utilities? Study of the Management and Operation of Piped Water Supply Schemes, 2010. Sustaining Expansion Plans Are there scheme-level plans for the Yes in most rural Yes in around In a small 0 Little or nothing done NTP reports. (of existing expansion of piped systems in rural areas half of rural proportion, or no by government though services) areas? areas rural areas informal expansion by informal private sector sometimes happens. Sustaining Expansion Investment finance Are expansion costs for rural water Yes in most rural Yes in around In a small 0 No (as for 25). There is a NTP reports. (of existing being covered by user fees and/or public areas half of rural proportion, or no policy directive enabling Circular 54/2013/BTC dated services) grants? areas rural areas management entities to 04/May, 2013 on Management, borrow but tends to be Utilization and Exploitation of used only for building new Piped water supply systems. schemes. 53 Service Delivery Assessment 54 Water Supply and Sanitation in Vietnam Service Building Areas of evidence for Question High (1) Medium (0,5) Low (0) Score Explanation for score Source of evidence Delivery Cycle Block assessment Sustaining User Subsector Is the subsector on track to meet the On-track Off-track but Off-track 0.5 Rate of progress is not high NTPI, NTPII completion Reports; outcomes progress stated target? keeping up enough to reach national Annual 2011. 2012 NTP with population target Reports growth UN Summit Reports. WB Report on Poverty Reduction. Sustaining User Equity of use What is the ratio of improved drinking Less than 2 Between 2 and 5 More than 5 1 Access to improved water JMP UNICEF special tabulation outcomes water access between the lowest and times times source lowest quintile is based on MICS 2010/2011 highest quintile in rural areas? 70% and highest quintile is 99%; so factor is 1.4; however, access to house connections is only 3% for lowest quintile, and 43% for highest quintile. Sustaining User Quality of user Of the households using an improved More than 50% More than 25% Less than 25% 0 Very few rural households NTP 2 completion report. outcomes experience drinking water source, what proportion of households of households of households have a private tap fed by a JMP 2013 are using piped drinking water in the piped network; according dwelling and yard / plot? to JMP 2013 this is 9% for rural population URBAN WATER SUPPLY ENABLING Enabling Policy Sector targets Are there UWS access targets in the Yes, there are There are No targets in the 1 There is a target in the Vietnam Development Goals national level development plan? urban water national development SEDP. (VDGs) supply targets in targets in the plan Socio-Economic Development the development development Strategy 2011-2020 (SEDS) plan plan but none for Orientation of Vietnam Water urban water. Supply in Urban and Industrial Areas up to 2025, Vision to 2050. Enabling Policy Sector policy Is there an urban water policy that is Policy officially Policy drafted No policy 1 The various laws, decrees Decrees of Production agreed by stakeholders, approved by approved, and and agreed but etc. are equivalent to a and Consumption of Clean government, and publicly available? publicly available not officially policy though they are not Water (177/2006/ND-CP & approved fully harmonized. 124/2011/ND-CP) National Programme of Non-revenue Water Reduction (2010). Service Building Areas of evidence for Question High (1) Medium (0,5) Low (0) Score Explanation for score Source of evidence Delivery Cycle Block assessment Enabling Policy Institutional Roles Are the institutional roles of urban water Defined and Defined but not Not defined 1 Decree No.177 confirmed Decrees of Production subsector players (national/state and operationalized operationalized key institutional roles and Consumption of Clean local government, service provider, (government, service Water (177/2006/ND-CP & regulator etc.) clearly defined and provider and consumer) but 124/2011/ND-CP) operationalized? lacked operational detail. Additional clarification is due to be provided by MOC (e.g.a circular) Enabling Planning Fund flow coordination Does government have a process for Coordination Coordination Not defined/ no 0 MPI annually coordinates Decree of Construction coordinating multiple investments in process process process multiple investments, Investment Management the subsector (domestic or donor e.g. defined and defined but not but this is not clearly (No.12/2009/ND-CP). national grants, state budgets, donor operationalized operationalized communicated to provinces Decree of ODA Management loans and grants etc.)? and related institutions (No.13/2006/ND-CP). Prime Minister’s Decision of the Regulation for ODA on-lending (No.181/2007/QD-TTg). MPI’s Letter for Guidance on using Government state budget (No.9005/2012/BKHDT). Circular on Financial Management Mechanism of ODA Programmes and Projects (No.108/2007/BTC) Decree of Management of Public Fund Debit (No.77/2010/ ND-CP) Enabling Planning Investment plan Is there a medium term investment Investment plan Exists but not Does not exist 0.5 There is no sector Law of Urban planning (2009). plan for urban water based on national based on priority used, or under investment plan, only plans Documents of water supply targets that is costed, prioritizes needs exists, is preparation for individual projects and programs for Hanoi, Hai Phong, investment needs, is published and published and programs. Ho Chi Minh, Da Nang and used? used other cities in Red River Delta and Mekong Delta. Enabling Planning Annual review Is there an annual multi-stakeholder Annual review Annual review No review 0.5 Reviews held by MPI, only MPI’s Letter requesting review in place to monitor subsector of performance of performance or setting of for donor-funded projects, status reports of Investment performance, to review progress and set and setting of but no setting of corrective actions not for whole sector. And no supervision and evaluation corrective actions? corrective actions corrective actions corrective actions set. (6058/2012/BKHDT) MoC’s annual reports 55 Service Delivery Assessment 56 Water Supply and Sanitation in Vietnam Service Building Areas of evidence for Question High (1) Medium (0,5) Low (0) Score Explanation for score Source of evidence Delivery Cycle Block assessment Enabling Planning HR Capacity Has an assessment been undertaken Assessment Assessment No assessment 0.5 No comprehensive Benchmarking of Vietnam water of the human resource needs in the undertaken and undertaken but undertaken assessment has been supply utilities, including HR subsector to meet the subsector actions being no action being undertaken – only assessment (WB/ VWSA. 2010) target and is the action plan being implemented taken occasional small studies implemented? relating to donor-funded projects. WB/MOC benchmarking project reports on the human resources in place in utilities, but does not assess needs. Enabling Budget Adequacy Are the public financial commitments More than Between 50 and Less than 50% 0 SDA financial analysis SDA’s financial analysis. to the urban water subsector sufficient 75% of what is 75% of needs of needs found that anticipated to meet the national targets for the needed are less than 50% of the subsector? requirement. Enabling Budget Structure Does the budget structure permit Yes for Yes for No 0.5 Urban water supply is being Law of State Budget (2002) investments and subsidies (operational investment and investment but developed on a commercial Prime Minister’s decision of costs, administration, debt service, etc.) for subsidies not subsidies basis. Service providers the allocation of regular state for the urban water sector to be clearly have to borrow/mobilize annual budget (no.59/2010/ identified? budget for investment. Govt QD-TT) does not subsidize any Decrees of Production O&M cost. In fact urban and Consumption of Clean water supply no longer Water (177/2006/ND-CP & features in govt budgets as 124/2011/ND-CP) it is entirely autonomous. Enabling Budget Comprehensive Does the government budget More than 75% Between 50- Less than 50% 0 See above ; there is no Vietnam: Urban Services and comprehensively cover domestic and of funds to 75% of funds of funds to consolidated national Water Supply and Sanitation official donor investment/ subsidy to subsector on to subsector on subsector on budget that records capital (ADB,2009). urban water? budget budget budget spending at the provincial SDA’s financial analysis. and utility level Urban water supply versus climate change (MoC’s article in the Construction Association Website, 2011) Investment for the infrastructure projects in Vietnam (MPI’s Workshop presentation, 2011) Service Building Areas of evidence for Question High (1) Medium (0,5) Low (0) Score Explanation for score Source of evidence Delivery Cycle Block assessment DEVELOPING Developing Expenditure Utilization of domestic What percentage of domestic funds Over 75% Between 50% Less than 50% 1 Government funds are Vietnam: Urban Services and funds budgeted for urban water are spent (3 and 75% small and easily spent Water Supply and Sanitation year average)? - used mainly for land (ADB,2009). compensation and pre- SDA’s financial analysis. investment activities (TA Urban water supply versus etc.) climate change (MoC’s article in the Construction Association Website, 2011) Developing Expenditure Utilization of external What percentage of external funds Over 75% Between 50% Less than 50% 0.5 Disbursement is relatively Vietnam: Urban Services and funds budgeted for urban water are spent (3 and 75% slow – projects are subject Water Supply and Sanitation year average)? to extensive delays (ADB,2009). SDA’s financial analysis. Urban water supply versus climate change (MoC’s article in the Construction Association Website, 2011) Developing Expenditure Reporting Do urban utilities (national or 3 largest Audited accounts Balance sheet No balance sheet 1 Under the Auditing Law, all Law of State Budget (2002) utilities) have audited accounts and and balance but not audited water supply companies are Gov. Decision on the auditing balance sheet? sheet subject to annual audits. procedure of water supply utilities (No.04/2012/QD-KTNN) Water supply company annual reports Developing Equity Local participation Are there clearly defined procedures Yes and Yes, but not No 0.5 Participation of local MPI’s letters to provinces / cities for informing, consulting with and systematically systematically community generally for the invidual agreements on supporting local participation in applied applied happens only in ODA- water supply projects. planning, budgeting and implementing funded projects Feasibility studies for new for urban water developments? investment / rehabilitation / extention of water supply systems; Socio-economic survey reports as well as Willingness to connect reports in various cities and towns Developing Equity Budget allocation criteria Have criteria (or a formula) been Yes, applied Yes, but No 0 No longer relevant – utilities determined to allocate urban water consistently not applied are autonomous funding equitably to urban utilities consistently or service providers and among municipalities and is it being consistently applied? 57 Service Delivery Assessment 58 Water Supply and Sanitation in Vietnam Service Building Areas of evidence for Question High (1) Medium (0,5) Low (0) Score Explanation for score Source of evidence Delivery Cycle Block assessment Developing Equity Reducing inequalities Have urban utilities or service providers Plans developed Plans developed No plans 0.5 There are clear Feasibility studies for new (national or in 3 largest cities) developed and implemented but not documented requirements on this within investment / rehabilitation and implemented specific plans for implemented donor-funded projects / extension of water supply serving the urban poor? only. But only about 10% systems; Socio-economic of utilities are mobilising survey reports as well as commercial fund so far, Willingness to connect reports so most investments are in various cities and towns donor-funded. Private Utility Business Plans sector investment not attractive. 177 requires full cost recovery but this runs against incentive to serve poor who live far from city centre. No strong pressure to serve the poor. Tariffs are low despite reqt for CR since Prov doesn’t approve necessary price hikes Developing Output Quantity Is the annual expansion of HH Over 75% of that Over 50% of that Less than 50% 0.5 Level of house connections Feasibility studies for new connections and stand posts in urban needed to reach needed to reach of that needed is already very high. investment / rehabilitation areas sufficient to meet the subsector sector targets sector targets to reach sector No national targets on / extention of water supply targets? targets connections or standposts. systems; Socio-economic survey reports as well as Willingness to connect reports in various cities and towns Utility Business Plans Developing Output Quality of water Are there drinking water quality Standards Standards exist No standards, 0.5 Quality standards and National Standard of Drinking standards for urban water that are exist, there is and there is or standards regular monitoring Water Quality (No.01/2009/BYT) regularly monitored and the results a surveillance a surveillance exist but are not requirements observed National Standard of Domestic published? program, and program but monitored but most utilities lack (non dinking) Water Quality results are there is no automated quality (No.02/2009/BYT) published publication of monitoring systems. results Developing Output Reporting Is the number of additional household Yes with full Yes but without No 0 Not yet incorporated into connections made and stand listing of a full listing of the sector monitoring posts constructed reported on in a connections connections system. consolidated format for the nation each year? Service Building Areas of evidence for Question High (1) Medium (0,5) Low (0) Score Explanation for score Source of evidence Delivery Cycle Block assessment SUSTAINING Sustaining Maintenance Functionality What is the weighted average Less than 20% 20% to 40% More than 40% 0.5 Latest reports from 68 Benchmarking of Vietnam water percentage of non- revenue water water supply companies utilities (WB/MoC, 2013) across urban utilities (national or 3 indicate Benchmarking of Vietnam water largest utilities) (last 3 years average)? 10-15% NRW in 5 well- utilities (WB/VWSA, 2010) managed schemes; 20- Utility Business Plans 25% in other companies. Sustaining Maintenance Cost recovery Are all O&M costs for utilities (national Operating ratio Operating ratio Operating ratio 0.5 Average OR for the 3 Benchmarking of Vietnam water or 3 largest utilities) being covered by greater than 1.2 between 0.8 below 0.8 largest utilities is 0.8 – 1.2 utilities (WB/MoC, 2013) revenues (user fees and/subsidies) (last and 1.2 but is tending to reduce due Benchmarking of Vietnam water 3 years average)? to the rising cost of power utilities (WB/VWSA, 2010) and chemicals. Utility Business Plans Sustaining Maintenance Tariff reviews Are tariff reviews regularly conducted Conducted, Conducted but Not conducted 0.5 Water tariffs are quite Inter-ministerial Circular - using a process and tariffs adjusted adjusted and not adjusted difficult to be adjusted Guidance on the Principle, accordingly and published? published annually, because several Methods and Decision procedures are required. Competence of Clean Water According to Decree Tariffs for Urban, Industrial and No.117, it must be agreed Rural Areas (No. 95/2009/BTC- by the Provincial / City BXD-BNN) People’s Council’ Circular – Guidance on the 2 issues are political domestic water tariff variation pressure to depress tariffs (No.88/2012/TT-BTC) and long process if going to change them Sustaining Maintenance Management of Disaster Do utilities (national or 3 largest utilities) Yes, the majority No. Only some No service 0.5 10% of the country’s 68 National Target Programme for Risk and Climate Change have plans for coping with natural of urban service service providers provider has a public water companies Climate Change Dealing (2008). disasters and climate change? providers have a have a plan for climate action are implementing water Circular – Guidance on plan for disaster disaster risk plan or has safety plans but these the water safery plans risk management management undertaken a do not generally address (No.08/2012/TT-BXD). and climate and climate vulnerability climate change. and are Programme documents of change change or most assessment. implementing them. Water Safety Plan under WHO/ service providers MoC/ MoH/ VWSA have undertaken a vulnerability assessment. Sustaining Expansiont Autonomy Do utilities or service providers (national Yes in all aspects In all aspects No 0.5 Utilities are financially Decrees of Production or 3 largest) have operational decision- except autonomous but Investment and Consumption of Clean making autonomy in investment investment / Master plans must be Water (177/2006/ND-CP & planning, HR, finance (separate balance planning approved by the Local 124/2011/ND-CP) sheet) and procurement management? Government authorities. 59 Service Delivery Assessment 60 Water Supply and Sanitation in Vietnam Service Building Areas of evidence for Question High (1) Medium (0,5) Low (0) Score Explanation for score Source of evidence Delivery Cycle Block assessment Sustaining Expansiont Plans Do service providers (national/state or 3 Business plans Business plans No business 0.5 Access is already high Feasibility studies for new largest utilities) have business plans for for increasing for increasing plans and approval of Provincial investment / rehabilitation expanding access to urban water? access being access being People’s Committee is / extention of water supply implemented prepared needed for plans and systems; Socio budgets, hence utility has economic survey reports as only limited freedom to well as Willingness to connect make them. reports in various cities and towns Utility Business Plans Sustaining Expansiont Borrowing Are utilities allowed by law to access, Allowed and Allowed but not Not allowed 0.5 Yes they are allowed and Decrees of Production and are they accessing, commercial accessing accessing some service providers and Consumption of Clean finance for expansion? are starting to access soft Water (177/2006/ND-CP & [donor] or commercial 124/2011/ND-CP) loans. But lenders are Prime Minister’s Decision of the hesitant as risks are Regulation for ODA on-lending perceived as high, (No.181/2007/QD-TTg). especially for main supply lines and treatment plants, which do not generate revenue. Sustaining User Subsector Is the subsector on track to meet the On-track Off-track but Off-track 1 MDG target has been met. Orientation of Vietnam Water outcomes progress stated target? keeping up MOC reports coverage with Supply in Urban and Industrial with population house connections as 69% Areas up to 2025, Vision to growth in 2009 while target is 85% 2050. for 2020. Situation of urban water supply sector (Institute of Urban and infrastructure Development, 2013). Sustaining User Equity of use What is the ratio of improved drinking Less than 2 Between 2 and 5 More than 5 1 Improved access in lowest JMP UNICEF special tabulation outcomes water access between the lowest and times times quintile is 94% and highest based on MICS 2010/2011 highest quintile in urban areas? quintile is 100% for urban population; access to house connections is more unequal with 35% for poorest quintile and 94% for highest quintile Sustaining User Quality of user What is the average number of hours of More than 12 6 to 12 hours Less than 6 1 Most water supply systems Benchmarking of Vietnam water outcomes experience service per day across urban utilities? hours per day per day hours per day in big cities / towns have utilities (WB/MoC, 2013) (Weighted by number of HH connections 24/7 service – challenge Benchmarking of Vietnam water per utility)? is in other locations. [ADB utilities (WB/VWSA, 2010) and AusAid reports identify problems of service quality and reliability]. Annex 2: Assumptions and Inputs for Financial Model This annex describes the key inputs that were used to gen- Demographic Variables erate estimates of required, recent and anticipated capital expenditures. It discusses the sources, adjustments and The model requires two sets of demographic variables. The assumptions of the following information: exchange rates, first set captures rural and urban population estimates/pro- demographic variables, sector-specific technologies and jections for 2009, 2011 and the target year (2020). These spending plans. data are combined with existing and target coverage rates for water and sanitation in order to calculate of the number Exchange Rates of people that will be requiring access to improved facilities during the period of analysis. The other set of information Amounts in Vietnamese Dong (VND) were converted into US refers to the average size of households. This is used to Dollars using exchange rates from the ADB Key Indicators. convert costs of facilities, which are generally in expressed The 2012 exchange rate was used for the 2013 and onwards. on a per household basis, into per capita terms. Table A2.1 Demographic Variables Table A2.1 shows the key demographic variables used in the analysis. Population data for 2009 were sourced from the Average household size population and housing census while values for 2010 and Region Population (million persons) (persons/ 2011 were projected by applying the appropriate population household)d growth rates. Projections for 2020 were obtained through a 2009a 2010b 2011b 2020c 2011 three-step process. First, population projections at the na- tional level were obtained from the Government Statistics Rural 60.4 60.7 60.9 53.1 3.9 Office. Second, the urban population was obtained by mul- Urban 25.4 26.2 27.1 43.4 3.7 tiplying the national population by 45%, which is the esti- National 85.8 86.9 88.0 96.5 3.8 mated share of the urban population in the total provided in the Prime Minister’s Decision No. 445. Third, projections of a General Statistics Office (2010a) The 2009 Vietnam Population and Housing Census: Major Findings, Hanoi. b Estimated from the 2009 population by applying annual the rural population were calculated as a residual. population growth rates of 3.4% and 0.4% for urban and rural areas, respectively. These represent the growth rates of the rural and urban populations between 1999 and 2009. The population growth rates were obtained from the General Statistics Office (2010b) Vietnam’s Population Reaches 85.487 Million People, http://www.gso.gov.vn/ Sector-Specific Technologies: Water default_en.aspx?tabid=515&idmid=5&ItemID=9813. c Computed using information from Government of Vietnam (2009c) Prime Minister’s Decision No. 445/QD-TTg: On Approval of the Revised Orientation for Vietnam Urban System Development Master Plan Towards The calculation of investment needs requires information on 2025 and Vision to the Year 2050, Hanoi; and General Statistics Office (2011) Statistics Data Yearbook of 2011, Publishing House of the Statistics Department, Hanoi. d Nguyen, sector-specific technologies, unit costs, and expected life. T. (2011) The Trend in Vietnamese Household Size in Recent Years, 2011 International Conference on Humanities, Society and Culture, IPEDR, 20(2011), Singapore. Table A2.2 presents information on the variables mentioned Service Delivery Assessment 61 above for water supply. The options included were based validation workshop in Hanoi on April 2013. In the case of on the technologies reported in the 2009 National Census, tap water that is piped into premises, the unit cost ($140 which was presented in JMP.41 per person) used in the analysis is quite close to the es- timated unit cost ($132 per person at 2012 prices) for the The distribution of water supply technologies across house- Red River Delta Water Supply and Sanitation project of the holds for 2009 was based on the shares indicated in the World Bank.42 On the other hand, the estimate for urban 2009 National Census. However, given the absence of doc- areas of $244 per person is higher than the estimated unit uments, the distribution of water supply technologies for costs ($177 per person at 2012 prices) for the Vietnam Ur- 2020 was based on the informed judgement of stakehold- ban Water Supply Development Project.43 ers at the SDA validation workshop in Hanoi on April 2013. Lifespan represents the projected number of years before a Unit capital costs represent expenditures for materials and facility is fully replaced. The information in Table A2.2 was labor used in the construction of the different facilities. The initially drawn from a consultation with experts and subse- information in Table A2.2 was initially drawn from a consul- quently revised on the basis of the opinions of stakeholders tation with experts and subsequently revised on the basis of who were present at the SDA validation workshop in Hanoi the opinions of stakeholders who were present at the SDA on April 2013. Table A2.2 Selected information on water supply sources Projected distribution of Distribution of facilities Unit capital cost Lifespan Option facilities (base year, %)a (per capita at 2012 prices) (in years) (2020, %)a Rural Tap water: piped into premises 9% 20% 140 20 Tap water: public tap, standpipe 1% 5% 100 20 Tubewell: borehole (drilled well) 38% 32% 72 10 Protected (dug) well 29% 24% 53 5 Protected spring (protected slot water) 6% 5% 19 5 Rain water 17% 14% 50 5 Urban Tap water: piped into premises 100% 100% 244b 23 a As a share of households with access to improved facilities. b Average of values provided by stakeholders at the SDA validation workshop in Hanoi on April 2013. 41 JMP (2012b) 42 Unit costs for water supply facilities estimated from a project document is about $113 per person (see World Bank, 2010, Project Paper on a Proposed Additional Financing Credit in the Amount of SDR 42 million to the Socialist Republic of Vietnam for the River Delta Rural Water Supply and Sanitation Project, March). This was scaled to units comparable with those used in the current analysis using the consumer price index and exchange rate. 43 Feasibility studies conducted for the Vietnam Urban Water Supply Development Project indicate an investment budget of US$135 million and is expected to benefit 0.9 million persons (See Poyry Environment Oy, 2009, Vietnam Urban Water Supply Development Project: Sub-project of Phase 2 Competition Route in Bac Ninh Province, Feasibilty Study Report, September). The values suggest a unit cost of about $150 per person at 2008 prices. This was scaled to units comparable with those used in the current analysis using the consumer price index and exchange rate. 62 Water Supply and Sanitation in Vietnam Table A2.3 Selected information on sanitation technologies Projected distribution of Distribution of facilities Unit capital cost Lifespan Option facilities (base year, %)a (per capita at 2012 prices) (in years) (2020, %)a Rural Flush toilet: Private total 27% 60% 75 20 Flush toilet: public/shared total 32% 15% 25 10 Improved pit latrines 42% 25% 25 5 Urban Drainage, wastewater treatment & collection 100% 100% 375 30 a As a share of households with access to improved facilities. Sector-specific technologies: Sanitation eas was the average of the values suggested by stakehold- ers. However, these estimates are quite close to the values Table A2.3 presents information on the expected household reported for urban areas in Vietnam (US$377 per person at distribution, costs and lifespans of key sanitation technolo- 2010 prices) in Hydroconseil and PEMconsult (2011).45 It is gies. The options included were based on the technologies also important to note that the per capita cost of shared reported in the 2009 National Census, which was presented pour-flush toilets is assumed to be a third of private pour- in JMP.44 flush toilets. This was implemented after the validation workshop and works on the assumption that three house- The distribution of sanitation options across households for holds share a toilet.46 2009 was based on the shares indicated in the 2009 Na- tional Census. Given the absence of documents however, Spending plans the distribution of sanitation options for 2020 was based on the opinions that stakeholders provided at the SDA valida- Collecting information on recent and anticipated invest- tion workshop in Hanoi on April 2013. ments and comparing the results to CAPEX requirements allows the costing tool to generate estimates of financing Unit capital costs and the lifespan of facilities were initially gaps (or surpluses). Recent and anticipated investments in drawn from a consultation with experts. Assumptions were the analysis represent the average annual expenditures of adjusted based on the opinions of stakeholders at the SDA government, development partners and users from 2009 validation workshop in Hanoi on April 2013. The unit cost of to 2011 and 2012 to 2014, respectively. Funds from de- drainage, wastewater treatment and collection in urban ar- velopment partners represent the investments/loans com- 44 JMP (2012c) 45 Hydroconseil and PEMconsult (2011) 46 In the validation workshop, stakeholders suggested a price of US$72 per person for shared pour-flush toilets. This was deemed too high given the unit cost of a private pour-flush toilet (US$75 per person) used in the analysis. Service Delivery Assessment 63 ing from the Agence Francaise de Developpement (AFD), The process of the collecting and compiling the information Australian Agency for International Development (AusAID), for capital expenditures encountered further difficulties and Department for International Development (DFID) of the is subject to the following issues/limitations. First, capital United Kingdom, Japan International Cooperation Agency expenditures of provinces and utilities were excluded in (JICA), World Bank, Finland, the Netherlands and Ministry the analysis. The reason for this omission is the absence of Foreign Affairs of Denmark (DANIDA). Information from of summary documents on the investments of these insti- the above development partners was drawn from project tutions. Collecting such information would therefore have documents and/or interviews with key staff. In the case of required visiting the numerous provinces for which time and the Netherlands and DANIDA, investment data were drawn resources are not available in this exercise. exclusively from AusAID et al. (2011)47 Second, there is also some uncertainty surrounding the Investments of government for rural water supply and sani- subsectoral data used in the analysis. In some instances, tation were obtained from the MARD48 and Government of information was only available for water supply and sanita- Vietnam.49 However, there was difficulty in obtaining esti- tion as a whole but not separately. Quite often, the data also mates of government investments for urban water supply do not make a clear distinction by location (rural or urban), and sanitation. Initial estimates were drawn the General annual disbursements for multi-year projects, actual expen- Statistics Office.50 On further inspection however, it was re- ditures and allocations, and nature (hardware and software). alized that it is not possible to disaggregate government In all these cases, the approach used in the analysis was to investments for urban water supply and sanitation between ask the concerned stakeholders for their best guess of how funds coming from donor agencies (which would be clas- the data might be suitably disaggregated. sified as coming from external sources in the analysis) and internal government funds. Information on expenditures Table A2.4 Public investments (million US$, annual from 2012 to 2014 was also not yet available during the average) preparation of this report. In the end, it was decided to use an approximation whereby government investments are as- Sector Government Donors Total sumed to be 20% of total investments in the sector.51 This Recent Investments (2009-2011) proportion is based on an ADB52 study which states that Rural water supply 24 15 39 80% of water supply and sanitation projects from 1993 to Urban water supply 18 43 61 2007 in Vietnam were financed by official development as- Rural sanitation 8 7 15 sistance. Urban sanitation 18 70 88 There is little evidence of capital spending for household Pit latrine with slab 89 24 86 rural sanitation and hygiene, except for some from Poverty Anticipated Investments (2012-2014) Health Action, but several partners provide software sup- Rural water supply 29 36 65 port or have been active in funding school latrines and hy- Urban water supply 43 100 143 gine education (not counted in SDA financing). These part- Rural sanitation 10 16 26 ners include CAWST, Child Fund, Helvetas, JICA, PLAN, Urban sanitation 41 164 205 SNV, UNICEF, and WHO. 47 AusAID et al (2011) 48 MARD (2011) 49 GOV (2012a) 50 General Statistics Office (2011) 51 In other words, it is one-fourth of the total investments for urban water supply and sanitation that comes from donors. 52 ADB (2009). 64 Water Supply and Sanitation in Vietnam Given the available information, estimates of anticipated subsidies of 75% for household water supply facilities and (2012-2014) and recent (2009-2011) CAPEX that come from 60% for sanitation facilities for the rural poor.54 In calculating government and development partners are shown in Table the user shares, rural poverty was assumed to be 17.4%.55 A2.4. To ensure comparability with the investment require- The user share for tap water is urban water supply was set ments, estimates of anticipated and recent CAPEX are lim- to zero in the analysis. This is based on Government Decree ited to hardware expenditures only. 117/2007/ND-CP, which states that costumers do not have to pay connection costs (i.e., water meter or connecting Table A2.4 indicates that government was the major source pipes) because these expenses will be accounted for in the of funding for the rural water supply and sanitation sec- water tariff. tors from 2009 to 2011. However, development partners are expected to be dominant from 2012 to 2014. The do- Table A2.5 Share of users in capital/development nor contributions that were counted in the analysis include costs, % those made by the World Bank, DFID, AFD (rural water sup- Option Rural Urban ply only), ADB, AusAID, DANIDA and The Netherlands. For Water reasons that were discussed earlier, investments of devel- opment partners were and are expected to be the major Tap water: piped into premises 10% 0% source of funds for the urban water supply and sanitation Tap water: public tap, standpipe 0% n.a sectors. Donor contributions represent projects supported by the World Bank, AFD, ADB, JICA, Finland and AusAID. Tubewell: borehole (drilled well) 87% n.a Protected (dug) well 87% n.a The planned spending of users is computed by specifying Protected spring (protected slot water) 0% n.a the share of investments that the authorities expect households to contribute. Table A2.5 shows the proportion Rain water 87% n.a of investments that households are expected to contribute. Sanitation User shares for tap water into premises, public taps and Drainage, wastewater treatment & collection n.a. 0% public flush toilets in rural areas were based on the informed judgment of the stakeholders who participated in the April Flush toilet: Private total 90% n.a 2013 workshop in Hanoi. For the remainder of rural facilities, Flush toilet: public/shared total 10% n.a user shares were specified by exploiting information on Improved pit latrines 90% n.a subsidies for the rural poor. 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