According to a press release by IFC, as agreed by all parties, the financing package may increase to US$24.9 million to support further growth of the company.
DNP Water aims to expand its portfolio of mainly urban water treatment and supply facilities in Vietnam, and is planning to increase its treatment and supply capacity by five times to one million cubic meters per day by 2025.
IFC’s investment will support the company’s growth by funding the construction of new bulk water treatment plants and the acquisition of equitised water supply companies. This will help improve access to clean water mostly in second- and third-tier cities in Vietnam.
IFC considers access to affordable and clean water a key development target and expects its investment to help encourage participation of the private sector in this area and in the growing equitised water sector in Vietnam, said Kyle Kelhofer, IFC Senior Country Manager for Vietnam, Cambodia and Lao PDR.
IFC’s financing will further accelerate the leveraging of the private sector for critical infrastructure, and champion the growth of local entrepreneurs, he added.
IFC has extensive experience supporting private sector investments in water and waste water worldwide. It made 55 investments totaling 2.2 billion USD, including mobilisation, in the last 10 years.
“We greatly appreciate IFC’s long-term funding in an important, but quickly changing sector,” said Vu Dinh Do, DNP Water Chairman.
“IFC’s extensive water sector expertise will further help us bring international best practices to the Vietnamese water sector and improve our sustainability standards,” he said.
Currently only about 35% of the Vietnamese population is connected to piped water. According to the World Bank’s estimates, the country needs investments worth US$1 billion per year to 2020 for urban water supply to meet its current and future growth demands. While the government is aware of this challenge, it faces fiscal constraints and has called for increased private funding for clean water and piped-water coverage expansion.