Nghe An Water Supply Company annually repays ODA capital debt of over 50 billion VND.
(Baonghean) - After transforming into a joint stock company, despite implementing many solutions and paying nearly 8 billion VND in state taxes each year, due to many difficulties, Nghe An Water Supply Company Limited is still losing money.
Nghe An Water Supply Company Limited was established on the basis of converting the ownership form from Nghe An Water Supply Company to Nghe An Water Supply Company Limited according to Decision No. 315/QD-UBND-DMDN dated January 20, 2006 of Nghe An Provincial People's Committee. The company has 5 branches: Water Supply Service Branch No. 1, Water Supply Service Branch No. 2, No. 3, No. 4, No. 5); 4 Water Supply Enterprises (Motorcycle Repair Construction Enterprise, Vinh City Suburbs Enterprise, Western Urban Enterprises, Water Construction and Installation Enterprise); 1 Hung Vinh Water Plant; 1 Hung Nguyen Clean Water Supply Center.
After equitization, the company focused on improving water quality and reducing losses. From January 2017 to present, the company has expanded its service scope, connecting 4,980 households in the service area. Water consumption in 2017 reached 22,989,969 m3, up 4.6% over the same period in 2016; Sales revenue and service provision 189,827,881,919 VND, up 3.1% over the same period in 2016.
However, many factors have caused difficulties in production activities, especially the previous ODA investment loan. The financial report of Nghe An Water Supply Joint Stock Company in 2017 shows: Production and business activities are normal, customers have increased, depreciation value is at the lowest level but still losing nearly 1 billion VND/year.
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| Operating the water supply system of Do Luong town. Photo: Hoang Vinh |
Mr. Hoang Minh Quan - Head of Price and Public Asset Management Department of the Department of Finance said: "The difficulty for enterprises in general and Nghe An Water Supply Company Limited is that the minimum wage increases every year while enterprises employ a lot of labor. The repayment of ODA investment loans for Cau Bach Water Plant is too high, each year around 50 billion VND. The current price of raw water is too high, each year the cost of raw water accounts for more than 50 billion VND in the cost price. Previously, we expected that taking water from Lam River would reduce chemical treatment, however, Lam River water is turbid in the rainy season, requiring more treatment."
It is known that the current cost of repaying ODA loans for Cau Bach Water Plant in 2017 is 40,833,007,484 VND. In addition, due to the lack of counterpart capital from Nghe An for the project, the company is having to pay the province tens of billions of VND.
Another difficulty is the high cost of purchasing raw water. The cost of raw water in 2015 was only 8.19 billion VND, in 2016 it was up to 39.87 billion VND and by 2017 it had to be spent 56.23 billion VND. Currently, almost all water supply companies nationwide use raw water from irrigation companies, with a maximum fee of 900 VND/m3clean water (according to Decree 67/2012/ND-CP and Decree 143/2003/ND-CP), therefore the clean water price of these companies will be lower than Nghe An Water Supply Joint Stock Company by at least 2,000 VND/m3.
Meanwhile, on January 28, 2015, Nghe An Provincial People's Committee issued a written commitment to Song Lam Water Supply Company Limited on the roadmap for increasing raw water prices (increasing raw water prices once every 2 years, each time increasing by 12%), which caused even more difficulties for the company.
In addition, the water loss rate is still high. The current water loss rate is 27% (broken pipes, stolen water, digging outside the meter, the meter not working...), however, the water loss at Nghe An Water Supply Company is up to 34%. The water supply pipeline system is mostly a patchwork of new and old pipes, many of which have seriously degraded.
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| Sedimentation tank system at Cau Bach water plant. Photo: Hoang Hao |
The company has strictly implemented internal inspection, self-inspection, and water quality monitoring; Ensuring the quality of water supply meets the requirements of the National Technical Regulation on drinking water quality QCVN01:2009. Periodically inspecting the water quality of the Center for Preventive Medicine - Department of Health, all indicators are good; Periodic inspection, maintenance, and replacement of meters, in 2017, 2,812 meters were carried out...
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| The Company's backup water pumping station in Cau Muoi. Photo: Hoang Hao |
All production and business activities, the company promptly publicizes and announces the results of production and business activities through 3 main channels: Company homepage: http://nawasco.com.vn; IDS information disclosure system of the State Securities Commission: http://ids.ssc.gov.vn; CIMS information disclosure system of the Hanoi Stock Exchange: http://cims.hnx.vn.
Mr. Nguyen Duy Truong - Deputy Director in charge of business of the company said: In the coming time, to improve the quality of clean water, reduce the loss rate and meet the huge demand for clean water of people in many localities, the Company is gradually renovating the pipeline network system, replacing it with new material water supply pipes, HDPE, striving to complete in 2020.
Discussing the solution to reduce the cost of clean water prices, Mr. Hoang Minh Quan - Head of Price and Public Asset Management Department of the Department of Finance said: Regarding raw water, we also see that from June to November every year, businesses can take water from the Dao River because at present the Lam River water is turbid. From November to May, they should take water from the Lam River to reduce water treatment costs and reduce raw material costs. Regarding labor, if businesses do not make a profit, they must continue to streamline and rearrange, each person working as two, strengthening management and improving water quality, serving customers better and better.
