Divestment in Quawaco running behind schedule

February 17, 2020 | 11:44
The divestment of the 94.7 per cent state-owned capital in Quang Ninh Clean Water JSC (Quawaco) is running behind schedule as the company is struggling to complete defining its assets and conduct business valuation.
divestment in quawaco running behind schedule
The state divestment in Quawaco is running two years behind schedule

According to Dispatch No.263/TB-UBND dated December 30 last year, signed by Bui Van Thang, Deputy Chairman of Quang Ninh People’s Committee, Quawaco is still in the stages of defining its assets and valuating its business.

On February 22, 2017, Quang Ninh Department of Planning and Investment reported to the Ministry of Planning and Investment in Document No.350/KHDT-KTN on the list of state-owned companies to be divested in 2016-2020, including a full exit from Quawaco within 2017.

Quawaco was also listed among the enterprises to be divested in 2017 by Decision No.1232/QD-TTg of the prime minister. However, the divestment has been time and again delayed as the company has not managed to count its assets and has not changed the appraisal unit.

In fact, the divestment of state-owned enterprises in the water sector has been in the spotlight after a series of incidents in 2019. In a petition to the prime minister in May 2019, the Vietnam Water Supply and Sewerage Association expressed that it is necessary to maintain a proportion of state capital in equitised water supply enterprises to enhance responsibility and ensure state management in these enterprises.

Nguyen Van Thang, Chairman of Quang Ninh People's Committee,sent a letter to the government asking for the adjustment of the state divestment plan to retain 51 per cent in Quawaco. "This would help supervise the investment as well as ensure the quality of water resources to serve people, especially in disadvantaged areas,” Thang said.

The prime minister's Decision No.2502/QD-TTg dated December 22, 2016, prescribes the operation principles and development policies of the water sector, while the sector is no longer subject to state monopoly. Accordingly, water supply activities are under state control, in order to protect public health and social security, including supporting the provision of water for the poor and extremely difficult areas.

In the process of divesting capital in Quawaco, Quang Ninh has drafted the criteria for selecting investors, including the criteria that require investors to commit to developing the market in urban areas and industrial parks, mountainous areas, islands, and remote areas. And the price of water can only be adjusted, according to current regulations and is subject to approval by Quang Ninh People's Committee.

In terms of economic development, the state dominion will maintain the retail price or water reserved for industrial parks, economic zones, production and service enterprises at VND11,100 (48 US cent) per square metre, much lower than some other localities as well supporting businesses and investors to reduce production costs.

While the regulations on divestment have not been finalised, the divestment of state-owned capital in Quawaco needs to be reviewed and adjusted.

In the context of the clean water deficient, the water sector is also an attractive area for investors. Thailand-based WHA Utilities & Power Plc.’s (WHAUP) in early November officially acquired 34 per cent of Duong River Surface Water Plant, around the time when Song Da Water Investment JSC was caught up in a scandal over its polluted water supply.

The first phase of the factory treating the surface water of the Duong River invested by AquaOne Water JSC (Vietnam) was put into operation on September 5 last year, easing the thirst of Hanoi and neighbouring province's population.

By Le Duong

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