Water plant worth nearly 320 billion VND is "thirsty" for output

Thousands of households in the area still lack water for daily use in the dry season, while the investing company is on the brink of bankruptcy. Behind this paradox is the story of a water purchase contract, which has now become the center of controversy and consequences.

In 2017, the Dak Lak Provincial People's Committee issued Decision No. 491/QD-UBND, approving the policy for Buon Ma Thuot Water Supply Company Limited (abbreviated as Buon Ma Thuot Water Supply Company) to invest in the Cu Kuin inter-commune water supply project, combined with supplementing domestic water sources for Buon Ma Thuot City. The project is built in Ea Bhok and Dray Bhang communes (Cu Kuin district) with a capacity of 20,000 m³/day and night. The total investment capital is nearly 320 billion VND, of which 220 billion VND is borrowed by the company from the bank.

On April 24, 2018, Buon Ma Thuot Water Supply Company signed Contract No. 12/HD-DAKWACO with Dak Lak Water Supply and Construction Investment Company Limited (now Dak Lak Water Supply Joint Stock Company - DAKWACO). Accordingly, DAKWACO committed to purchasing a minimum of 15,000 m³ of water per day and night at a provisional price of VND 7,800/m³, lasting until 2043. The contract also clearly stated that any change in the business model would not affect the validity of the commitment.

Buon Ma Thuot Water Supply Company is having to operate the plant at a low level.

However, when the plant was completed and put into operation in 2019, after a few months of experimental water purchases, DAKWACO suddenly reduced the purchase output to only 3.2% of the contracted capacity and stopped completely by 2025.

Mr. Le Quoc Nam, CEO of Buon Ma Thuot Water Supply Company, shared: “We invested nearly 320 billion VND, of which 80% was to build a water pipeline to Buon Ma Thuot City. Now the factory is only operating at a low level, retailing in Cu Kuin district about 3,200 m³/day (only reaching 16% of the design capacity). Meanwhile, each month the unit has to shoulder 2.5 billion VND in bank interest and operating costs. From 2019 to now, the company has accumulated losses of over 284 billion VND, lost all equity and is on the brink of bankruptcy.”

According to Mr. Nam, the company proposed many times to sell water back to DAKWACO at only 5,379 VND/m3 (less than 1/3 of the market price), but was not approved. The company even requested the departments and branches to advise the Provincial People's Committee on the policy of zoning water supply, so that the company could retail water to some areas in Buon Ma Thuot City at a price of just over 10,000 VND/m3, but was also rejected.

On DAKWACO’s side, Mr. Nguyen Cong Dinh, Deputy General Director, said that the discontinuation of Contract No. 12/HD-DAKWACO was a consequence of the equitization process. Specifically, when determining the asset value to convert to a joint stock company, the Steering Committee for Equitization of Dak Lak Water Supply and Construction Investment Company Limited did not include this contract in the inventory. Therefore, DAKWACO is not bound by the previously signed contract.

On the other hand, in 2017, the Provincial People's Committee committed to the Asian Development Bank (ADB) to lend Dak Lak Water Supply and Construction Investment Company Limited 24 million USD to build 4 water supply projects. Including the Serepok River Surface Water Exploitation Project (located in Ea Na Commune, Krong Ana District) with a designed capacity of 35,000 m3/day and night to supply Buon Ma Thuot City. Although only 50% of the capacity has been exploited, it is enough to meet the demand, without needing to buy more from outside. If we continue to buy from outside, the cost will increase, affecting the company's financial balance target.

Discussing this issue, Lawyer Le Xuan Anh Phu, Thanh Cong and Associates Law Firm (Dak Lak Province Bar Association) said that if the contract is signed by the right authority, has a specific term, and does not have any provisions that are invalid after equitization, then in terms of legal principles, DAKWACO, despite having converted its business model, must still inherit and fully perform its obligations, unless there is an adjustment, liquidation or agreement to terminate the contract. Unilaterally terminating the contract without the consent or judgment of a competent authority is a sign of a serious violation.

However, the question is why the Steering Committee for Equitization did not completely handle the valid contracts before converting the enterprise model? This shortcoming not only caused the investing enterprise to fall into crisis, but also caused long-term consequences for the confidence of other investors. Behind this incident is not only a business on the brink of bankruptcy, a project with an investment of nearly 320 billion VND at risk of being "shelved", but also a great lesson on how to manage, supervise and transfer public-private partnership projects.

To salvage the situation, the competent authorities need to quickly intervene and review all documents, contracts, and legal responsibilities between the parties. A timely and correct decision will not only save a business that is about to “close down”, but also help restore the reputation of the local government, affirming its commitment to protecting the rights of genuine investors.

Source: https://baodaklak.vn/kinh-te/202504/nha-may-nuoc-gan-320-ty-dong-khat-dau-ra-b251bf5/