Hanoi water pipeline project cancels contract with Chinese company over quality dispute - VnExpress International

Hanoi water pipeline project cancels contract with Chinese company over quality dispute

By Bach Duong, An Hong   April 28, 2016 | 11:57 am GMT+7

The developer of the Da River water pipeline project has officially cancelled a contract with a Chinese supplier of ductile iron pipes, said the project's main investor the Vinaconex Water Supply Company (Viwasupco).

Amid public concerns over the quality of the water pipes supplied by the Chinese contractor, the Xingxing Corporation, the Hanoi People’s Committee asked Prime Minister Nguyen Xuan Phuc to intervene in the second phase of the project. The Prime Minster agreed with the request, directing Viwasupco to delay signing a contract with Xingxing.

Viwasupco has hired legal advisors to assess the possible consequences of cancelling the contract.

As the main investor of the second phase of the Da River water pipeline project, Viwasupco collected bids between August 2015 and March 2016 from potential suppliers of ductile iron piping and finally chose Xingxing for its “global reputation as a manufacturer of large pipes with 20 years of experience and for offering a bidding price 11.8 percent lower than the approved price".

In the latest development, Viwasupco has removed project manager Bui Minh Truong from his position without giving any specific reasons.

Singapore's Acuatico, which has been a strategic shareholder in Viwasupco for the past six years,  has decided to divest its 43.6 percent stake amid public doubts about the credibility of the Chinese water pipe supplier.

hanoi-water-pipeline-project-cancels-contract-with-chinese-company-over-quality-dispute

Workers fix a broken water pipe from the first phase of the Da River project. Photo by Ba Do

Upon completion, the Da River water pipeline project will bring water to about 200,000 households living in various residential areas in Hanoi. The project was launched in 2004 and divided into two phases. The first phase of the project went into operation seven years ago.

Local people are concerned about the quality of the project as well as the selection of a Chinese contractor because since the first phase was completed in 2009, the water pipes supplied by another Chinese contractor have broken 17 times, causing an estimated loss of around 1.5 million cubic meters of water.

Due to these problems, around 70,000 residential households living in six of the city's inner districts have repeatedly suffered severe clean water shortages.

The numerous ruptures along the pipeline have not only disrupted water supplies to hundreds of thousands of residents, but also cost suppliers more than VND1 trillion in expenses to maintain water supplies to the city and in repair costs.

An investigation concluded that the reason behind the problem was the substandard quality of fibre composite used in the project.

The incident led to the prosecution of nine Vinaconex executives for violating construction regulations.

The second phase of the project, costing VND5 trillion ($224 million), is expected to double the total water supply to 600,000 cubic meters per day.