Case Study on the Performance-Based Contract in Ho Chi Minh City
An NRW-PBC brought in a private firm to help HCMC save 122MLD of water. Reliability of supply improved, and new customers were connected to the network.
Performance-based incentives are effective, particularly when they are linked to water saved.
NRW-PBCs can achieve better and faster results than traditional contracts for leakage reduction.
In 2005, Vietnam’s largest city, Ho Chi Minh City (HCMC), did not have enough water supply to meet demand. More than 40 percent of the water produced was lost as leakage. Supply was intermittent. To increase supply to customers, the state-owned water utility, Saigon Water Corporation (SAWACO), competitively procured a contractor to enter a performance-based contract (PBC) for non-revenue water (NRW) reduction, with a focus on leakage reduction in one of its six hydraulic zones. In a different zone, SAWACO implemented a traditional approach for leakage reduction, with remuneration based on inputs instead of outputs. SAWACO chose to implement both approaches at the same time to learn the strengths and weaknesses of each approach.
