Darco Water Technologies of Singapore, and InfraCo Asia Development are to partner on a design, build, own, operate (DBOO) project covering four municipal water treatment plants in Vietnam.
The two companies were brought together by International Enterprise (IE) Singapore, a government agency that promotes Singapore companies in trading and collaborating overseas. InfraCo Asia, backed by the Private Infrastructure Development Group, is to provide funding, leadership and experience in DBOO deal structuring, and has supported Darco in conducting feasibility studies.
The plants will take feedwater from rivers and treat it to potable standards, with capacity of 62,000 m3/d across all four of them.
The first facility, a 15,000 m3/d plant in Ben Tre province, begins construction in Q4 2017, and will provide water to industry and domestic customers. One of the plants in southern Vietnam is subject to a feasibility study to establish whether the treatment required is for brackish water, because seawater has started to mix with the river.
The project is Darco’s first DBOO in Vietnam, and is the first step in its overseas growth strategy, which envisages more asset ownership. Darco generated $60 million in revenue in 2016, mainly specialising in engineering, procurement, and construction in industrial water treatment. The move towards asset ownership is expected to enable the company to generate recurring revenue, to improve cashflow, and to take on bigger projects overseas.
“The EPC scene is becoming more competitive, and it is important for us to move ahead in the value chain, in order to extend our foothold in the water purification sector. By building up on DBOO projects, the strong recurring revenue will enable us to grow more significantly. IE Singapore and InfraCo Asia both played important roles in helping us to clinch our first DBOO project through their expertise. Through these small scale, decentralised projects, we can amass experience to scale up for bigger municipal projects in Vietnam and Southeast Asia,” said Darco chief executive Thye Kim Meng.
On the other side, the partnership with Darco is part of InfraCo Asia’s mandate to develop sustainable, commercially viable projects with social impact. “This marks our first foray into the water sector and is an important part of our infrastructure development strategy in Vietnam. The project will support social and economic development in the four municipal towns by providing potable water solutions for the communities. Our support in developing these projects to world class standards will set the stage for achieving financial close through private sector investments. Attracting private sector investment is a key focus for every project we undertake, and we look forward to working with Darco to execute and implement the projects,” said InfraCo Asia chief executive Allard Nooy.