ANÁLISIS DE LOS FACTORES DE PELIGROSIDAD

Alternative for sewage charge collection will be calculated according to price structure for sewage service. Accordingly, the determination of sewage charge is aimed to: recover cost for operation management of the sewage system and there will have a part devoted to construction, major repair of works on the system. The calculation alternative for sewage charge is presented below.

Calculation of fixed assets depreciation for sewage works.

According to Decision No.206/2003/QD-BTC stating that all fixed assets including fixed assets invested by the State shall be calculated and depreciation shall be calculated on business expenses. Calculated depreciation shall be used for the upgrade and major repairs for work over the life cycle of the project.

Also in accordance with this Decision, the calculation time for depreciation of all different fixed assets has relative long variation, accordingly:

Plant and equipment: 5-12 year Storage tank, yard and road: 5-20 year

Reinforced housing: 25-50 year

Pipeline, channel: 6-30 year

Therefore, the shorter the depreciation period, the higher the price but it also depend on the actual quality of the work to calculate the depreciation time appropriately. On the other hand, the depreciation period depends on the life cycle of the project. In theory, the project's life cycle is assumed to be shorter than the actual one with aim to calculate factors of finance, material cost, and depreciation according to the most adverse circumstance. Besides, for ODA funded project by the World Bank, the World Bank has guidelines to calculate by of the project life cycle of 20 years.

Therefore with this project, 03 kinds of fixed assets are divided and depreciation time is calculated as follows:

Construction works (housing, dispatching part covering the work, work items relating to construction etc.)

20 years

Work items relating to pipeline, channel etc 20 years

Therefore, the depreciation is mandatory and must be calculated into the cost of wastewater treatment. However, when calculating depreciation in the cost, the cost of the wastewater treatment will be higher, but in reality, the projects of sewage and wastewater treatment system in Vietnam are not currently profitable and popular. Therefore, people haven’t had a habit of paying sewage charge as calculated cost of the project. Normally payable sewage charge in fact is much lower than theoretical calculations. For example, every year Hanoi has to cover losses of about 20-40% of the total cost of sewage system operation management because sewage charge collection is lower than calculation.

Thus, the calculation of depreciation into sewage cost is mandatory. The question is, for the environmental sanitary sewage project in Vietnam, what is appropriate depreciation rate? which can ensure the project will be effective in both economic and financial aspect and the project owner has annual the repair and maintenance of the system but also ensure suitability for the difficult and poor economic conditions of the locality having project.

For this project, we will provide the different depreciation rate and proposal for the rate of depreciation of 40% as the option. This is a reasonable rate for a particular urban like Ho Chi Minh City, but this rate also ensure that the project will get profit and economical and financial effectiveness. The other rates will also be calculated and the comparison will be presented in sensitivity analysis Section.

If the depreciation rate is higher, the sewage charge will be more. However, the depreciation rate must be large enough so that the project has financial productivity. Therefore, for this project, the depreciation rate of 40% will be correspondent with a relatively high level of sewage charge (average sewage charge is 6000 dong/1m3). As a result, assistance from the Government of Vietnam and state budget for the production activity of the work is very important and consistent with the actual situation of the current sewage charge collection in Vietnam.

The cost of operation and maintenance of sewage and wastewater collection system.

The determination of sewage and collection charge will affect the projected sewage charge. Specifically in Table 4 (in Appendix).

In the table above, we plan to calculate depreciation only with one certain rate. We know that depreciation is mandatory to be calculated in the cost forming price. The question is what rate for depreciation. Because depreciation is calculated with rate of 100% of depreciation value, the price of sewage and waste water collection will be very high. And if the cost is high, sewage charge must be high too to ensure profit for the project. Therefore, in this project we calculate the depreciation rate of 25%.

4.5.3. Determination of sewage charge Price structure for sewage service:

Based on price factors of waste water production, maintenance and operation. Based on common principle determining sewage charge mentioned above.

Based on Circular no. 17/2005/TT-BXD dated 1November, 2005 of the Ministry of Construction guiding methods of preparation and management of estimated price of urban welfare service.

Sewage service structure is described in the table as below: Chemical, power, additional

material

Direct cost for operation- maintenance and waste water treatment

Direct cost Sewage charge Operation and maintenance

Production tools Construction material

Direct cost of operation- maintenance of the network Operation and maintenance

salary

Motorbike, production tools Management and assistant cost

Management cost

Insurance, shift meal and other costs

Net profit _{Profit before}

tax Enterprise income tax

Depreciation

Determination of sewage charge:

The above table shows drainage, sewerage charge should not only ensure the cost of management and operation but also satisfy the guaranteed profits, tax payment and depreciation calculation. The cost of operation and maintenance, calculation method of depreciation and depreciation rates have been presented in the sections above. The problem of tax and profit calculated in sewage charge is defined as follows:

Sewage charge was calculated at 2012 and started in production and operation of the system.

Charge for domestic waste water, small scale production, public and service should be calculated by % rate of average sewage charge.

The sewage charge calculated below is average sewage charge to be applied for every discharging objects.

As stipulated in the Circular no. 17/2005/TT-BXD dated 01 November, 2005 of the Ministry of Construction, the norm interest rate is chosen by 10% of direct production and general administration cost.

As stipulated in the Decree no. 35/2002/ND-CP dated 03/29/2002 of the Government on sectors benefited with investment preferential (subject to List A), income tax for special services such as sewage and wastewater treatment system is taken by 20% of profit before tax.

From the basis above, sewage charge is proposed as the table below:

No Description Unit Amount

I Direct cost

- Power cost VND/m3 99,48

- Chemical cost VND/m3

- Labor cost VND/m3 165,8

- Maintenance and small repair cost VND/m3 605,74

Subtotal I 871,02

II Management cost

No Description Unit Amount

Total II 109,42

III Depreciation of fixed assets

-

Total depreciation amount of fixed assets (at the

first year calculated with depreciation) _VND/m3

12114,97

- Depreciation rate to be proposed % 0,53

-

Depreciation amount calculated in the price of

waste water production _VND/m3

4845,98

Subtotal III 4845,98

IV Norm interest and Enterprise income tax 0

- Norm interest = 10%*(I+II) – profit before tax VND/m3 98,04 - Enterprise income tax (20%* norm interest) VND/m3 19,61

Subtotal IV 117,65

Proposed sewage charge (round up) VND/m3 6000

Therefore, average sewage charge at the moment of 2013-starting year of the project is 6000 VND/1m3. This charge will totally satisfy the cost of operation, maintenance, profit, tax payment and a part of the depreciation to be deducted for the re-investment and major repair of facilities on the sewage system.

The table is for defining average sewage charge, however in the project area there are many different discharging objects, the determination of particular sewage charge for each discharging subject is very important especially for domestic waste water discharging object (accounting for the largest proportion), and the basis for determining sewage charge for each discharging object is as follows:

The determination of sewage charge for each discharging object is aimed to collect sewage charge easily during the operation.

K coefficient is determined based rate between average selling price of clean water and clean water selling price of each different using object.

Sewage charge is calculated at the moment when the work is started being put into use in 2012.

% rate of waste water discharging object is taken by % rate of clean water using object.

No Waste water discharging object

K coefficient compared with

average sewage charge % rate

1 Domestic 0.76 65.00

2 Administrative agencies 1.30 5.00

3 Trade and service 1.50 20.00

4 Small scale production 1.40 10.00

Total 100.00

Thus sewage charge for domestic waste water discharging object is the lowest with only 3,900 VNĐ/1 m3 of waste water at the time of 2013

The identification of sewage charge increase schedule is aimed to forecast sewage charge expected in the next year in order to calculate the financial and economic model accurately, and make predictions for project owners as well as discharging objects of sewage charge to be paid in the following years.

As mentioned above, sewage charge is a new issue in Vietnam, especially when the sewage charge is rather high (for this project). Therefore, assistance from the Government and the state budget for the maintenance and operation of the sewage system is every important. With depreciation rate of only 40%, but the result shows relatively high sewage charge (4500 dong/1m3). Therefore in the early years of production, it should have support from the state budget and need to gradually increase sewage charge following a certain schedule.

Schedule for sewage charge is planned to increase once a year, this is only the plan of the Consultant, in fact sewage charge will be decided to increase depending on the project owners, management agencies of and actual sewage works and actual conditions during the operation as well as the actual economic conditions of the people in the project area.

CHAPTER V. MANAGEMENT OF PERFORMANCE AND OPERATION OF THE