Vinaconex Water Supply Company (Viwasupco) has cancelled a pipeline contract with a Chinese company for the second phase of the Song Da water project.

The move followed the instructions of Prime Minister Nguyen Xuan Phuc after the Hanoi People's Committee proposed the government to instruct Viwasupco to halt signing the contract with China’s Xinxing Co. Ltd. to re-assess the entire project due to quality concerns.

Nguyen Van Ton, Director of Viwasupco, said that the implementation of the second phase of Song Da water project had been temporarily been halted to wait for the PM's decision.

Repairing the pipeline of the first phase of Song Da water project

Earlier, Xinxing Co. Ltd. won a VND588 billion (USD26.25 million) contract to supply ductile iron pipes for the 21-km pipeline of the Song Da water project with the bidding price 11.8% lower than the investor's asking price. Rival bids from China’s Hydrochina Corporation, French Saint-Gobain PAM and India’s Jsaw-Newtatco all failed.

However, the public has voiced concerns about the selection of a Chinese contractor with such a low bid, highlighting problems of the Song Da water project's first phase.

Since becoming operational since 2009, the first phase of the project with the water pipeline supply from a Chinese company has broken 17 times, causing an estimated loss of around 1.5 million cubic metres of water.

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.

The situation was blamed for the substandard quality of fibre composite used in the project and this has resulted in prosecution of nine Vinaconex executives for violating construction regulations.

The second phase of the project costing VND5 trillion (USD224 million), is intended for the supply of clean water to such urban areas as Son Tay, Hoa Lac, Xuan Mai, Mieu Mon, and Ha Dong in the capital city