State-owned construction firm Vinaconex has backed out of a deal to use pipes from a Chinese company to fix an unreliable water supply system in Hanoi amid concerns over the quality of the replacement.
Viwasupco, the water utility subsidiary of Vinaconex, said in a new statement that it has canceled the plan to buy ductile iron pipes from Xinxing Pipes International Development Company for its Song Da water pipe system, whose existing fiberglass pipes kept broken.
Xinxing was named the supplier for the project in March, beating out 20 other companies by setting its price at US$26.3 million, 12 percent less than the cost estimate.
But after that, the Bidding Assistance Center at the Ministry of Investment and Planning said Xinxing’s ductile iron pipes have received negative feedback from some customers in Vietnam and other countries as well.
Hanoi authorities thus asked Viwasupco to conduct further research and the request was supported by the central government.
It is unclear what Viwasupco has found about Xinxing's products and whether there is any penalty for calling off the deal.
Vinaconex will have to choose a new supplier for the pipe system.
The new water pipe line, which will cost a total of $53.7 million to build, will run 21 kilometers to provide tap water for nearly 200,000 families in Hanoi.
Local media counted that the current system, which cost $70 million, has broken 18 times since 2012, three years after the pipe was installed, although it was supposed to last at least 50 years. The latest rupture was last month.
Nine former executives from Vinaconex have been prosecuted as the ruptures affected around 70,000 families every time.