Wednesday, October 5, 2011

No. 89: Water business in Japan and the world (8) (October 5, 2011)

Japan’s first case that introduced PFI
Kawai Water Purification Plant in Yokohama is the first water purification plant that introduced PFI. Constructed in 1901, it is the oldest of the four water purification plants in Yokohama. The local government of Yokohama felt the necessity to renew the whole facilities because its aseismic capacity decreased considerably. It planned to introduce the membrane filtration system, but it had no delivery record of this system. It decided to introduce PFI for the renewal of the facilities to utilize the management capability and technology of a private company.

In the renewal project, the local government concluded a contract that the private company builds facilities including purification facilities and transfers the ownership to the local government and that the private company maintains the facilities and takes care of the sludge for its effective utilization for the next 20 years. This is a full package contract based on the Build-Transfer-Operate (BTO) system. In this case, the point is that which party, the local government or the private company, should bear the responsibility if water quality is impaired. In this project, the local government governs the entrance and exit of water, while the private company secures daily water production of about 170,000 tons after it receives raw water of turbidity of less than 30 degrees and maintains the water quality required by the local government.

The PFI helped the local government reduced the project cost including expenses for maintenance to 27,7 billion yen, about 6% lower than the cost that could have been required by the conventional method. In addition, under the direction of the private company, the water purification plant did not run pumps using the difference in height between the water source and the purification plant, and operated the facilities using the power by photovoltaic generation inside the premises. At present, this water purification plant attracts attention as a successful case of PFI. (To be continued)

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