Children at a kindergarten in Văn Yên District in Yên Bái Province wash their hands before a meal. — VNA/VNS Photo Việt Dũng

WASHINGTON — A new project that would manufacture 300,000 water purifiers to be distributed to approximately 8,000 schools and institutions in Việt Nam has been announced.

The project is expected to make clean water available to around two million children and to reduce greenhouse gas emissions by almost three million tonnes of carbon dioxide over five years, according to a release by the World Bank.

The bank priced a five-year US$50 million, principal protected Emission Reduction-Linked Bond that provides investors a return linked to the issuance of Verified Carbon Units (VCUs) expected to be produced by the project in Việt Nam.

Through the transaction, investors are supporting the up-front financing required to manufacture and distribute water purifiers for use in schools and other community service institutions across Việt Nam that will reduce the burning of biomass traditionally used in boiling water for safe consumption, said the release.

In addition to reducing greenhouse gas emissions, the purifiers help improve air quality, reduce associated health impacts, lower fuel costs and effort previously required to purify water, and help reduce deforestation.

“The Emission Reduction-Linked Bond comes at an important time in the global efforts to scale up low-carbon solutions in developing countries. With this pilot transaction we can demonstrate another path for capital market investors to support the financing and implementation of climate action,” said World Bank Group President David Malpass.

“Investors will directly benefit from the project’s success, as will the children in Việt Nam who will get access to clean drinking water as a result. This structure can be replicated and scaled to channel more private capital to development and climate activities,” he said.

Khmer people in Khánh An Commune, Cà Mau Province, have to use water from tanks or wells due to droughts and salinity. — VNA/VNS Photo Kim Há

The bond is 100 per cent principal protected with the $50 million proceeds used to support the World Bank’s sustainable development activities globally. The Việt Nam water purifier project is not a World Bank project.

Investors in the bond will forego ordinary coupon payments, with the equivalent amounts instead being provided, through a hedge transaction with Citi, to support the financing of the water purifier project managed by a private project developer. Instead of ordinary coupons, the investors will receive semi-annual coupon payments linked to the issuance of VCUs by the water purifier project on the Verra Registry, according to the release.

As of 2022, only 84.2 per cent of people in Việt Nam’s urban areas have access to clean water. That number is just 34.8 per cent in rural areas.

The country is in danger of missing the target of providing 93-95 per cent of people in rural areas, and at least 95 per cent in urban areas, access to clean water by 2025, according to experts. — VNS