Contractors who build water-supply projects would receive financial and policy support from Hanoi People's Committee, said Dao Duy Tam, Deputy Director of Hanoi's Agriculture and Rural Development Department.

"The city's government will fund 45 to 90 percent of the estimated cost of building clean water plants," he said.

The amount of funding will increase if the plants are built in mountainous and ethnic minority areas. Other plants in hill and midland areas will receive less, and those in delta regions and towns will receive the least. The graded funding is meant to encourage development in rural areas which are in need of water systems.

According to the new policy, contractors would only receive the rebate when they finish construction of plants, Tam said.

However, he suggested that the funds would be better distributed in an incremental fashion, based upon the progress of construction and financial reports issued by contractors.

Contractors should also be able to receive loans from preferential credit funds, the city's development and investment funds and international organisations, he added.

Tam added that previously there were almost no land policies for the construction of clean water plants. The lack of official guidance about appropriate construction procedures often forced constructors to abandon projects.

Many commune authorities and local residents also showed little interest in clean water projects and many contractors lacked sufficient capital to carry them out.

The chairman of Ba Vi's People's Committee, Duong Trung Lien, told Vietnam News that a planned project had not been carried out in his commune because the contractor lacked capital.

Projects also received little interest from locals in Thach That district's Tien Xuan commune. The commune's chairman, Bui Van Tinh, told Vietnam News that residents were happy with well water since it was safe, hygienic and free.

So far, city authorities have approved construction of six clean water projects and distribution of 40,000 water filters to supply water to 340,000 rural residents, the Deputy Director of Agriculture and Rural Development Department said.

However, to date, city authorities have only completed installation of 10,000 filters for 45,000 residents in Phu Xuyen, Ung Hoa, Thanh Oai and Thuong Tin districts, he said.-VNA