Vietnam ends contract with Chinese contractors who unilaterally quit power project

A joint venture between Hydrochina Huadong Engineering Corporation and China Railway Construction Co Ltd broke ground on the VND5.74 trillion ($270.36 million) Thuong Kon Tum project in 2009, but asked to end the contract in May when all construction units of the project were behind schedule.

The contractors even abandoned construction in spite of beingrepeatedly reprimanded by the project operator, Vinh Son Song Hinh Hydropower JSC (VSH).

The Vietnamese company said it had “rescinded the contract with the Chinese side.”

VSH attributed the contract cancelation to the tardy construction progress and the failure to meet commitments of the two Chinese firms.

Previously the contractors asked for unreasonable conditions when developing the project, one of the largest hydropower plants in the Central Highlands province of Kon Tum.

The Chinese venture won a tender for building the penstock, which regulates the water flow, of the project at VND1.61 trillion ($75.78 million), only 44 percent of the prices bid by other contractors.

However, during construction, the contractors repeatedly demanded additional expenses worth up to VND800 billion ($37.65 million), which the Vietnamese investor rejected.

As their clamor for money was unheard, the Chinese firms ceased construction and announced that it would end the contract for “inevitable reasons” in a document sent to the Vietnamese side on May 25.

The companies have since withdrawn their workforce and machinery back to China, leaving the construction site an abandoned zone.

It is not uncommon for Chinese contractors to join tenders offered by Vietnam at dirt cheap prices to win contracts. Once construction starts, the Chinese firms will gradually ask for out-of-contract additional costs to make up for the low bidding prices.