Development costs soar

The state audit report has revealed a rise in costs for development projects due to investors’ infractions
Photo: Phung Cuong

The Nghi Son 1 thermal power plant in the central province of Thanh Hoa had a total exceeded investment capital of VND3.39 trillion ($159.15 million) as of June 2014, but its investor, state-run Electricity of Vietnam failed to submit a proposal for added capital to the Ministry of Industry and Trade. Many other projects have had their scale and investment capital increased against the initial approved amount. For example, the investment capital of Hanoi’s project to build a road connecting its My Duc district and Ha Nam’s Tam Chuc-Kha Phong tourism area rose by $5.26 million, up 3.8 times against the initial-approved sum. Also, the northern mountainous province of Lao Cai saw 30 projects bump up their capital by an additional $9.56 million.

While these violations by individual enterprises were by no means dealing with small amounts, the added capital for large-scale infrastructure projects was truly colossal. For the Hanoi-Haiphong expressway, added capital reached $943.6 million, while for the Nghi Son 1 thermal power plant it was nearly $493 million, it was $476.5 million for the Hanoi-Lao Cai expressway, and over VND6 trillion ($281.7 million) for the Nhat Tan bridge in Hanoi. Many other projects also had their capital raised far higher than initially approved.

According to the State Audit of Vietnam (SAV), scores of projects have been approved without capital resources in the provinces of Ha Tinh, Quang Tri, Quang Nam, Long An, Soc Trang, Cao Bang, Thanh Hoa and Binh Thuan.

Many projects have also been implemented even though they were not listed in the government’s investment portfolios and suitable to localities. These projects went ahead in the provinces of Thanh Hoa, Tra Vinh, Vinh Phuc, and Dak Lak.

The ministries of Transport, and Culture, Sports and Tourism were found to have been remiss in ensuring the design quality of many projects, while many others gave false estimates of their investment capital, like the Hanoi-Lao Cai expressway project, and the project to expand the National Highway No.1 running through the Mekong Delta province of Tien Giang and Can Tho city.

The SAV also revealed that a whole host of projects violated bidding regulations. These projects were invested by Ho Chi Minh City, and Ha Nam, Thanh Hoa, Ha Tinh, Quang Tri, Binh Thuan, Tay Ninh, and Long An provinces. They were also invested in by some ministries including Transport, and Natural Resources and Environment.

For example, at Nghi Son 1 thermal power plant, the bidding appointment process for consultancy on doors and channels for intake and outflow of cooling water was conducted in contravention of regulation specifications. The selection of contractors for many projects was also delayed unreasonably. For example in the Hanoi-Lao Cai expressway project (23 months), the project to build new headquarters for the Ministry of Foreign Affairs (five months), and the Nhat Tan bridge (28 months).

“Many localities and ministries are wasting state assets and are displaying little to no financial discipline, which is especially unhelpful when the national economy is in difficulty,” said SAV chief Nguyen Huu Van. “I recommend that solutions be found to solve this issue urgently, otherwise public confidence in ministries and state agencies will decrease.”