Foreign contractors yet to get reward for completing road early

As of last week, the Ministry of Transport still has not authorised PMU Thang Long, the project investor, to disburse VND173.72 billion ($7.79 million) in reward to the two contractors, which is already a decrease from the amount promised in 2013 of VND180 billion ($8 million).

During the past three years the ministry has many a times asked for permission from the government and opinions from related government agencies, but the matter has not been resolved. Apparently, there is no precedent for this kind of reward in infrastructure construction yet, and related government agencies have yet to agree on how to calculate its amount.

The Ministry of Transport calculated that the value brought about by the early completion of the road is VND1.5 trillion ($67.3 million), including socioeconomic value and savings. According to the contract signed between PMU Thang Long and the contractors, in case of finishing earlier than scheduled, the contractor receives 1.12 per cent of the contract’s value for every 28 days, however, the total must not exceed 12 per cent of the value brought about by early completion. Therefore, the maximum reward in this case would be VND180 billion ($8 million).

The Ministry of Transport said that the reward is lawful and proposed the Ministry of Finance to disburse the money from the funds Vietnam borrowed from Japan International Cooperation Agency (JICA) to carry out this project. The Ministry of Finance agreed that the money should come from the borrowed JICA capital, but said that calculating the reward based on the socioeconomic benefits brought about by the early completion is not reasonable.

Phase 2 of the Ring Road III project in Hanoi aimed to build 8.91 kilometres of expressway. The total investment was VND5.55 trillion ($246.6 million), all borrowed from JICA. Construction started in June 2010 and was completed in 2013.

Samwhan-Cienco 4, finishing its allotted share 263 days earlier than agreed, was to receive VND77.7 billion ($3.5 million) in reward. Sumitomo, finishing its part of the project 454 days ahead of schedule, was to receive VND102 billion ($4.6 million) in reward. Sumitomo recently submitted a notice to PMU Thang Long asking for interest on the reward it was promised.