Key maritime projects stuck in the mud without public funds

Checking work progress at the Phan Thiet channel dredging project, one of the five urgent maritime projects

During .2014-2016, the Vietnam Maritime Administration (VMA), under the management of the Ministry of Transport (MoT), had performed effective measures leading to a sharp rise in the number of vessels and goods passing through local ports.

This resulted in marine safety fees collected annually during the period consistently exceeding projections. During this three-year period, marine safety fee collections exceeded the projection by VND746.7 billion ($32.5 million), including VND420 billion ($18.26 million) in 2016 alone.

Based on the VMA’s proposal, in late 2016 the MoT asked the government for permission to use this excessive sum to implement several urgent maritime investment projects, particularly on infrastructure development, material base, and equipment procurement to ensure marine safety.

In December 2017 the government provided in-principle approval for the MoT to use this excessive sum to invest in five urgent projects.

The projects cover dredging Phan Thiet marine channel in the southern province of Binh Thuan; building a brand-new specialised rescue ship for offshore activities; establishing the Cospas Sarsat new-generation satellite tower; building several marine channels and stations; and erecting beacon works.

However, up to the end of 2020, of the five projects, only the one on dredging Phan Thiet marine channel was completed, the four others remained in the investment preparation stage.

That explained why, in the auditing report 146/KTNN-TH dated July 17, 2020 on the MoT's use and management of public finance and public assets in 2019, the State Audit of Vietnam (SAV) ordered the repayment of the VND746.7 billion ($32.5 million) to the state coffers, following regulations in the Law on Fees and Charges 2015.

However, in a recent dispatch to the MoT, the VMA requested the MoT to seek permission from the SAV to hold back VND26.83 billion ($1.17 million) of the sum to clear unsettled payments at the Phan Thiet marine channel dredging project which has been completed, as well as pay for implemented work items and consultants who work on the investment preparation stage of four other projects.

The remaining VND721 billion ($31.35 million) shall be contributed to the state coffers in compliance with SAV's decision.

At the channel dredging project, the unpaid amount to contractor and technical design units reportedly amounted to around VND25.9 billion ($1.13 million), not including some provisional fees.

In the dispatch, signed by VMA chief Nguyen Xuan Sang, the body also asked the MoT to soon submit proposals to relevant authorised agencies asking for capital allocation from the medium-term public investment budget for 2021-2025 to fund these four urgent projects, getting them off the drawing board to be attuned with the prime minister instruction.

The VMA has attributed the late enactment of relevant guiding documents on the use and allocation of the excessive sum as the main reason why they failed in completing the urgent projects sooner.

In fact, the Ministry of Planning and Investment enacted a document guiding the MoT on the use and allocation of the sum in May 2020 after the Law on Public Investment version 2019 came into force (January 1, 2020).