MoT conclusion: loose management and advance payments at ACV

ACV manages projects using the most state capital in the transport sector. Photo: Duc Thanh

The Ministry of Transport (MoT) has just completed the conclusions of its ten-month inspection on the mobilisation, management, and usage of capital in ACV. During the inspection all procedures of developing investment and construction projects were reduced since ACV’s establishment in 2012 through the merger of Northern, Central, and Southern Airports Corporation of Vietnam.

ACV manages projects using the greatest volume of state capital in the transport sector. Between 2012 and 2016, this corporation developed 85 projects which exceeded the VND15 billion ($0.66 million) of investment value each. The total investment of these projects was over VND42.14 trillion ($1.86 billion), including VND1.42 trillion ($62.6 million) from public capital, VND4.222 trillion ($186 million) from government bonds, VND12.443 trillion ($548.2 million) in ODA capital, and over VND24 trillion ($1.06 billion) from ACV’s counterpart fund.

In addition to reviewing the management of basic construction investment, the Inspectorate of MoT also highlighted ten projects and outlined particular conclusions for each. These are:

• International terminal T2 expansion;
• Repairing HCC 25R in Tan Son Nhat International Airport;
• Passenger terminal and airfield construction project in Tho Xuan Airport;
• Construction of the road to Phu Quoc International Airport;
• Passenger terminal project in Phu Quoc International Airport;
• Passenger terminal project in Vinh Airport;
• Some projects on purchasing and installation.

The 64-page inspection conclusion (No. 5045/KL-BGTVT) provides a list of shortcomings in the management of investment at airports developed by ACV. The first issue is the large number of projects that have been completed for a long time but have yet to finalise the balance sheet.

44 of the 85 projects with the total investment value of VND30.4 trillion ($1.34 billion) and total execution value of VND25.298 trillion ($1.11 billion), and total disbursement value of VND24.94 trillion ($1.1 billion).

Beside the normal reasons for slow settlement that every developer usually faces, some projects of ACV could not even complete basic construction procedures for a variety of unique reasons.

According to MoT’s Inspectorate, the firm was loose in paying in advance for building materials, so the advance payments exceeded the contractual value.

Also, the Inspectorate has mentioned another issue occurring at least three times in ACV’s investment management. Accordingly, ACV is a joint stock company, but state-owned capital captures 95.4 per cent of its charter capital. This means ACV’s investment capital is mainly state capital.

The Inspectorate said that ACV is an investment decision maker, the developer, and the recipient of the projects. Thus may not be completely objective throughout the management of construction investment.