Sanctions threatened on late public funding

April 13, 2022 | 16:00
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The Ministry of Planning and Investment has expressed its dismay of poorly disbursed and allocated public investments.
Sanctions threatened on late public funding
Sanctions threatened on late public funding - illustration photo

“We strictly criticised incapable contractors and investors of public investment projects as their implementation in the first quarter was too far from the plan set forth. Dozens of ministries, agencies, and localities have yet to finish their allocation of this year’s public investment plan or did nothing in the first three months,” Minister of Planning and Investment Nguyen Chi Dung explained last week, adding that the poor performance will negatively impact the performance of the country’s public investments for the whole year.

The two projects Dien Chau-Bai Vot and Vinh Hao-Phan Thiet within the North-South Expressway cluster were mentioned among the culprits.

“They should self-reflect to see their limitations and learn from experience to do better. We may consider applying stricter measures to these projects’ management agencies, for example, by not allocating investment capital for the next period or refusing contract compensation,” emphasised Dung at last week’s national conference on public investment, chaired by Prime Minister Pham Minh Chinh.

He urged ministries, agencies, and localities to remove obstacles related to land and natural resources, along with reviewing and transferring capital investment plans of slowly-disbursed projects to well-disbursed and those in need of capital.

“We should clarify the responsibility of every agency and individual in order to identify their violations related to the delay of public investment disbursement, which is wasting the state’s resources and slowing down the country’s economic recovery,” added Dung.

It is expected that the Ministry of Planning and Investment (MPI) will soon submit a proposal to the government to consider some sanctions against investors and contractors who fail to push public investment disbursement. This may also include a proposal on firing them.

According to the latest report by the Project Management Board No.6 sent to the Ministry of Transport (MoT), as of March, the contractors of the Dien Chau-Bai Vot Expressway project only disbursed $6.6 million, equivalent to 1.81 per cent of the total value and 21.1 per cent of the plan. Worse still, only 0.28 per cent of the contract value was realised last month.

Starting construction last May, the project only disbursed about $435,000 per month on average. With such slow construction, Dien Chau-Bai Vot Expressway was at the bottom of the 11 component projects under the eastern North-South Expressway in the 2017-2020 period.

“In March, the construction volume of the whole project reached 2.07 per cent of the contract value. The implementation of most component projects has met the plan so far, but there are still two projects behind schedule, which are Dien Chau-Bai Vot and Vinh Hao-Phan Thiet sections,” said Deputy Minister of Transport Le Dinh Tho.

Dien Chau-Bai Vot Expressway is a public-private partnership endeavour conducted by Hoa Hiep Co., Ltd., CIENCO4 Group JSC, Pink Mountain Investment Co., Ltd., Truong Son Construction Corporation, and VINA2 Investment and Construction JSC. It is also the largest component project with the total investment of $485 million, $221.7 million of which come from private capital.

However, the venture struggled for around a year to land loan contracts of about $177 million from commercial banks, according to Tran Huu Hai, acting director of Project Management Board No.6.

Deputy transport minister Tho reported to the prime minister at the conference, “With the existing slow progress in providing equipment, calling for human resources, and mobilising materials, it is very difficult to accomplish the project as scheduled. Due to the slow construction, the total public investment worth $77 million in the project has not been disbursed yet.”

Tho further emphasised, “If the involved investors and contractors fail to meet the requirements on quality and progress, we will consider blocking them from participate in medium-term public investment projects, including the North-South Expressway, in the 2021-2025 period.”

In addition to Dien Chau-Bai Vot, the 100-km long Vinh Hao-Phan Thiet section has been denounced for its poor performance and the ability of the related contractors, including CIENCO8, Vinaconex, and Vinaconex E&C. The project has so far disbursed around $80 million in its construction, roughly 30 per cent of the total, and almost 12 per cent less than planned.

According to Project Management Board No.7, the section’s delay was caused by contractors who were not able to provide sufficient materials, as well as a slow bidding process. The section is currently 76 per cent complete.

Dinh Cong Minh, director of Project Management Board No.7, said, “The management of contractors currently remains weak, and many of them are not authorised to operate construction teams or sub-contractors, while machines and equipment also cannot operate at maximum capacity.”

Besides this, the project lacks financing, which affects the mobilisation of supplies, materials, and fuel.

“If they don’t change their approach, the contractors will not be able to keep up with the schedule. If they continue violating the commitment, they will be fined 0.05 per cent of the contract value for each day of violation but less than 12 per cent of the contract value. The delayed projects will then be moved to another unit,” said Minh.

Public investment in 2022 has so far amounted to around $2.7 billion, equivalent to 11.88 per cent of the year’s plan, lower than that of the same period last year (13.17 per cent). Of this, 46 of 51 ministries and agencies and 27 localities reported disbursement rates lower than the average of 11.88 per cent, and 29 ministries and agencies of these did nothing.

In addition to public investment disbursement, the Ministry of Planning and Investment raised the issue of poor performance in the allocation of capital across the country. By the end of March, the total capital allocated reached $20.3 billion, making up 90 per cent of the total capital. However, unallocated capital still stands at almost $2.26 billion, caused by ministries, agencies, and localities with high remaining unallocated capital such as the Vietnam Cooperative Alliance, the Government Inspectorate, the Vietnam Women’s Union, and the central city of Danang.

By Minh Vu

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