Transport contractors get squeezed

November 17, 2012 | 10:23
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Pressure is mounting on transport project developers and contractors to fulfill the strict conditions of their 2012 capital disbursement targets.

Ministry of Transport (MoT) figures show that by the end of September 2012 about  a 4.653 trillion ($221 million) of state budget capital allocated to construction firms in early 2012 had yet to be disbursed.

If advanced capital portions for 2013 plan were included, developers and contractors reportedly would need to disburse VND3.973 trillion ($189 million) investment capital each month in 2012’s fourth quarter.

Meanwhile, developers and contractors were urged to finalise capital disbursement targets before the deadline January 31, 2013.

Two factors are cited as obstacles for transport sector’s project developers and contractors to meet disbursement targets.

The first hindrance was late capital allocations, of which supplemental capital amounts for 2013 plan were only made clear by relevant state agencies in late September 2012.

Second, the MoT demanded developers to direct capital into new items and not advance or pay for previous items’ completed workload, which remains unpaid.

The requirement was intended to help speed up construction of remaining items at half-done projects for entire finalisation of projects.

Contractors, however, assumed since most construction units face hardships in raising finance, getting a new completed item for capital allotment would not be simple.

At this time, only the Transport Department in northcentral Thanh Hoa and Ninh Binh provinces and Thang Long Project Management Unit have reached the capital disbursement targets. Most other localities and businesses would need great effort to meet the goals, according to MoT’s Planning and Investment Department.

MoT’s Project Management Unit 85 (PMU 85) was the first unit dropping the disbursement target in a recent meeting viewing disbursement results of MoT’s major transport projects as PMU 85’s deputy general director Nguyen Thanh Van had returned VND240 billion ($11.4 million) to authority ministry MoT.

This $11.4 million was part of the sum PMU 85 got from the state for land compensation at the project on building an access road linking Nhat Tan bridge north of Hanoi and Noi Bai international airport.

This sum remains unused since scores of residents in Hanoi’s Dong Anh district in the project’s affected area refused the compensation although relevant land compensation records were earlier ratified by local government.

To quench the thirst for capital of businesses, the MoT required Vietnam Expressway Corporation (VEC) and Cuu Long Corporation for Investment, Development and Project Management of Transportation Infrastructure (Cuu Long CIPM)--two developers owing the most to building contractors-- to finalise payments to contractors before the end of November 2012.  

VEC reportedly owes VND1.057 trillion ($50.3 million) and Cuu Long CIPM owes VND585 billion ($27.8 million) to contractors.

By Anh Minh

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