Multi-billion thermal power project needs more capital
The ministry in August sent a dispatch on the issue, but to date, still has not received replies from the Ministry of Construction (MOC), State Audit and the Commission for the Management of State Capital at Enterprises (CMSC).
Lilama was initially assigned to develop the Vung Ang 1 project of 1,200MW, with initial investment capital of VND19.996 trillion (2006), or $1.249 billion.
However, because of difficulties in capital arrangement, Lilama and PVN asked the Prime Minister to assign PetroVietnam (PVN) to act as the project investor and Lilama as the EPC.
In March 2009, the Government Office forwarded the instruction of Deputy Prime Minister Hoang Trung Hai on agreeing to assign PVN to act as the investor. Hai also agreed to allow PVN to make direct appointments of contractors to implement the project.
The EPC (engineering, procurement and construction) package was approved by PVN shortly after that, which had a pre-tax value of $1.17 billion, under a lump-sum contract.
In late 2009, PVN approved the adjustment of the total investment capital of the project (the first time), up to VND29.509 trillion, or $1.595 billion.
Later, because of price fluctuations and labor costs, as well as new items and changes with design, Lilama asked the Prime Minister to solve problems with the EPC contract. PVN also informed the Prime Minister about the situation.
In March 2016, PVN approved the second adjustment of the total investment capital (second time), raising it to VND33.576 trillion.
However, the "unforeseeable rising expenses" of the EPC contract (including VND1.117 trillion for construction and VND520 billion for installation) were not adjusted by PVN and Lilama in the contract.
However, PVN advanced VND1.108 trillion (VND865.64 billion for construction and VND242.82 billion for installation) so that the contractors could continue the project.
The problem was that if the two sides did not sign the EPC adjusted contract, which served as the foundation for the payment for new work, PVN would have gotten the money back, even though Lilama had advanced the money.
According to MOIT, the contract has not been signed, though the work was put into operation seven years ago. Lilama still has not paid the money and PVN cannot finalize the EPC contract of the VungAng1 project.
As suggested by the State Audit, PVN sent a document to the Prime Minister asking for approval for the "unforeseen expense items" for construction and installation.
Deputy Prime Minister Trinh Dinh Dung then asked PVN to consider the signed EPC contract and the law to solve the problems and take responsibility for its decisions.
However, PVN asserted that the adjustments of the EPC contract is not within its competence.