VietNamNet Bridge – A proposal made by the Chinese contractor in the Cat Linh-Ha Dong railway project has been denounced by experts as “illegal” and “unacceptable”.

Deputy Minister Hoang Trung Hai has requested the Ministry of Transport (MOT) to check the project’s estimates and release a final decision on the Chinese proposal. The contractor is asking for a $339 million funding increase which, if approved, would bring the cost of the project to $852 million.

The document released from the Deputy Minister’s office requests that MOT join forces with the Ministry of Planning and Investment and other agencies to work with the appropriate Chinese agencies on the Chinese ODA (official development assistance) capital complement to the project.

The railway project, kicked off in October 2011, had an initial price tag of $552 million, of which $419 million had been pledged from the Chinese through their ODA.

Under the terms of the project, a Chinese corporation acts as the EPC (engineering, procurement, construction) contractor. The railway is expected to be put into operation by June 2015.

However, problems in the site clearance and the contractors’ capability have led to the delays. Meanwhile, MOT, following a request by the Chinese contractor, has proposed the government approve a $339 million increase in the budget.

MOT explained that the project would need an additional $221 million for construction costs, $20 million for equipment and $25 million for site clearance.

The news comes as no surprise to many Vietnamese, but has certainly angered them. It has proven to be a familiar tactic of Chinese contractors who have been awarded projects in Vietnam.

The modus operandi has become all too recognizable. A Chinese contractor wins a project by offering a bid 20-30 percent lower than his rivals. Subsequently, the contractor begins work by implementing the easiest elements of the project at the early stages. Then, “snags” emerge. A deadline extension is urgently requested, followed by demands for an increase in funding for the “unforeseen” difficulties.

The Nhieu Loc-Thi Nghe canal environment sanitation project is a case in point. The project was initially slated for completion by 2008. However, it was only in 2011 that the project became fully operational, three years late and $120million over budget. The investor ultimately had to shell out $320 million on a project with an initial estimate that the contractor had won with a bid of of $200 million.

Nguyen Tien Lap, an ODA expert, has many times warned that Vietnam has to pay a certain price for the “assistance”. In additional to the political and economic benefits, donors nowadays show their increasing interest in promoting the democratization, i.e the institutional reform in the recipient countries.

Dr Nguyen Dinh Tham from the Hanoi Civil Engineering University affirmed that “there is no legal foundation for such a sharp increase of the investment capital” (by nearly 100 percent).

An expert has suggested that the government of Vietnam should set up a taskforce in charge of watching over the public debts and ODA management. As for the large-scale ODA projects which require high complicated technologies about which Vietnam does not have experiences, it should hire foreign consultants to manage the projects. Vietnam should refuse the projects that it cannot control.

Dat Viet