Capital shortages stalls roadbuilding projects

Road building would face a severe lack of capital next year, even though this year, around VND40 trillion (US$2 billion) was disbursed, the Ministry of Construction has said.

The ministry said it has not been able to raise capital of VND100 trillion ($5 billion) for 230 planned traffic projects. Of the projects, only 77 were approved with a budget of VND34 trillion ($1.7 billion).

Nguyen Quoc Binh, deputy general director of Project Management Unit 1 (PMU1) said the project to upgrade National Highway No 6 in northern Viet Nam had not received VND400 billion (20,000$) as planned.

Binh said six out of 15 signed building and assembling contracts had not been started because of the lack of funds.

The Road Department was also unable to find capital for projects to upgrade National Highway No 15 between Hoa Binh and Thanh Hoa and National Highway No 20 between Trai Mat and Lam Dong.

Some projects that were already under construction were also waiting for funds in order for work to be continued.

The National Highway No 27 project with a total investment of VND966 billion ($48.3 million) had been implemented slowly due to the shortage. The ministry said it was worried that the project would not be completed next year as scheduled.

Director of the project Le Ngoc Minh said contractors had moved their equipment to other construction sites because the VND135 billion ($6.75 million) provided by the ministry in August had already been spent.

Minh added that they had asked for a further VND85 billion ($4.25 million) to complete the project but had not received a reply.

A representative from the ministry said projects that were financed by Government bonds and the State budget could mobilise investment from other slowly disbursed projects but those that used construction bonds would have difficulty mobilising capital due to increasing lending interest rates.

The capital shortage has put more pressure on contractors who face losses due to the interest rates and are losing skilled workers.

Specialists in the sector said the capital shortage should have been forecast and appropriate measures taken to deal with the situation.

The sector disbursed VND33.5 trillion ($1.67 billion) between 2006-09 on large construction projects including HCM City-Trung Luong Highway, Thang Long Boulevard, and Thanh Tri, Rach Mieu and Bai Chay bridges.

It made a record disbursement of VND40 trillion ($2 billion) this year.

The ministry has submitted 38 traffic infrastructure projects to the Government with total investment of VND800 trillion ($40 billion) for the 2011-15 period. — VNS

Tags: Vietnam Infrastructure