Ciencos keep staying outside WB and ADB funded projects

The plan to rescue seven civil engineering construction corporations (Ciencos) by joining the bids for big-scale infrastructure projects using the loans from the World Bank (WB) and the Asian Development Bank (ADB) proves to have low feasibility.

It is now clear that it is nearly impossible for the seven Ciencos, the leading construction and installation corporations belonging to the Ministry of Transport, to join the bids for the implementation of the projects on the 65 km Da Nang-Tam Ky stretch of road (capitalized at 631 million dollars, funded by WB), the Da Nang-Quang Ngai Highway invested by the Vietnam Expressway Corporation (VEC).

The reason, according to Mai Tuan Anh, VEC’s General Director, is very simple. Under the current provisions on interest conflicts of the World Bank, the sponsor does not allow the enterprises belonging to the Ministry of Transport to join the bids for the implementation of the projects invested by the enterprises also belonging to the ministry. In this case, Ciencos, the Ministry of Transport’s enterprises, will not be allowed to implement the projects to be invested by VEC.

Phung Minh Mo, Head of the Planning Division of VEC, said that Ciencos even are not eligible for implementing the projects as the sub-contractors at the WB and ADB funded projects.

However, the fact that seven Ciencos, which have good experiences in executing big-scale and complicated highway projects, are excluded from joining ODA (official development assistance) projects using the loans from WB and ADB, proves to be not a new story at all.

For the same reasons, Ciencos once had to stay outside from the bids to select the contractors for the project on the Noi Bai-Lao Cai highway, also invested by VEC.

However, the topic has heated up again after the Ministry of Transport has a new minister – Dinh La Thang, who has highlighted the task of adding Ciencos into the list of potential contractors for transport projects, using WB and ADB loans as one of the priority tasks for the last months of 2011.

If Ciencos is allowed to join the projects, Vietnam will be able to “kill two birds with one stone”. If Ciencos win the bids, they will get more jobs that help them escape from the current financial difficulties. Meanwhile, the investors would feel more secure about the quality of the projects, because Ciencos are the experienced contractors in transport projects.

The fact that Ciencos has to stay outside from the projects on upgrading the waterway projects funded by WB, has really dealt a strong blow on the financial situation of the corporations,” said Luu Dinh Tien, General Director of the Vietnam Waterway Construction Corporation (Vinawaco).

“The three dredgers we purchased at hundreds of billions of dong have been left idle,” he complained.

The plan to rescue Ciencos has become more abstract when the leaders of the Ministry of Transport states that the ministry does not consider moving the 7 Ciencos to the State Capital Investment Corporation (SCIC), known as the powerful corporation specializing in using the state’s money to invest in enterprises.

A senior official of the Ministry of Transport has admitted that it is nearly impossible to persuade the two sponsors, ADB and WB to amend the bidding regulations to make them fit the Vietnamese conditions.

“We discussed the issue many times before at the working sessions with the donors, but both ADB and WB said “no”, because these are the globally valid regulations,” the official said.

In fact, Vietnam has been warned about the legitimacy of the enterprises belonging to the Ministry of Transport in joining these projects for a long time. However, the equitization process of the Ciencos has been going very slowly.

Nguyen Van Quoc, Director of the Finance Department of the Ministry of Transport, said that the equitization would be completed by mid 2015. However, even by that time, the equitized Ciencos would still not be able to satisfy the requirements set by the donors to implement the projects, because the percentages of stakes to be held by the State at the enterprises would still be higher than 40 percent.

Source: TBKTVN

Tags: Ciencos