Investors to suspend delayed projects

Investors must make adjustments to construction schedules for delayed projects as limited State capital is available, according to Minister of Transport Ho Nghia Dung.

Because of the capital shortage, Dung said that early announcements from investors on the date of cessation of construction would help prevent losses to bidders.

Speaking at a meeting on construction projects, Dung said that investors must be held accountable for any delays in public investment projects.

Except for projects using Official Development Assistance (ODA), around 100 transport projects will be suspended.

Seventy-five of the projects use capital of VND1.4 trillion (US$70 million) in Government bonds, and the remaining use State budget money of VND3.2 trillion ($160 million).

For other projects that use Government bonds, investors will be allowed to complete several projects this year, with the rest of the capital paid for any construction works completed before March 31 and for land compensation.

“If we don’t stop construction in the middle of the second quarter for all 75 projects using Government bonds, all other projects using this kind of capital will be closed because we won’t have enough capital,” said Tran Quoc Viet, head of the Transport Ministry’s Construction Quality Control and Management Bureau.

This year, total capital for infrastructure construction for the sector can meet only 43 per cent of demand, at around VND18.5 trillion ($920 million).

This means that the ministry has the largest number of projects either delayed or postponed in comparison with other sectors.

This could halt construction on many key and national construction projects as well, such as the Ho Chi Minh Road and National Road 279.

“This will lead to damage and waste in equipment and human resources, and will worsen the transport situation,” said Nguyen Hoang, head of the Ministry’s Planning and Investment Department.

In fact, most transport bidders face serious debt. Two corporations, the Transport Construction Corporation No 1 and Waterway Construction Corporation, have total debt of up to VND2 trillion ($100 million).

Moreover, even though construction will stop temporarily at these 100 projects, they will only have enough capital for urgent works until August.

To cope with the difficult situation, the ministry has asked investors to set up a plan to ensure sufficient transportation and environmental hygiene. The ministry has also encouraged bidders to provide capital themselves to finish road works.

“Project management units for ODA and national key construction projects should speed up disbursement as well as seek outside capital to create jobs and prepare for the 2012-13 period,” said deputy minister Ngo Thinh Duc. — VNS

Tags: Vietnam Construction, Vietnam construction sector