Oct 15, 2012

Vietnam - BOT projects fall behind schedule

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VietNamNet Bridge – The Ha Noi People's Committee has decided to halt 24 infrastructure projects being constructed under the Build-Operate-Transfer (BOT) and Build-Transfer (BT) models after reviewing all developments of this kind in the city since last May.

The move follows the Prime Minister's direction to tighten management and speed up such projects, aiming to mobilise financial resources from the private sector and minimise land misuse.

The city will now seek investors to resume work on the suspended projects, but using a different model. The current investment in the projects is over VND29 trillion (US$1.4 billion).

The halted projects include embankment work along the Hong, Duong and Da rivers, worth about VND3 trillion ($144 million) and the development of an incinerator in Dong Anh District worth VND502 billion ($24 million).

Meanwhile, the committee also accepted the request to extend the implementation period for 11 other projects further than the initial timeframe of 2015-20.

Deputy Chairman of the municipal People's Committee Le Van Hoat said that projects were stopped or postponed because many investors did not have the financial capacity to continue.

"There are problems in BOT/BT project management, mostly because of changes to prices of land and building materials combined with the economic slowdown," he said.

The review of BOT/BT developments in the city took key criteria into consideration, such as the urgency and feasibility of the projects, the financial ability of the investors and the likelihood of successful land acquisitions.
As many as 64 projects reportedly worth VND178 trillion ($8.5 billion) have been allowed to continue.

Concern over BOT/BT projects has been rising for some time. The Ministry of Planning and Investment recently confirmed that inspections had uncovered "traces" of financial violations at developments including the Yen So waste water treatment factory project in Hoang Mai District.

Meanwhile, the cost of some constructions was found to have increased by hundreds of billions of Vietnamese dong on projects including the new Ha Noi Museum.

Former deputy minister of Natural Resources and Environment Dang Hung Vo added his concerns that BOT/BT contracts could pose high risks to the environment due to the waste created.

Under these models, the private sector spends their own money to build the infrastructure first, before operating the finished projects for a pre-approved term and then transferring responsibility to the State.


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