Adjust to reality
The delay of the Central Region Connectivity Project in Quang Nam Province, as announced by the investor, is due to force majeure. However, the original goal of the project was to complete the traffic connection network in the Central region and the Central Highlands provinces.
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The report of the Party Committee of the Provincial People's Committee pointed out the "irrationality" of the actual implementation of this project, forcing the adjustment of the investment policy.
Specifically, the construction of resettlement sites, the increase in compensation and site clearance (GPMB) areas according to the policy of the Provincial People's Committee led to a large increase in project costs (increased compensation costs, GPMB and increased construction costs due to price fluctuations), exceeding the total approved investment. As a result, there was no guarantee of capital to continue to implement compensation and GPMB for the entire project.
The project has a total investment of 34.5 million USD, equivalent to more than 768 billion VND for construction costs, construction drawing design consultancy, supervision consultancy, contingency costs and Economic Development Cooperation Fund (EDCF) service fees and counterpart capital of 9.04 million USD, equivalent to more than 201.2 billion VND for project management costs, remaining construction investment consultancy, other costs, compensation for site clearance, taxes and fees.
The initial estimated compensation and site clearance costs according to the investment policy were nearly 125.5 billion VND. However, the implementation period lasted for many years, and the compensation and site clearance costs changed and increased too much.
The total need for compensation and site clearance for the project as proposed by the People's Committees of the districts is 339.2 billion VND, exceeding the provisional estimate by 213.7 billion VND. Not only has the actual number of affected households increased from 1,586 households (51 households with complete clearance must be resettled) to 1,640 households (about 90 households with complete clearance must be resettled), but the cost of compensation and site clearance also increased when the width of the roadbed through Thang Binh district increased from 12m to 34m.
In addition, the Provincial People's Committee has agreed to allocate capital from the project's compensation and site clearance costs to invest in additional resettlement areas and points to serve site clearance. The District People's Committees are speeding up the implementation of compensation and site clearance, but the increased costs exceed the total investment, so there is no basis for implementation of the remaining part, which will affect the progress and interrupt some project implementation work.
In addition to the above reasons, the construction package of the road is expected to be completed in December 2025. Meanwhile, the implementation period according to the approved investment policy is October 2024.
Therefore, it is impossible to guarantee the time for the construction to complete the traffic section of the project. The construction package for the lighting section has been approved for design, construction drawings, and cost estimates on September 15, 2021, but the contractor has not been selected (price slippage has caused the total project investment to exceed). The investor needs to update the current price before organizing the selection of a construction contractor.
Where is the money to compensate?
Vice Chairman of the Provincial People's Committee Ho Quang Buu said that the project was established and approved in 2017, so the total investment and progress of the project are no longer suitable. Compensation and site clearance costs have increased, making it difficult to balance the project's capital sources.
The Provincial People's Committee has agreed in principle for the investor to carry out the documents, procedures, and reports to submit to the competent authority for consideration and adjustment of the investment policy.
“The adjustment of the project investment policy is really necessary. This adjustment is to ensure the implementation of the remaining items of the project, with enough time for construction completion, acceptance, and final settlement of the project, meeting the objectives, scale, and efficiency of an inter-regional connectivity project,” said Mr. Buu.
According to calculations, if the adjustment is approved, the total investment of the project from 768 billion VND will increase by more than 291.7 billion VND to reach 47.6 million USD after adjustment (equivalent to 1,059.8 billion VND). The capital from EDCF will not change, but the budget counterpart capital will be about 492.9 billion VND, instead of 201.2 billion VND as before.
It can be seen that the proposal to adjust the project implementation period from 2020 - 2024 to 2020 - 2026 is necessary. However, adjusting the capital planning time to 2026 with the total investment increasing to nearly 300 billion VND, where will the money come from to compensate for this additional amount, when local budget resources are increasingly decreasing?
According to the Party Committee of the Provincial People's Committee, the Central Region Linkage Project of Quang Nam province is one of the key projects, which has been approved by the Steering Committee for Compensation and Site Clearance of Key Projects 2021 - 2025 and directly directed by the Provincial Party Secretary, and needs to be completed on schedule to welcome the 23rd Provincial Party Congress, term 2025 - 2030.
According to the Party Committee of the Provincial People's Committee, the Provincial People's Committee submitted to the Standing Committee of the Provincial Party Committee for comments on adjusting the total investment level of the provincial budget counterpart fund and adjusting the implementation time of the Central Region Linkage Project in Quang Nam province to ensure the legal basis for continuing to organize the implementation of the next steps to meet the project's objectives and effectively use the loan.
According to Vice Chairman of the Provincial People's Committee Ho Quang Buu, after the Provincial Party Committee Standing Committee agrees to adjust the project investment policy, the Provincial People's Council approves, the Party Committee of the Provincial People's Committee will assign the Department of Planning and Investment to preside over and coordinate with the investor to review and advise the Provincial People's Committee to report to the competent authority to transfer counterpart funds for other ODA projects that are not fully used in the medium-term plan for the period of 2021 - 2025 to supplement the Central Region Linkage Project of Quang Nam province. At the same time, capital will continue to be arranged in the medium-term plan for the period of 2026 - 2030 to invest in completing the project.
The Central Region Linkage Project of Quang Nam Province, which borrows EDCF-Korea capital, has a total initial approved investment of 34.51 million USD (equivalent to 768 billion VND). The ODA capital of nearly 25.47 million USD (equivalent to 566.8 billion VND) is lent by the Korean Government through the Economic Development Cooperation Fund (EDCF).
The budget counterpart fund is 9.04 million USD. If adjusted, the total investment of the project will increase to 47.62 million USD, equivalent to 1,059.8 billion VND (an increase of 13.11 million USD, equivalent to 291.7 billion VND). The EDCF capital remains unchanged, but the counterpart fund will increase to 22.15 million USD (equivalent to 492.9 billion VND).
The project signed loan contract number VNM - 60 on August 31, 2020 and took effect from October 28, 2020. The implementation period is 4 years, calculated from the date the project's loan agreement takes effect (expected from 2020 to 2024).
The capital plan for the 2021 - 2024 period is nearly 371.4 billion VND. The disbursement rate reached 53% (198.5 billion VND).
Source: https://baoquangnam.vn/du-an-lien-ket-vung-mien-trung-tinh-quang-nam-vi-sao-phai-dieu-chinh-chu-truong-dau-tu-bai-cuoi-can-thiet-de-phu-hop-thuc-te-3137686.html
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