Adjust to reality
The delay in the Central Vietnam Regional Linkage Project in Quang Nam province, as announced by the investor, is due to force majeure. However, the project's original objective was to complete the transportation network connecting the Central region and the Central Highlands provinces.
Connecting the Bo Y International Border Gate with Ky Ha Port, Chu Lai International Airport, Chu Lai Open Economic Zone, and Dung Quat Economic Zone in accordance with the "ASEAN Connectivity" policy. Developing industry based on rationalizing land use and reducing travel costs...
The report from the Party Committee of the Provincial People's Committee pointed out the "irrationality" of the project's implementation in practice, necessitating adjustments to the investment plan.
Specifically, the construction of resettlement sites and the increase in land compensation and clearance area, as per the provincial People's Committee's policy, have led to a significant increase in project costs (increased compensation and land clearance costs, and increased construction costs due to inflation), exceeding the approved total investment. Consequently, there is insufficient funding to continue compensation and land clearance for the entire project.
The project has a total investment of US$34.5 million, equivalent to over VND 768 billion, covering construction costs, design and construction drawing consulting, supervision consulting, contingency costs, and service fees from the Economic Development Cooperation Fund (EDCF), and a counterpart fund of US$9.04 million, equivalent to over VND 201.2 billion, covering project management costs, remaining construction investment consulting, other costs, land compensation, taxes, and fees.
The initial estimated compensation and land clearance costs were approximately 125.5 billion VND. However, due to the extended implementation period of many years, the compensation and land clearance costs have changed and increased significantly.
The total compensation and land clearance needs for the project, as proposed by the People's Committees of the districts, amount to 339.2 billion VND, exceeding the provisional estimate by over 213.7 billion VND. Not only has the number of affected households actually increased from 1,586 (51 households requiring complete relocation) to 1,640 (approximately 90 households requiring complete relocation), but the compensation and land clearance costs have also increased as the road width through Thang Binh district has increased from 12m to 34m.
Furthermore, the Provincial People's Committee has agreed to allocate funds from the compensation and land clearance costs of the project to invest in additional resettlement areas and sites to serve land clearance. The People's Committees of the districts are accelerating the implementation of compensation and land clearance work, but the increased costs exceeding the total investment amount mean there is no basis for implementing the remaining portion, causing additional costs, affecting the progress, and disrupting some project implementation.
In addition to the reasons mentioned above, the construction contract for the road project is expected to be completed in December 2025. Meanwhile, the implementation period according to the approved investment plan is scheduled to end in October 2024.
Therefore, it is impossible to guarantee the completion time for the transportation component of the project. The construction contract for the lighting system had its design, construction drawings, and cost estimate approved on September 15, 2021, but the contractor has not yet been selected (price fluctuations have exceeded the total project investment). The investor needs to update the current prices before a contractor selection process can be organized.
Where will the money come from to compensate for this?
According to Vice Chairman of the Provincial People's Committee Ho Quang Buu, the project was established and approved in 2017, so the total investment and implementation schedule are no longer appropriate. Compensation and land clearance costs have increased significantly, making it difficult to balance the project's funding.
The Provincial People's Committee has agreed in principle to allow the investor to prepare the necessary documents, procedures, and reports for submission to the competent authority for consideration and adjustment of the investment plan.
"Adjusting the investment policy for the project is truly necessary. This adjustment is to ensure the implementation of the remaining project components, allowing sufficient time for construction completion, acceptance, and final settlement of the project, meeting the objectives, scale, and effectiveness of an inter-regional connectivity project," Mr. Buu said.
According to calculations, if the adjustment is approved, the total investment for the project will increase from VND 768 billion to over VND 291.7 billion, reaching USD 47.6 million after adjustment (equivalent to VND 1,059.8 billion). The capital from EDCF remains unchanged, but the budget counterpart funding will be approximately VND 492.9 billion, instead of VND 201.2 billion as previously stated.
It is immediately apparent that the proposal to adjust the project implementation timeframe from 2020-2024 to 2020-2026 is necessary. However, adjusting the capital allocation plan to 2026, along with a total investment increase of nearly 300 billion VND, raises the question of where the funds will come from to cover this additional cost, given the dwindling resources of the local budget.
According to the Party Committee of the Provincial People's Committee, the Central Region Linkage Project in Quang Nam province is one of the key projects, which has been approved by the Steering Committee for Compensation and Land Clearance of Key Projects 2021-2025 and is directly supervised by the Provincial Party Secretary. It needs to be completed on schedule to celebrate 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 approval the adjustment to increase the total investment from the provincial budget's counterpart funds and the adjustment of the implementation time for the Central Region Linkage Project in Quang Nam province to ensure the legal basis for continuing to implement the next steps to meet the project objectives and the effective use of the loan.
According to Vice Chairman of the Provincial People's Committee Ho Quang Buu, after the Provincial Party Standing Committee agrees to adjust the investment policy for the project and the Provincial People's Council approves it, the Party Committee of the Provincial People's Committee will assign the Department of Planning and Investment to take the lead and coordinate with the investor to review and advise the Provincial People's Committee to report to the competent authority on transferring the remaining counterpart funds from other ODA projects not fully utilized in the medium-term plan for the period 2021-2025 to supplement the Central Region Linkage Project in Quang Nam province. At the same time, further funding will be allocated in the medium-term plan for the period 2026-2030 to complete the project.
The Central Vietnam Regional Linkage Project in Quang Nam province, funded by the EDCF (Economic Development Cooperation Fund) of South Korea, has an initial approved investment of US$34.51 million (equivalent to VND 768 billion). Nearly US$25.47 million (equivalent to VND 566.8 billion) of this ODA funding is provided by the South Korean government through the Economic Development Cooperation Fund (EDCF).
The budget counterpart funding is $9.04 million. If adjusted, the total investment of the project will increase to $47.62 million, equivalent to VND 1,059.8 billion (an increase of $13.11 million, equivalent to VND 291.7 billion). The EDCF funding remains unchanged, but the counterpart funding will increase to $22.15 million (equivalent to VND 492.9 billion).
The project signed loan agreement number VNM-60 on August 31, 2020, which came into effect on October 28, 2020. The implementation period is 4 years, starting from the date the project's loan agreement came into effect (expected from 2020 to 2024).
The capital plan allocated for the period 2021-2024 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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