Two ministries argue over BOT project with billion-dollar capital increase

Due to disagreement with the Ministry of Planning and Investment inspectors on how to determine the total investment of the two BOT projects Cau Giat Nghi Son and Hanoi - Bac Giang, the Ministry of Transport has asked the Government for clarification.

The Ministry of Transport today issued a press release explaining the difference between the total investment and actual costs in the two BOT projects to expand National Highway 1, the Nghi Son - Cau Giat section and the Hanoi - Bac Giang section, which the Inspectorate of the Ministry of Planning and Investment has just concluded to have many errors.

The BOT project to expand the Nghi Son - Cau Giat section was implemented by the consortium of Transport Construction Corporation 4 - Corporation 319 with a total investment of over VND3,627 billion. According to the inspector, this project was previously established with state budget capital, so the cost was only about VND1,937 billion. However, when adjusted to the form of BOT investment with a smaller scale, the capital increased by over VND1,226 billion (excluding interest).

Cau Giat - Nghi Son BOT project is 34km long. Photo: Vneconomy

The inspection agency is concerned that the capital increase was not mentioned and compared before the competent authority approved the investment, which could cause waste and loss of budget. In addition, the plan to collect fees to recover capital for the project in more than 17 years and 5 months is incorrect and needs to be recalculated.

According to the inspection team's calculations, as of February 2015, the project's investment level was only over VND 2,378 billion, a difference of about VND 1,202 billion.

Similarly, at the Hanoi - Bac Giang section project implemented by the consortium of Dai Duong Group - 319 Investment and Trade Joint Stock Company - Vinaconex Corporation and Van Phu Investment Joint Stock Company, the inspector also pointed out a difference in total investment of over 800 billion VND. Of which, the increase due to construction and installation costs alone was 273 billion.

The inspection conclusion also pointed out that the selection of investors for the project still had many shortcomings, was unclear and did not comply with legal regulations.

Specifically, Techcombank's commitment to arrange finance for Ocean Group did not specify a time frame for implementation and the maximum funding value was only 10% of equity capital, equivalent to 1,329 billion (while the required level was 3,727 billion), which was not consistent with the required documents in the investor selection process. By the time the inspection began at the end of 2014, investors had only contributed more than 211 billion VND, reaching 84.5% of the capital contribution progress as committed.

Responding to this conclusion, the Ministry of Transport said that the total investment is only the initial basis for estimating the payback period used to negotiate the selection of investors. “The official toll collection period is decided based on the final settlement value of the project, so the difference between the total investment and the actual cost is not a loss or waste, and it is impossible to overstate the investment level to extend the toll collection period,” the Ministry of Transport said in a document.

According to the Ministry of Transport, during the audit of a number of BOT projects, the State Audit did not conclude that the difference in investment levels was a loss or damage to the budget. This agency also explained that according to the provisions of the signed BOT contracts, the final settlement value approved by the competent authority is the value for the competent State agency and the Investor to sign the adjustment contract to determine the payback period for the project.

The Ministry of Transport said that immediately after the draft and inspection conclusion were available, the Ministry had a written explanation to the Ministry of Planning and Investment and reported to the Prime Minister to clarify how to determine the total investment as well as determine the settlement value to adjust the project's payback period.

Meanwhile, a representative of Techcombank today also spoke up to explain the commitment to provide credit for the Hanoi - Bac Giang BOT project.

The bank said it had only made a commitment in principle to guarantee the bid and to arrange financing for Ocean Group. “However, because the investor has not provided the bank with documents, Techcombank has not yet appraised the project. Therefore, Techcombank has sent a notice to terminate the commitment to arrange financing for Ocean Company since mid-March this year,” the bank said in a statement.

According to VnExpress