Nghe An: Why is the disbursement progress of many public investment projects still slow?

Difficult and difficult reality

Department of Planning and Investmentsaid that in the first 9 months of the year, besides 9 investment units with a good disbursement rate (over 80%), there were 6 investment units with disbursement from 50-80% and 4 units with disbursement reaching 36.52-50%. Currently, there are 15 agencies and units that have not yet disbursed; 18 districts, cities and towns have a disbursement rate below the average of the province (36.53%). There are 13 units and investors outside the district and town block with low disbursement rates such as Department of Tourism 0.36%, Department of Labor - Invalids and Social Affairs 1.27%, Nghe An Eye Hospital 4.08%, Provincial Enterprise Block 4.74%, Oncology Hospital 4.82%, Provincial Military Command 5.22%, Department of Natural Resources and Environment 7.4%,...

Chart comparing public investment progress in the province up to September 10, 2022. Graphics: Hong Toai

At the meeting on the morning of September 20, 2022, the Chairman of the Provincial People's Committee met with departments, branches, units and localities to promote the disbursement of public investment capital, the representative of the Department of Planning and Investment said that as of September 10, 2022, the concentrated public investment capital managed by the province had disbursed VND 2,119,069 billion, reaching 29.74% of the plan of VND 7,124,72 billion assigned in 2022. If not counting the detailed allocations, the disbursement progress reached 36.52%. Of which, the local budget disbursed VND 369,584 billion, reaching 23.72% of the plan; the central budget disbursed VND 1,749.48 billion, reaching 31.43% of the plan.

Slow site clearance is the reason for the low disbursement rate of public investment capital. In the photo: People in Hung Trung commune (Hung Nguyen) demolish their houses to hand over the site for the North-South Expressway Project, part of the Dien Chau-Bai Vot package. Photo: Nguyen Hai

The representative of the Department of Finance said: Ifpublic investment disbursementDomestic capital has not been as expected but still reaches a fairly high rate compared to the national average, while the disbursement rate of foreign loan public investment capital is too low. Up to this point, the disbursement rate of foreign loan capital has only reached nearly 15% of the 2022 plan.

Reason

Through research and discussions with a number of representatives of investors and project management boards, we learned that in 2022, although the progress of public investment disbursement was no longer heavily affected by the Covid-19 pandemic like 2 years ago, it suffered a shock when the prices of raw materials and input materials increased too sharply.

Investing in concentrated shrimp farming infrastructure according to the VietGAP model in Quynh Bang commune (Quynh Luu). Photo: Nguyen Hai

Mr. Nguyen Mau Luong - Director of the Provincial Management Board of Investment and Construction Projects for Civil and Industrial Works said: After 2 years of being affected by the Covid-19 epidemic, most project dossiers requesting investment policies and construction drawing designs were constructed at normal prices, without major fluctuations. However, after approving the investment policy and moving to the construction implementation phase in early 2022, the prices of basic materials such as iron, steel, soil, rock, and cement increased sharply, exceeding the estimate by 20-25%.

According to regulations, the reserve fund is only 5-10%, so when material prices increase, many projects have stopped construction and applied for budget adjustment. Currently, according to the Law on Public Investment, to adjust the scale of a project, it must be submitted to the People's Council at the district or provincial level. This is the reason why in 2022, the People's Council of the province and some districts and cities must hold extraordinary meetings to consider and approve to ensure construction progress and disbursement.

On the other hand, according to representatives of the People's Committees of some districts, the reason for the slow progress of public investment disbursement is still due to the poor investment preparation stage. When preparing the dossier for approval of the investment policy, only the estimate was made and it was not known whether it would be approved or not, so the preparation was only initial and rough. When the project was approved and started to be implemented, some items that arose in the field had to be adjusted, leading to the need to redo the dossier. The clearest example is the project to restore the floodplain of Nghe An province from the loan capital of the Arab Investment Fund. During the implementation phase, due to design changes and bridge additions, it was necessary to go through adjustment procedures and re-appraisal, which affected the construction of the entire route and the overall progress of the project.

Construction of the North-South expressway overpass connecting with National Highway 48B at the intersection of Quynh My commune (Quynh Luu). Photo: Nguyen Hai

Some other examples that also slow down the disbursement of public investment capital for projects with foreign loans are the site clearance stage: The Phan Boi Chau Specialized High School investment project under the Secondary Education Development Program Phase 2 (80 billion VND) could not be disbursed and had to request to be transferred back to the Central budget;Khe Lai Lake Upgrade ProjectIn the upstream of Vuc Mau Lake, Tan Thang Commune (Quynh Luu), under the Dam Safety Repair and Upgrade Project (WB 8), the Ministry of Agriculture and Rural Development transferred 136 billion VND, but due to problems with site clearance, after 2 years, including the extended period, only 16 billion VND was disbursed...

In addition to the above reasons, according to the Departments of Finance, Planning and Investment, for public investment projects with foreign loans, the slow disbursement rate is due to the Government's regulations and the Capital Financing Agreement between our Government and capital sponsors and international financial institutions. Large projects must invite international bids or procedures to consult with sponsors, so it takes more time. Based on reality, since 2020, Nghe An and localities have repeatedly requested ministries, branches and the Government to consider amendments but have not yet been successful.

Cua Thoi Bridge connecting Quynh Thuan commune with Quynh Tho commune is one of the four key bridges of the Coastal Highway Project with quite positive construction progress, contributing to speeding up the disbursement progress for the Transport sector. Photo: Nguyen Hai

On the other hand, compared to before, public investment from foreign loans was supported by ministries, branches and the Government to repay the debt, but now the borrowing localities have to arrange counterpart funds and repay the principal and interest, so not all localities are enthusiastic. In recent years, Nghe An has only been allocated about 500 billion VND of public investment capital from foreign public investment loans each year, a low rate compared to other provinces but difficult to disburse.

Sharing more, Mr. Vuong Dinh Nhuan - Head of Project Management Board of the Department of Transport also said: According to construction practice, the first quarter is the time to prepare project documents, if the investor or construction unit works quickly, they will take advantage of the second quarter to construct, otherwise July and August are often flooded, so it is very difficult. In fact, the construction progress and disbursement are mainly in the last quarter of the year.

Although there are still many difficulties and problems, it is hoped that with the spirit of looking straight at reality and clarifying the above causes, with the drastic participation of the Chairman of the Provincial People's Committee, from now until the end of the year, the disbursement progress of public investment capital, especially domestic capital, will reach 100% and strive to increase the disbursement progress by 3.National Target Programand foreign loan public investment reached over 50%.