Counterpart funds for ODA projects: A difficult problem!

(Baonghean) - Lack of counterpart funds, while the sponsor requires speeding up the construction progress, ensuring compliance with the plan..., are the difficulties of the Project to Restore and Upgrade the Northern Nghe An Irrigation System and the Vinh Urban Development Sub-project. Without a timely solution to solve the funding source, these important projects will face many difficulties in progress.

The North Nghe An Irrigation System was built, completed and put into use in the 30s of the last century, with the task of providing irrigation water for 34,500 hectares of cultivated land and serving the economic development needs of the people of 4 districts: Do Luong, Yen Thanh, Dien Chau and Quynh Luu, at the same time providing domestic water and drainage for the low-lying area of ​​Yen Thanh - Dien Chau.

Construction of upgrading and renovating the North Canal - Vinh City.

After a long period of exploitation and use, and suffering the devastation of war, most of the construction items have seriously degraded, causing huge water loss and waste. Especially in recent years, due to climate change and rising sea levels, the drought situation is very severe, saltwater intrusion is increasingly large, the demand for water is increasing, so agricultural production is unstable, the lives of people in the region are in difficulty. Early investment in restoring and upgrading the Northern Nghe An Irrigation System is very necessary, so in 2009 this project was included in the list of ODA capital use, then the International Cooperation Agency (JICA - Japan) supported the project "Restoring and upgrading the Northern Nghe An Irrigation System" with a total investment of more than 5,705,456 million VND, using ODA loans from Japan (JICA), central and local counterpart funds. Accordingly, component 1 is investment in construction, restoration and upgrading of the Northern Nghe An Irrigation System (invested by the Department of Agriculture) with a total investment of VND 5,205,582 million.

Ms. Nguyen Thi Thuy Hien - Head of Planning and Finance Department of the Agriculture and Rural Development Management Board (NAPMU) said: “The goal of the project is to restore and upgrade the entire system to ensure long-term safety of the project, stably irrigate 27,656 hectares of agricultural land for 4 districts of Do Luong, Yen Thanh, Dien Chau, Quynh Luu; Provide domestic water for 969,000 people and 934,000 livestock; Provide 1.89 m3/s of water for Hoang Mai and Dong Hoi industrial parks (including Kobelco Vietnam Steel Plant invested by Japan) and other industrial plants in the project area; drain 1,405 hectares of water for the Yen Thanh - Dien Chau low-lying area; Prevent salinity and retain freshwater to create a water source for agriculture and daily life. The implementation time of the project items is very urgent, however, the project is currently facing many difficulties due to delays in design work and lack of investment capital”.

It is known that the detailed design and supervision package for the project selected contractors through international bidding, so the project plan has many changes, especially the project implementation time is slower than planned. Especially in the site clearance work, there will be many difficulties, due to the implementation in a large area and must ensure compliance with the sponsor's safety policy... The principle of site clearance implementation is to have a detailed design document, set up site clearance boundary markers before being able to deploy the plan, organize the inventory... However, the time to complete the detailed design document is expected to be completed by December 31, 2014 at the earliest, leading to delays in site clearance and project implementation progress, which is inevitable.

Another important project is the Medium-sized Urban Development Project under the Vinh Urban Development Sub-project. The project has a total investment of more than 128.434 million USD, of which the World Bank's ODA loan is 98 million USD and Vietnam's counterpart capital is 30.43 million USD. Through that capital, 4 components will be implemented: improving services and upgrading infrastructure; improving environmental sanitation; building urban bridges and roads; enhancing technical capacity and technical support. The project started in 2012 and has basically completed the compensation and site clearance work at the Bac Canal, sections 1-3 and the resettlement area of ​​Quan Bau ward, Nghi Phu commune, and at the same time handed over the site to the construction unit.

The design and construction work is also on schedule. Currently, the school sanitation construction package has completed 24/32 schools, of which 19 schools have completed the rough construction. At the construction project of the North 1-3 canal, contractors have collected water hyacinth, cleared trees, built service roads... Typically, in the construction package of the North 1 canal, the contractor has completed the foundation treatment, poured concrete for the bottom of the 2 box culverts... Due to the good implementation of the project items, the ODA capital has been granted to date is more than 5.844 million USD (cumulative disbursement is more than 4.060 million USD) and the counterpart capital has been granted 206,820 million VND (disbursed 204,866 million VND), of which the central budget has granted 128 billion VND, the local budget has granted 178 billion VND.

Mr. Nguyen Thac Chinh - Head of Vinh Urban Development Sub-project Management Board said: "Because the local counterpart capital is facing many difficulties, in order to ensure the progress of the project, relevant levels and sectors have created favorable conditions to restructure and reallocate the counterpart capital for the project and accordingly, the central budget will support 70% and the local budget is 30%. With the restructuring of that capital source, it will create favorable conditions for the locality to implement the project". However, the local counterpart capital is also very difficult and therefore, some remaining packages of phase 1, including the resettlement area of ​​Quan Bau ward and the Bac canal section 3, must delay the bidding progress (it is expected that the counterpart capital for compensation and site clearance for these two remaining packages is 270 billion VND).

It will be difficult to find a solution to the counterpart fund problem for the project and furthermore, according to the plan, in the first quarter of 2014, it will be necessary to speed up the progress of some construction items such as: Approving the planning of the remaining 4 resettlement areas in Hung Dong commune and selecting contractors to make the planning in Hung Tay commune. Deploying the survey, design, and marking of the field for land acquisition and resettlement areas in phase 2. Continuing to pay compensation, hand over the completed site of phase 1 items and bidding to select contractors to construct the project items... Thus, in the coming time, the demand for capital is very large and with the current reality, it is very difficult to meet that requirement.

Due to lack of investment capital, many projects in the province cannot ensure progress and if there is no timely solution to solve the capital source for the project to restore and upgrade the Northern Nghe An Irrigation System, the Vinh Urban Development Sub-project will be stalled and delayed.

Hoang Vinh