Exchequer loses over $44 mil in HCMC road project

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Violations by Ho Chi Minh City authorities in building a major beltway has caused losses of over US$44.3 million to the state budget, according to the latest report by the government inspectorate.

 

The report says that in 2007, the city's People's Committee signed a build-transfer contract with the GS Construction & Engineering Corporation under which the Korean-owned company would invest and construct the Tan Son Nhat Binh Loi beltway.

 

The beltway. whose construction started in June, 2008, would connect the Tan Son Nhat International Airport in Tan Binh District with northeastern areas of the city when it is put into operation, expectedly in 2013.

 

Under the contract, GS was allowed to rent five pieces of land with the same value as its investment into the project for building residential areas, trade and service centers.

 

However, while the city's authorities were supposed to estimate the land value when the plots became available, they did the estimation much earlier, the report said.

 

For instance, in 2005, the People's Committee estimated a land area in District 10 to be worth US$37 million, although the decision to rent it out wasn't made until 2008 when its value had reached $51.6 million.

 

Inspectors also found the contract having many shortcomings, including the "baseless" value of the beltway estimated by GS. The company said that they needed to invest some $172 million in the project, but the figure was calculated in 2005 without details of unit prices that had been approved by related Vietnamese agencies.

 

Moreover, inspectors found that the city "indirectly paid" GS VND138.4 billion ($7.09 million), but the Department of Planning and Investment as well as the project's coordinating board could not explain it.

 

The report also criticizes the city authorities for making changes to the plan approved in 1997 by the then Prime Minister Phan Van Khai.

 

The plan aimed to build a straight road with a section at its end in Tan Binh and Go Vap districts widened to 60 meters. The section comprised parts of Bach Dang and Nguyen Thai Son streets.

 

However, instead of widening these streets which continue on from each other the city moved 1.5 kilometers of the planned road section and split it into two narrower 20m-wide sections one along Hong Ha Street and through Gia Dinh Park to the south and the other on the Bach Dang Nguyen Thai Son route.

 

The modification, which was made as proposed by GS, was illegal, because it wasn't approved by the Prime Minister as well as related agencies and people in affected areas, according to inspectors.

 

As no rational explanation was given for the change, including why it would be more beneficial than the original one, it was understandable that affected people have submitted complaints, they said.

 

In fact, the government inspectorate has received 835 complaints from people in four affected districts, the report said.

 

Following the findings, the inspectorate has asked the city's People's Committee to re-estimate the value of the land areas and the beltway, and negotiate with GS to make adjustments to some parts of the contract.

 

The municipal authorities have also been ordered to deal with people's complaints by admitting their mistakes and making plans to compensate those affected.

  

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