Major HCMC project cancels pact with Chinese contractor

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The Ho Chi Minh City Water Sanitation Project Management Unit (PMU) has annulled its contract with a Chinese firm because it was named on a World Bank corruption blacklist, an official said Tuesday.

Director of the PMU Hoang Dieu said they had ended the US$85- million contract with China State Construction Engineering Corporation (CSCEC), which was constructing package No. 10 in the project to dredge and construct embankments along the Nhieu Loc Thi Nghe Canal.

The World Bank would not continue to disburse aid to the project if CSCEC continued to construct the package, she said, adding that the international lender had blacklisted CSCEC for several years because it was implicated in a corruption scandal in the Philippines.

Dieu said the contract with CSCEC was being ended after the contractor had completed construction work worth $60 million.

The cancellation would cause difficulties for the project process because they would have to open international bidding to construct the remaining parts, she said.

"The project will be finished next year instead of this year as scheduled," she said.

In December 2009, CSCEC was blamed for delaying the project that began in 2001 and was scheduled for completion by June 2010.

Over the past years CSCEC had focused only on getting the simpler tasks done first while delaying removal of the city's major water pipeline in the package, Dieu said.

The board had reminded the company of its duties many times, but it was not until 2008 that the company made a plan for the removal, she said, noting that the progress was slow because the pipeline was the main water source for the city center and any problem while clearing it could cause critical consequences, the director added.

The contractor was supposed to complete all the work items by August 2009, but had asked for an extension till November 2009.

However, by the end of November, CSCEC had completed just 65 percent of its work and the company had asked for another extension.

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