Intellasia News Services -- International contractors indifferent to Vietnam's ODA projects

International contractors indifferent to Vietnam's ODA projects
Source: 03/Jun/2009 Intellasia | Lao Dong
3 Jun, 2009 - 2:07:24 PM
The pace of some transport projects, especially ODA-funded projects are slowing down and one of the main reasons that investors and project management boards explained is indifference of international contractors.

According the 85 Project Management Board that is the representative investor of the Nhat Tan Bridge, although the project was kicked off from March, Japanese contractors have not yet bought bid documents for the package No.2. This is an ODA-funded project, hence, if no Japanese contractor participates, implementation of the project will encounter various problems. This has made the investor worried.

The Railway Project Management Unit (RPMU) of Vietnam Railway Corp that is assigned to manage many ODA-funded projects are also seeing similar problems.

According to Tran Van Luc, RPMU's director, to borrow ODA capital of Japan requires that the head contractor must come from Japan. Therefore, RPMU has encountered various difficulties in seeking contractors to take part into bid packages of recovering 44 Thong Nhat railway bridges using loans from Japan International Cooperation Agency (JICA).

Particularly, the package CP1, which was designed to recover 17 railway bridges, presented a dilemma. Namely, following the preliminary selection, one of the two eligible contractors gave up the project because some certain financial difficulties.

Currently, there is only one contractor. However, the bid price is twice as much as the approved estimation. Thus, RPMU has no way but to apply for cancelling the result to organise another bid, leading some one-year delay for the project.

The package CP3 to recover 16 bridges had even more complicated movements when RPMU held two preliminary selections of contractor documents but only one Japanese contractor submitted its bid document. The transport ministry and JICA had to decide to cancel the results of preliminary selections, simplify requirements but attracted no additional contractor. The final decision was temporary stopping the preliminary selections and finding other measures, which would possibly split the bid package.

The fact showed that indifference of international contractors to ODA transport projects is significantly impacting pace of projects.

A representative from PMU 85 forecasted that the reason for such indifference of international contractors was that the delay of site clearance, narrow construction sites, traffic jam and others may make Japanese contractors indifferent to the Nhat Tan bridge.

According to Tran Van Luc, that Japanese contractors did not want to take part in ODA railway projects was because the stretch of the package was long [the package CP3 stretched from Ninh Binh province to Thua Thien - Hue), conditions to develop the project were difficult and hard to access.

Additionally, recent fluctuations of construction material prices have also made contractors hesitant to offer bid prices while adjusting prices is complicated, slow. Some contractors said that they did not want to go to Vietnam because Japan also had demand stimulus policies. This is really a paradox when many domestic competent contractors have to stand out but investors dare not violate the regulations.

In order to settle the problems for the Nhat Tan Bridge Project, the prime minister has recently given a green light to participation of Vietnamese contractor, which get active support from JICA, the Japanese Ambassador to Vietnam. The government has also sent a diplomatic note to the Japanese government and is waiting for their official approval. According to PMU 85, compared to the initial plan, the project has been delayed for some six months. As expected, it would take at least another six moths to select contractors.

Experts said that in order to thoroughly settle this issue on borrowing ODA loans, it is necessary to include specific binding conditions into loan borrowing agreements among governments and related sides must strictly follow those conditions in the signed agreements.

In case there is any problem for those conditions, it is required to make mutual discussions on settling problems.

Regarding the above specific projects, if Japanese contractors are indifferent to the projects, the two sides should discuss to revise the requirements to help international and Vietnamese competent contractors to access the projects.