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State constructor Cosevco wallows in the red

09-Jun-2007 Intellasia | 05/Jun/2007 Lao Dong | 7:08 AM Print This Post

Many out of a total of 160 projects of state-run Central Construction Corp (Cosevco) are backed by bank loans but are either losing money or projects started years ago are still a wasteland of weeds growing in basic foundation works.

A project by Cosevco to build a high-quality steel mill started in 2002. The project initially needed an investment of 254.499 billion dong but in November 2004, Cosevco increased total investment capital to 309.8 billion dong. Initial work started on the project in 2002 with a groundbreaking ceremony held even though at that stage Cosevco had not obtained a capital source for the project. Then nearly a year later May 2003 Cosevco signed a contract buy equipment and technology transfer from an Italian supplier whereby under the contract, Cosevco transferred 350,000 euro (7.5 billion dong) from a 10 billion dong bridging loan supplied by the former Vietnam Development Assistance Fund (now called the Vietnam Development Bank).

In the five years since the project started, no progress has started on the project and a report by the project management unit under Cosevco stated that total investment paid out for the project so far to 16.687 billion dong as of last August. Cosevco paid 105 million dong for the groundbreaking ceremony and 3.095 billion dong in management costs over the near-vacant construction site.

Other pivotal projects of Cosevco were simply sold off for a profit take on the contract. A medium density fibreboard (MDF) mill in Quang Tri province with total investment of more than 450 billion dong was put out to equitisation even though the plant was still under construction. Vietnam Rubber Corp bought up to 90% of the equity in this plant. Cosevco Star in the central coastal province of Da Nang with total capital of more than 100 billion dong was sold for 40 billion dong to another state company buyer right after its groundbreaking ceremony. Importantly, the 40 billion dong contract was inked without any official tender as regulated by the law. Cosevco also sold another steel project in Da Nang in a similar way.

Two other large projects by Cosevco in Da Nang were to build a high-end apartment complex in An Trung II area of Son Tra district. The project needed investment of more than 100 billion dong and when finished would cover an area of 17,000 square metres. As scheduled, construction would finish in September 2004. However, after the groundbreaking ceremony and tens of billions of dong were spent on basic foundation works, the project has since been left toile fallow for five years.

A project of Da Nang-Quang Ngai high speed road worth some six trillion dong was also held off since 2003. It has yet to be done now since the investors said they have yet to gather capital for the implementation. A range of big projects which have been implemented are now making losses but the Corp tried to hide the losses and inefficiency that intentionally makes the losses more serious and has negative impact on employees’ lives.

For the sake of more than 20,000 employees at the Corp, it is very pressing that the construction ministry and policy ministry should take actions to conclude the prolonged loss making and stagnancy at the Corp.


Category: Legal

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