Critical Vietnam Power Source Projects: Why Sluggish?

The sluggish implementation of Vietnam’s critical power source projects makes the electricity shortage more serious. Why have those projects, carried out by particular mechanisms like 797, 400 and 1.195, not been completed on time? On May 29, 2007, the Electricity of Vietnam (EVN) sent Official Dispatch No. 2.673 to the Prime Minister, explaining the reasons for the delay and proposing measures to speed up implementation of crucial power source projects.

 

Among 19 hydropower projects and eight thermoelectricity projects executed by EVN, several projects are behind schedule, including A Vuong and Tuyen Quang hydropower projects. In addition, Ban Ve, Huoi Quang, Bat Chat, Dong Nai 3, Dong Nai 4 and other hydropower plant projects are also facing possible delays.

According to the explanation, there are five major reasons for the delays. First, the establishment and approval of technical designs and overall calculations are slower than expected. The purpose for introducing special mechanisms for power projects is to improve the capability of domestic companies. However, the varying levels and weak capacity of executing units have become significant barriers. For example, the sub-consultant acted as main consultant; hence, human resources and the quality of design, supervision and on-site settlement failed to meet expectations. In addition, several projects are situated in areas with unexpected geological conditions, and new work requirements emerged and needed resolving. This is the case at A Vuong, Ban Ve, Ba Ha River, Buon Kuop and Buon Tua Srah hydroelectricity plants. As a result, although technical designs have been approved, the overall calculations could not be approved.

 

The site clearance is difficult, because it is based on a 1/25,000 scale map, leading to inaccuracy and disqualification of site investigation. In addition, the approval of overall plans and mechanisms for resettlement at several projects are moving at a snail’s pace. Another hindrance is the sluggish and asynchronous bidding process and equipment purchase. Chinese equipment bidders are dominant at power projects because of their low bidding prices and willingness to accept projects of all levels of quality and speeds of implementation. However, problems emerged during the execution. The EVN report pointed out weaknesses of general contractors and subcontractors, such as thin workforce. The roles of general contractor and subcontractor management boards have not been fully brought full play, and have not been adapted to practical conditions. Many contractors could carry out only half of their work. At present, many members in contractor consortiums have been turned into joint stock companies operating in accordance with the Enterprise Law; thus, general contractors find it difficult to manage project execution as they did before equitisation. In general, power source contractors are overloaded because they are in charge of many projects at the same time.

 

To ensure the punctual completion of the projects, EVN put forward a series of solutions. As for investors, they should set up and approve technical designs, overall calculations, EPC contracts, equipment supply bidding and make regular contact with worksites to resolve any possible problems. EVN leaders will investigate the execution of projects every month and ensure the settlement of difficulties within the authority of investors within 15 days. The EVN Group pledges to provide sufficient capital to pay for finished items.

 

As for consultants, they should focus on technical design and overall calculations, and intensify supervision to resolve any possible changes on worksites. Projects with complicated structures and execution technologies will continue to be leased to foreign consultants. Project management boards will work with local authorities to speed up site clearance and compensation.

 

General contractors will reorganise management forces and will replace sub-standard contractors. Contractors must send weekly and monthly reports to general contractors and ensure the workforce, vehicles, machinery, material and equipment for operation of three consecutive working shifts a day. As for specialised projects, contractors should buy equipment and materials to strictly keep the project construction schedule. Capital will be given to contractors in time for buying materials (petroleum, cement, steel, etc) to meet construction demand. General contractors and subcontractors will coordinate with project management boards on any amendments to the construction pace to maintain consistency with the overall project.