Illustrative photo.
This will affect the overall GDP growth target as well, especially as these important large-scale projects will act as a driving force to stimulate other economic growth projects.
Funds disbursement
For the year 2021, the Ministry of Transport has been allocated funds for disbursement that are more than VND 43,400 bn, which include investment capital of VND 42,996 bn from the annual plan. Of this amount, VND 38,159 bn is from domestic capital, and VND 4,837 bn is from foreign capital, while VND 405 bn is part of the extended plan. By the end of June, the Ministry of Transport had disbursed VND 17,311 bn, which covered 40.8% of the total plan and about 40.3% of the plan assigned by the Government, which is higher than the average disbursement rate of all the other ministries that show an average of 22.02%.
The above results were achieved due to the initiative and flexibility of the Ministry of Transport in implementing disbursement plans for several key transport projects. The Ministry of Transport efficiently directed the basic construction works, especially in disbursing public investment capital with many key solutions, such as clearly defining the responsibilities of the investor, as to who is the leader in capital allocation decisions. The Ministry also promptly issued documents to urge and criticize investors who were behind schedule, while regularly inspecting ongoing works in localities, to remove difficulties in site clearance and construction materials.
Up until now, the Ministry of Transport has made three adjustments to the plan for eleven projects worth a total value of VND 3,130 bn. In which, the North-South expressway component projects has received an additional VND 1,637 bn from the Ministry of Transport; and disbursed VND 6,935 out of a total of VND 14,981 bn, reaching 46.3% of the plan and basically meeting the set requirements. Similarly, the My Thuan-Can Tho expressway project saw a positive disbursement with an additional VND 647 bn of the plan, and disbursing VND 900 bn out of a total of VND 1,811 bn, reaching 49% of the plan and meeting all the set requirements.
Also the Mai Son-National Highway 45 highway project, represented by PMU Thang Long, for the first six months of the year has reached the schedule in the ongoing North - South expressway component projects. This route covers a total length of 63.37 km, passing through two provinces of Ninh Binh and Thanh Hoa, at a total investment of VND 12,111 bn, since starting the first bidding package at the end of September 2020, and expected to complete construction in next two years.
Difficulties in last six months
According to the Ministry of Planning and Investment, in the last five months of the year, the Ministry of Transport needs to continue disbursing more than VND 26,000 bn, including VND 3,620 bn of foreign capital and more than VND 22,000 bn of domestic capital. This will not be an easy task, especially in the current scenario of an ongoing pandemic. That is to say that the disbursed value in the first six months of the year is still mainly towards contract application, payment of outstanding debts, recovery of advance capital for businesses and localities, and the disbursement for construction.
One of the difficulties in the construction of key projects that the transport sector is facing is the current high price of construction materials, such as a 40% to 50% increase in construction steel in the second quarter, leading to moderate standard construction material, and some other construction materials shortage in supply as well. Currently, the Cam Lo-La Son expressway project, which is the section connecting Quang Tri and Thua Thien-Hue, is not expected to be complete and put into use by the end of 2021 due to a lack of land for embankment. The contractors are also waiting for the local mining license for this project.
The section of the Mai Son-National Highway 45, which will run through Ninh Binh-Thanh Hoa, and the Phan Thiet-Dau Giay project, which will run through Binh Thuan and Dong Nai provinces, are also facing lack of land for embankment. Besides this delay, there is the high price of iron and steel which puts the contractor in a difficult position, affecting construction progress. The North-South expressway project has just disbursed VND 4,534 bn, reaching 30% of the yearly plan. Similarly, the Long Thanh airport clearance project has also disbursed VND 9,887 bn, reaching 43% of the plan through domestic capital in the last six months of the year.
To overcome these many difficulties, the Government issued a resolution at the end of June, allowing localities to apply a specific mechanism for granting land mining licenses to solve the lack of land for embankment of the North-South Expressway. However, this cannot be done right away because of the Covid-19 pandemic outbreak in many localities, which has created complicated situations. In addition, at present, there are still a number of official development assistance (ODA) projects that are completing procedures for approving technical designs, while the bidding process is lengthy, so construction has not yet been implemented. This is potentially posing a risk for disbursement not meeting the proposed schedule time while the stormy season is approaching, affecting the project progress.
Faced with the above situations that are causing needless delays, the Ministry of Transport issued Directive 06/CT-BGTVT 2021 in June to accelerate the implementation and disbursement of the 2021 public investment plan. Specifically, the Ministry of Transport requires investors, and the Project Management Board to hasten the completion of bidding procedures to select contractors and consultants, based on the detailed monthly disbursement plan approved by the Ministry, as a basis for project management. The department directs and manages the implementation and ensures the overall disbursement plan of the Ministry's projects in 2021. Accordingly, it will strive to achieve at least 90% of the plan by December and to disburse 100% by 31 January, 2022. Projects with capital sources extending from the 2020 plan must be fully disbursed before 31 December, 2021.
When the above targets set by the Ministry of Transport are fully realized, they will contribute a great deal towards the GDP growth target this year. However, under the current difficult circumstances caused by the Covid-19 pandemic, the effective implementation of these target plans in the last six months of the year will certainly prove to be an immense challenge.
