Eyebrows raised after Chinese power plant contractor nominated to build Vietnam’s mega-airport

Construction News Vietnam

Eyebrows raised after Chinese power plant contractor nominated to build Vietnam’s mega-airport

The lotus design of Long Thanh International Airport in Dong Nai Province.

The selection process hasn’t started yet, and Chinese contractors have already gained notoriety for costly delays in Vietnam.

Questions are being asked about the expertise of a Chinese contractor that has been put forward to build what would be the largest airport in Vietnam.

The Hanoi Export-Import Company, or Geleximco, has asked the government for permission to team up with Sunshine Kaidi New Energy Group Co., Ltd., a construction and engineering firm based in Wuhan, to build Long Thanh International Airport.

Geleximco, which specializes in real estate, information technology and finance and banking, vouched for its selection by arguing that it could complete the project at the lowest cost within three to five years.

The proposal has not received an official reply from the government because it has not even started the process of selecting investors and contractors for the multi-billion-dollar airport.

But in Vietnam, where Chinese investors and builders are notorious for delayed, unsafe and costly projects, the proposal has already been met with public skepticism.

Nguyen Thien Tong, a Vietnamese aviation expert, said he is concerned with the “low-cost” proposal.

“China does not have experience in building big international airports,” he told Tuoi Tre (Youth) newspaper on Friday. “So a proposal to let them build one of this scale at a cheap price is very dangerous,” he said.

The Chinese firm was established just 25 years ago, and has no prior experience in building airports, according to its profile.

Bloomberg said the company “constructs power plants and offers electrical construction general contracting services”, and is also involved in fuel and construction material production.

The United Nations Development Program, a partner of Sunshine Kaidi, said the company is a hi-tech investment company working in the field of green energy, and is known as the largest private company in biomass power generation in China.

Similar information can be found on the company’s website.

The company is actually no stranger to Vietnam, but not in the field it professes to excel in.

According to a recent Tuoi Tre report, it has worked as an investor, contractor and consultant for at least five thermal power projects in northern and central Vietnam. Two of them started operations at the end of May this year, but the rest have been delayed.

Government officials have not commented on the matter, but Nguyen Ngoc Dong, vice minister of transport, said at a press briefing on Wednesday that “we welcome all investors”.

Dong said the ministry is in the process of conducting a feasibility study for the project, which is expected to take two years. After that, investors and contractors will be selected.

The Airports Corporation of Vietnam (ACV), the state-owned company in charge of managing all of the country’s air terminals, said caution is advisable when it comes to selecting an investor for the project.

Do Tat Binh, deputy general director of the ACV, said Long Thanh will be the country’s main airport, so national security interests are at stake.

His company has been assigned by the government to study investment proposals for the project.

“We will follow a strict set of guidelines to select the investors, including experience in the field and financial capacity,” he told Tuoi Tre.

He said it’s too soon to appraise Geleximco’s plan right now. But if the company does select a Chinese partner, the “ACV will have to control the construction technology and quality, and progress on the project.”

There will be “many risks” if the pair is granted the project, Binh added.

Long Thanh, which will cover 5,000 hectares (12,400 acres), is expected to replace Tan Son Nhat International Airport in Ho Chi Minh City as the country’s largest airport and have an annual capacity of 100 million passengers and five million tons of cargo.

Lying 40 kilometers from HCMC, the project will be carried out in three phases, the first of which is scheduled for completion in 2025 and will be able to handle 25 million passengers a year.

Transport Minister Truong Quang Nghia said last June that the airport will cost an estimated $16 billion.

Officials have made the construction of Long Thanh “an urgent issue” given the constant overloading at Tan Son Nhat. The airport is currently handling 32 million passengers a year, far beyond its designed capacity of 25 million.

Chinese firms are currently the dominant engineering contractors in Vietnam, besides others from Japan, South Korea and the west.

However, there have been numerous reports of failures in various fields, most commonly regarding quality, delays or violations of contractual terms and conditions.

The cost of the country’s first metro line in Hanoi has ballooned from $552 million to $891 million after five years of delays.

The Hanoi-Lao Cai Expressway, another project run by Chinese contractors, also opened two years behind schedule in 2014.

Experts say although all Chinese contractors should not be discounted on these grounds, Vietnam should take any low-cost offers with a grain of salt.

“Chinese companies were able to offer low prices thanks to subsidies from the Chinese government given on presentation of contracts they had won,” Le Hong Hiep, a Vietnam analyst at the ISEAS-Yusof Ishak Institute in Singapore, wrote in a 2013 research paper.

“In addition, unlike other contractors who, once awarded the contract, strictly implement its terms and conditions, Chinese contractors normally adopt a different strategy,” Hiep wrote. “They are willing to offer low prices, but after being awarded the contract they try to save costs by persuading project owners to change the contract’s original terms and conditions, or by just ignoring them.”

According to Hiep, Vietnam’s dependence on Chinese contractors has generated concerns about Vietnam’s national security, especially energy security, and the poor quality of a number of projects has created a negative perception of Chinese contractors among a large segment of the Vietnamese population.

“They further deepen Vietnamese distrust of China in general and Chinese products and services in particular,” he wrote.

Source: https://e.vnexpress.net/news/news/eyebrows-raised-after-chinese-power-plant-contractor-nominated-to-build-vietnam-s-mega-airport-3635782.html

Leave a Reply