Admitting that the initial estimate to build Long Thanh Airport was "unreasonable", the Ministry of Transport (MOT) has revised construction costs to $15.8 billion instead of $18.7 billion.
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Admitting that the initial estimate to build Long Thanh Airport was “unreasonable”, the Ministry of Transport (MOT) has revised construction costs to $15.8 billion instead of $18.7 billion.
Minister of Transport Dinh La Thang said at a National Assembly’s Steering Committee the pre-feasibility study shows that the investment cost could be cut by $3 billion.
In a report MOT submitted to the National Assembly in October 2014, it quoted an $18.7 billion investment. This included $7.8 billion in capital to be invested in the first phase.
However, total investment capital has been cut to $15.8 billion, of which $5.2 billion would be spent in the first phase of the project.
The capital for the project would be sourced from the state budget (VND12.149 trillion), which provides 11.1 percent of the total investment capital, ODA (official development assistance) (VND29.177 trillion), 26.5 percent, and non-state budget VND68.644 trillion, 62.4 percent.
The chair of the National Assembly’s Economics Committee, Nguyen Van Giau, in his project appraisal report, noted that $5.2 billion may not be the final estimate.
Phung Quoc Hien, chair of the National Assembly’s Finance & Budget Committee, said the money for the project would come mostly from the state budget.
“It is estimated that the State would have to pay VND40.1 trillion out of every VND100 trillion of the total expenses. And this is just for the first phase of the project,” he said. “Therefore, it is necessary to clarify the issues relating to the public debt.”
Even though the NA Economic Committee agreed with the need to build a new airport, it also raised concerns over the amount the Long Thanh International Airport project in HCM City might add to public debt.
Thang said investment capital may be adjusted several times more, but said the estimates were the maximum amount of capital needed.
Thang also tried to reassure the National Assembly’s Deputies by saying that MOT would not need money from the State budget, if the government allowed it to retain funds to be collected from the equitization of Long Thanh and Phu Quoc airports.
As for loans from ODA, Thang said that it is not difficult to borrow money from sources because all airport projects have been profitable.
Dr. Nguyen Thien Tong from the HCM City University of Technology noted that the drop in investment by $3 billion shows that MOT was not careful when drawing up the prefeasibility study. Therefore, no one can say for sure if $15.8 billion is an accurate figure.
It is quite common for the actual cost of transport projects to exceeded their original estimates, which is why many NA deputies are worried about additional unexpected expenses.
(Source: VNN)
