Miscalculation of Total Investment by Nearly VND 310 Billion
A section of the Bac Giang – Lang Son Expressway.
According to the inspection conclusion, the Bac Giang – Lang Son BOT project was approved by the Ministry of Transport (now the Ministry of Construction) in 2015, with a total investment of over VND 12,188 billion. The project operates under a Build-Operate-Transfer (BOT) contract, allowing investors to recover capital through toll stations.
The Government Inspectorate identified multiple errors in the preparation and appraisal of the total investment. These included miscalculations in construction costs, inflating the value by nearly VND 310 billion (excluding interest and land clearance expenses).
Notably, the Ministry of Transport approved the project without updating the Environmental Impact Assessment (EIA) report, violating the Environmental Protection Law. Additionally, the approval decision was issued before receiving the Ministry of Finance’s input on toll station locations, contravening the Prime Minister’s directives. The construction timeline (2015–2017) was deemed unrealistic, contributing to project delays.
The inspection revealed that the TEDI – VECC design consultancy consortium inaccurately forecasted traffic volume, with unrealistic growth rates of 131–186% between 2019 and 2020. This error was identified as the primary cause of the project’s financial inefficiency and subsequent losses.
Furthermore, the contract between the Ministry of Transport and the investor contained provisions inconsistent with the tender documents, negotiation results, and project approval decision. The Ministry signed the BOT contract despite the investor’s insufficient capital contribution and failure to meet financial conditions under the Procurement Law, posing significant implementation risks.
In May 2018, the Ministry of Transport transferred authority to the Lang Son Provincial People’s Committee. However, the province signed six contract addendums without fully adhering to Decree 150/2015/NĐ-CP procedures. The Inspectorate attributed these issues to the investor’s internal instability, frequent changes in capital contributions, and consortium membership, causing multi-year delays.
Low Project Efficiency, Insufficient Revenue to Repay Bank Loans
The Lang Son Provincial People’s Committee reported that the project investor submitted an investment settlement proposal of VND 8,387 billion, but the province approved only VND 8,161 billion after review. The Inspectorate identified a VND 80 billion miscalculation in the completion estimate and an additional VND 93 billion in deductible items, totaling VND 99 billion in financial irregularities.
The conclusion stated, “The project failed to meet its initial objectives, achieving low efficiency. Toll revenue at the time of inspection fell short of contractual financial projections, leaving the enterprise unable to service bank loan principal and interest.”
The Government Inspectorate recommended that the Prime Minister direct the Ministry of Construction, Ministry of Finance, and Lang Son Provincial People’s Committee to investigate and clarify the responsibilities of individuals and entities involved across all periods. Strict measures, including compensation for damages, should be enforced if violations causing budget losses are identified.
The Inspectorate also instructed the Lang Son Provincial People’s Committee and the project enterprise to deduct VND 99 billion during investment settlement and review construction-period interest expenses for proportional adjustments. If criminal violations or state asset damage are detected, the case must be referred to investigative agencies for legal action.
Beyond financial corrections, the Inspectorate mandated that the Lang Son Provincial People’s Committee collaborate with the Ministry of Construction and its Economic Institute to scrutinize the application of 2020 construction standards in the project.
The Inspectorate advised the Government to comprehensively review mechanisms for appraising, approving, and monitoring transport BOT projects to prevent losses, ensure transparency in revenue, expenditure, and investment recovery.
