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VNPT’s $150 million sea cable project cancelled

VietNamNet Bridge – The Prime Minister has agreed to stop the implementation of the North – South sea optic cable project invested by the Vietnam Post and Telecommunication Group (VNPT), using VND3 trillion worth of capital from Japan’s ODA.

Vietnam planned to develop an 8-fiber optic cable transmission system with WDM technology, which would skirt the Vietnamese coast, estimated to have the total length of 2.034 kilometers from Hai Phong City to Soc Trang province. The initially designed capacity of the system is 60 Gbps.

The project was hoped to help improve the VNPT’s infrastructure capacity, minimize the risks of having transmission to be interrupted due to natural calamities, earthquake and floods.

In November 2004, the project management unit signed a commercial contract with the Japanese partnership contractor JTEC/KEC on providing consultancy services.

JTEC was known as the unit that helped Vietnam make the feasibility project to be submitted for Japan’s ODA loans in 2001. It was one of the four consultancy contractors suggested by JBIC.

The other KDDI Corporation and Nippon refused the cooperation opportunity. Finally, JTEC/KEC was chosen as the consultancy contractors for the project.

Due to the limited experiences and abilities, and the limited understanding about the Vietnamese laws, the consultants drew the technical design and construction design with unclear provisions which cannot show the workloads, duties and value of works in details.

A report on the implementation of the sea cable project released in May 2013 pointed out that there existed disagreements between the project management unit and the foreign consultancy contractors, between the Vietnamese competent agencies and JICA on several issues.

The project management unit and JTEC also had disagreements on the official acceptance and payment for the prolonged MSR and CDR works.

JTEC implemented the MSR research in 2005, but it did not fulfill all the works assigned to it, because of which the project management unit decided not to pay in full to JTEC.

As a result, JTEC then became uncooperative and refused to submit the report on the first phase of the project. This is one of the main reasons that has slowed down the project implementation. Only in January 2008, were the documents delivered to invite bidders, or 3 years later than initially planned.

Meanwhile, 3 years is too long a period for the telecommunication industry, during which a new technology could be found and became out of date. Therefore, the 8-fiber system with the capacity of 60 Gbps became no longer suitable. VNPT then wanted to set up the 24-fiber fiber optic cable with the capacity of 320 Gbps.

However, in order to make adjustments with the technical requirements, everything needs to be restarted from the very beginning. The biggest problem arisen is that the total investment capital of the project is estimated to reach VND3,494 billion, which is attributed to the dong/yen exchange rate fluctuations.

Finally, the Prime Minister has decided to stop the project after 10 years of implementation during which VND130 billion was spent. It’s still unclear about how to arrange money to make payment for this. As the project has stopped, Vietnam cannot make payment with the ODA capital.

P. V

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