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Govt saves 1,213 billion kip from overvalued projects
   
The government has saved 1,213 billion kip from overvalued state investment projects whose efficiency was determined to be low when inspections were carried out, Prime Minister Thongloun Sisoulith told the National Assembly recently.
Addressing the one-week ninth ordinary session of parliament which ended on Thursday, the premier said the government had formed a taskforce committee to investigate the implementation of costly projects across the country.
In total, 4,601 state investment projects worth 103,187 billion kip will be inspected.
So far, the committee has inspected 672 projects with investment funding of 43,538 billion kip. In this regard, the government has saved 1,213 billion kip with unpaid taxes of 89.36 billion kip also required to be paid to the state.
Speaking to Vientiane Times on Thursday, Deputy Minister of Planning and Investment Dr Kikeo Chanthabouly said the money was saved after inspections revealed that some project activities had been cut, meaning the investment cost would be reduced accordingly.  
In addition, inspections found that the unit price of many projects was more than 20 percent (amounting to 2,583 billion kip) higher than the unit price imposed by the relevant ministries, PM Thongloun told parliament.
 His government would re-negotiate with the contractors to retrieve the money, he added.
Dr Kikeo said there were several reasons why the unit cost had increased and these should be taken into account during negotiations.
One of the reasons was that the government had been unable to pay contractors after they completed their work due to financial difficulty so investors added the interest rate on bank loans to the investment cost, which drove costs above the official unit price.
Projects that cost over 20 percent more than the unit price needed to undergo negotiations in order to lower the cost.
“But this doesn’t mean that an excess of more than 20 percent will be completely cut,” Dr Kikeo said, adding that acceptable reasons for price increases would be taken into account.
“On the government’s side, whatever is done aims to ensure the price is really the fairest,” he added. Previous reports suggested that investment in some projects, including infrastructure, was unreasonably high, so the government had renegotiated and signed new contracts with lower costs.
The government previously told the National Assembly that overpriced infrastructure projects were found to have been carried out since 2007. Most had not been approved by parliament or the government.
A number of these projects were initially funded by businesses under an agreement where the state departments involved were to repay the money at a later date.
But these projects did not go through a bidding process and the investors themselves carried out the surveys, design plans, actual construction and hiring of consulting companies, which drove up costs to an unreasonable level.


By Souksakhone Vaenkeo
(Latest Update July 3, 2020)


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