Former Deputy PM provided poor guidance to loss-making steel project - inspectors
Former Deputy PM Hoang Trung Hai was found to have committed violations and shortcomings in his instructions to a long-suspended, loss-making megaproject managed by State-run Thai Nguyen Iron and Steel Corporation.
In a statement today, December 9, the Party Central Committee’s Inspection Commission released its official conclusions following its inspection into the irregularities found in TISCO’s phase-two production expansion project.
Poor administration by the relevant State agencies over the years had prompted the steel-and-iron plant project to grind to a halt despite the heavy investment of VND8.1 trillion (US$350 million) that had been made, with the project owner still owing some VND40 billion (US$1.7 million) per month for the bank loans.
The commission found that the 60-year-old Hai, who is now a Politburo member and the Party chief of Hanoi City, had made errors in issuing instructions for the steel plant project while serving as a member of the central Government’s Party committee and as deputy prime minister from August 2007 to February 2016.
For this project, former Minister of Industry and Trade Vu Huy Hoang, now 66, was held largely accountable for the wrongdoing of the ministry’s Party unit. His deputies, Le Duong Quang and Do Huu Hao, were equally liable.
The commission alleged that the Party standing committee of TISCO had shown negligence, slack leadership and poor inspection and oversight, which resulted in the corporation making serious mistakes in the execution of the project.
Their poor performance “has led to grave consequences, causing serious losses of the State’s money and assets. Many officials and Party members involved are subject to criminal offenses, provoking public anxiety.”
Many executives of the corporation were held accountable for their involvement in the project.
Early this year, the Government Inspectorate released its years-long inspection results for the project.
In late 2004, the then-Prime Minister gave TISCO the go-ahead to do a feasibility study for tripling the capacity of steel billet production from 250,000 tons to 759,000 tons.
One year later, the project was approved, at an initial cost of VND3.84 trillion, or US$242.5 million given the exchange rate at the time of VND15,850 per U.S. dollar.
The project, which was originally scheduled for completion in two and a half years, included two major bidding packages and 22 smaller components.
The first key package involved Tien Bo iron mining, worth VND442 billion. A local contractor was chosen to build an iron ore screening plant, which was designed to handle 300,000 tons of iron ore on an annual basis. It was put into operation in May 2014.
Meanwhile, the second package was expected to develop a chain of metallurgy technology operations, worth roughly VND2.3 trillion, or US$143 million, at an annual capacity of 500,000 tons of steel billets.
In 2007, TISCO signed an engineering, procurement and construction (EPC) contract, worth US$160.8 million, with Chinese contractor China Metallurgical Group Corporation (MCC) to complete the second package within two and a half years.
However, the two sides signed many extra appendices on adjustments, which led to various content changes in their EPC contract.
In 2012, TISCO and its holding company, VNSTEEL, suggested the Ministry of Industry and Trade raise the total investment of the project to VND8.1 trillion, or VND4.26 trillion higher than the initial figure. The approval was given in mid-2013, and the project was expected to begin operations in late 2014.
Since 2013, MCC and its subcontractors have suspended work on the project. Consequently, the project is over 10 years behind schedule and all of the major items remain incomplete, according to the Government Inspectorate. SGT