Recent inspections by the Ministry of Finance has shown that the project to upgrade and expand a long section of National Highway 1 has ballooned in cost VND1.8trn (USD81.8m) due to various violations.

National Highway 1

The cost to upgrade 438km of the highway, running through eight provinces and cities, was set at VND27.8trn. But the inspections revealed a series of violation in all provinces and cities from Quang Binh, Quang Tri, Quang Ngai, Binh Dinh, Phu Yen, Khanh Hoa, Ninh Thuan and Binh Thuan, that pushed the cost up by VND1.8trn.

Approving wrong final accounts and declarations are serious violations to the law on the state budget. This problem has also been put on table from many National Assembly deputies because of the impact on funding through a budget deficit, especially for major projects like upgrading national highways.

This is not a new problem and violations have been discovered at many projects. Highway 1 is a huge project and has racked-up huge loss.

Though the spending plan was incorrect, the investors didn't cut expenditure in accordance with reality. In addition, even when the project was scaled down, spending stayed the same even though there could have been savings of up to VND545bn.

At some localities, investors and project managers even created extra jobs that were not necessary to justify the VND182.6bn price tag. Moreover, the inspectorate discovered a VND5.2trn depreciation reserve fund that was founded on flimsy grounds.

The inspectors from the Ministry of Finance successfully discovered the wrongdoings and prevented a potentially huge loss of money.

However, the Ministry of Transport alone shouldn’t take responsibility for the case, the Ministry of Planning and Investment and even the Ministry of Finance must also take blame as they reviewed and provided financial consultancy. Yet in the report, the inspectors have only proposed to review and punish officials at the Ministry of Transport.

Huge projects like the National Highway 1 upgrade must be scrutinised right from the start so its concept as well as the funding remain realistic. Inspectorate and audit agencies must participate in the project in the early stages to discover violations, instead of waiting for the whole thing to be completed.