Vinh Son Song Hinh escaped a claim of 2,100 billion dong

Vinh Son Song Hinh Hydropower will not have to pay 2,163 billion dong for compensation because it falls into the “trap” of bidding at low price by Chinese partners.

Vinh Son – Song Hinh Hydropower Joint Stock Company (stock code: VSH) has just announced that the Hanoi Court has canceled all arbitration awards on April 10, 2019 of the Arbitration Council 24/14.

This ruling previously forced the company to pay more than VND 2,163 billion for a complex of contractors including the East China Design Institute of China Hydropower Group and the No. 18 Railway Bureau Co., Ltd.

Conflicts between the two parties related to the Thuong Kon Tum Hydropower project was started in late 2009. Designed to build on the Dak Nghe River (the main upstream of Se San River), the project has the following engine installation capacity. adjusted 220 MW, which was identified as an important industrial and infrastructure project of Kon Tum province according to the master plan till 2020.

The problem arises when an important bidding package falls into the hands of Chinese contractors at a “record low” price. The power line and plant package of this project is internationally procured in the form of EC and selected the main contractor, including the East China Design Institute of China Hydropower Group and Railway No. 18 Co., Ltd.

However, the tender price of this unit with a total construction value is only VND 1,137 billion and USD 25 million, equivalent to the converted price of VND 1,614.7 billion, equal to 44.7% of the bid price of The second ranked contractor is CMC, CAVICO and Power Engineering Consulting Joint Stock Company No. 3 (bid price is VND 3,614.3 billion).

The investment was then continually increased, while the project schedule was not guaranteed. After nearly 2 years of construction of items and more than 1 year of construction of TBM (a technology used to make hydroelectric dams), Chinese contractors did not perform according to the signed schedule. The report of the Management Board of Vinh Son – Song Hinh Hydroelectricity Management Board in 2016 commented that the contractor’s style of “low bidding price and continuous construction of increasing costs” has made progress according to the signed contract. not guaranteed. “Therefore, VSH proceeded to terminate the contract with Chinese contractors,” the report said.

This termination caused the project cost to be high due to the change of construction method, but another consequence for Vinh Son – Song Hinh was entangled in this lawsuit. Both parties submit a claim to the Vietnam International Arbitration Center (VIAC).

On August 23, 2014, the Chinese contractor complex filed a lawsuit against Vinh Son – Song Hinh to VIAC, requesting to arbitrate the contents of the contract termination and claim. By early 2019, the arbitral tribunal ruled that the company must pay more than VND 2,163 billion to Chinese contractors. Disagreeing with this decision, Vinh Son Song Hinh then submitted the application to the Hanoi Court and also filed a lawsuit with VIAC asking Chinese contractors to compensate more than 2,000 billion VND.