Cost of Lao Road Project Led by PM’s Son Vastly Overstated: Expert
A road upgrade scheme in Vientiane led by the son of Lao Prime Minister Thongsing Thammavong is expected to cost four times more than similar projects, according to an expert, highlighting a lack of transparency in development in the capital.
The road linking Laos National University’s Dongdok campus to Route 13 North will cost an estimated U.S. $80 million to upgrade, according to a survey conducted by Chinese firm The Third Railway Survey and Design Institute Group Corporation (TSDI) between November 2014 and January 2015.
The company, which reportedly has connections to members of the Lao national leadership, had initially proposed a cost of U.S. $75 million for the project, but increased the estimate after carrying out the three-month survey.
At U.S. $80 million, the nine-kilometer (5.5-mile) long, 28-meter (92-foot) wide road, which was built only ten years earlier, would cost slightly less than U.S. $9 million per kilometer (0.6 mile).
But the cost of the upgrade is vastly over-estimated, a road construction expert told RFA’s Lao Service, speaking on condition of anonymity.
“The construction cost should not be more than U.S. $2.2 million per kilometer, including administrative expenses,” the expert said, adding that the company working on the road would still profit from the project at that price point.
At U.S. $2.2 million per kilometer—or just under U.S. $20 million for the proposed nine-kilometer Dongdok-Sikeuth road upgrade—construction costs would include the completion of the road, as well as the installation of lampposts and sidewalks, he said.
Dethsongkham Thammavong, the prime minister’s son and a leading official in the Vientiane Public Works and Transportation Department, told RFA the actual cost of the road upgrade was likely to be significantly less than what the survey estimated.
“The quote was made by the company in charge of the survey, but we must examine … the breakdown of the costs, and how they are defined by the company,” he said.
“However, the final cost will be less than [U.S. $80 million] … it will be around U.S. $50 million (around U.S. $5.5 million per kilometer), including the cost of compensating villagers for their loss of land.”
Dethsongkham Thammavong did not provide details of how many villagers would be relocated for the project or what compensation they could expect to receive.
He also declined to provide the name of the company that will construct the road.
TSDI has reportedly applied for financing from the Export-Import Bank of the United States (Ex-Im Bank), which is the official export credit agency of the U.S. federal government.
A second source, who declined to be named, told RFA that plans for the Dongdok-Sikeuth road
upgrade had been modeled on an upgrade to a 20-kilometer (12.5-mile) road in the capital
known as the 450-Year Road, which was built a few years ago at a cost of U.S. $80 million (U.S. $4 million per kilometer).
“The construction of the 450-Year Road had a lot of problems with
transparency and was not constructed in a standard manner,” the source said.
“Because of this, Sombath Yialiher, the former mayor of Vientiane who was responsible for the project, was demoted and made a governor of Xaysomboun province.”
The road construction expert echoed concerns over the cost of the 450-Year Road project.
“The fair price for the construction of this road was no more than U.S. $45 million,” or U.S. $2.25 million per kilometer, he said.
In addition to the Dongdok-Sikeuth road upgrade, three other road projects have been approved for construction in Vientiane following surveys undertaken by another Chinese firm—the China Railway No. 2 Engineering Group Co., Ltd—at an estimated total cost of more than U.S. $130 million.
China Railway No. 2 has applied for financing for the Dondeng-Nongthatai, Veunkham–Saendinh, and Somhong-Haddokkeo-Nahai roads—each at a length of around 60 kilometers (37 miles) and less than 15 meters (49 feet) in width—from the Exim Bank, though it is unclear if the loans will be approved.
Corruption problem
In January, sources told RFA that several top Lao politicians, including President Choummaly Sayasone, are building high-priced, luxury homes in the impoverished one-party communist country, raising questions among citizens about where the money is coming from.
They said that many leaders in the Lao government, military and communist party engage in corruption and spend the proceeds on expensive homes and other luxury items, although corruption is a criminal act punishable by fine and/or imprisonment.
Corruption among high-level officials in Laos has been going on for years, if not decades, while some low-level state employees and teachers are not even paid their salaries on a regular basis.
Graft in Laos is so widespread that it has deterred foreign investors, created problems with the country’s ability to enforce business contracts and regulation, and left many ordinary citizens impoverished.
In 2014, Lao ranked 145 out of 175 countries on corruption in the nongovernmental organization Transparency International’s corruption perception index, which scores nations on how corrupt their public sectors are seen to be
