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67 Gov`t-funded Projects See Costs Triple

Posted September. 18, 2009 08:39,   


In 2003, the Environment Ministry and Geoje, South Gyeongsang Province, allocated 10.5 billion won (8.7 million U.S. dollars) to build a 100-ton capacity waste incinerator. Strong opposition from residents forced the plan to stall, however.

After promising residents to build convenience facilities worth six billion won (five million dollars), the project was set to resume in 2006, the same year the incinerator would have been completed had construction gone on as scheduled.

The project hit another snag, however, due to an increasing amount of waste stemming from population growth. In November last year, the government raised the volume of the incinerator to 200 tons and project costs to 72 billion won (60 million dollars), or nearly seven times the original cost.

The government’s burden of the cost also shot up to 21.6 billion won (18 million dollars) from three billion won (2.5 million dollars).

According to a report submitted by the Strategy and Finance Ministry to ruling Grand National Party lawmaker Cheong Yang-seog yesterday, the number of large state-financed projects whose costs more than doubled has risen to 67. The combined funds for such ventures rose 292 percent to 30.03 trillion won (25 billion dollars) from 10.3 trillion won (8.5 billion dollars).

The geometrical rise in project costs is attributed to unethical practices by provincial governments. They usually apply for a project costing a small amount of money to get permission, and after getting approval, raise the cost several times. Lack of surveys on demand, delayed construction due to opposition from residents, and conflicts with land owners also jack up costs.

Massive infrastructure construction of roads, agricultural facilities, subways and ports made up the largest share of the projects whose costs doubled. Because of this, experts urged the government to thoroughly manage existing projects instead of increasing infrastructure investment.

A Strategy and Finance Ministry official said, “We will strengthen monitoring on projects whose costs rose more than 20 percent by conducting additional feasibility tests.”