HCMC metro project cost spike to worsen public debt

Several ministries have expressed concern that the Metro Line No. 2 project in HCMC might make the country’s public debt soar as its cost has surged to about US$2.15 billion from the originally planned US$1.3 billion.



HCMC metro project cost spike to worsen public debt, vietnam economy, business news, vn news, vietnamnet bridge, english news, Vietnam news, news Vietnam, vietnamnet news, vn news, Vietnam net news, Vietnam latest news, Vietnam breaking news

A view of an elevated section of Metro Line No. 1 in HCMC. Several ministries have expressed concern that the Metro Line No. 2 project, which has yet to get off the ground, in HCMC might make the country’s public debt soar



At a meeting with the HCMC People’s Committee on September 1 on metro line development projects, Hoang Nhu Cuong, deputy director of the city’s Management Authority for Urban Railways (MAUR), said the adjustment of the project’s investment cost from US$1.3 billion to US$2.15 billion had been thoroughly reviewed by consultants and would go before the city government this month.

However, the Ministries of Finance and Construction said the project should be sent to the National Assembly for approval because the additional US$800 million would worsen the country’s public debt.

According to Cuong, Metro Line No. 2 connecting Ben Thanh Market in District 1 and Tham Luong Depot in District 12 will have 10 stations and a total length of 11 kilometers, with nine kilometers underground and about two kilometers elevated.

The project is funded by official development assistance (ODA) loans from the Asian Development Bank (ADB), the European Investment Bank (EIB) and the German Development Bank (KfW), and scheduled for completion in 2024.

The project developer has plans to invite competitive tenders in late September to carry out two underground tunneling packages.

In addition to the cost overrun, the project is having difficulty with site clearance and compensation. In particular, the site clearance cost has shot up 10 times since the project was approved in 2010. Besides, site clearance work will not begin until June 2018.

In addition to Metro Line No. 2, the under-construction Metro Line No. 1 has fallen behind schedule due to the slower-than-expected capital disbursement process.

According to MAUR chief Le Nguyen Minh Quang, the city will need VND5.44 trillion (US$239 million) to finance the Metro Line No.1 project this year but the city has got only VND2.12 trillion from the central Government.

Some contractors said they would have to suspend construction work if the city delays payments. Therefore, the city has used its own budget to advance VND500 billion for MAUR to pay the contractors.

However, this is just an impromptu move. To make sure the US$2.49-billion Metro Line No. 1 project will be completed as planned, the city government and relevant ministries will have to accelerate ODA loan disbursement.

To conclude the meeting, city chairman Nguyen Thanh Phong said the city government would report to the secretary of the HCMC Party Committee and the Prime Minister to find a way out.

SGT

HCMC metro project cost spike to worsen public debt, vietnam economy, business news, vn news, vietnamnet bridge, english news, Vietnam news, news Vietnam, vietnamnet news, vn news, Vietnam net news, Vietnam latest news, Vietnam breaking news
 
*
*
*
  Send