Five metro line projects report a cost overrun of $3.47 billion

14:47 | 10/06/2019
The total investment capital of the five metro line projects in Hanoi and Ho Chi Minh City increased by VND80 trillion ($3.47 billion) against initial expectations due to delays in land clearance, arranging capital, and irresponsible investors.
five metro line projects report a cost overrun of 347 billion
Vietnam's five metro line projects are all running behind schedule, with significant cost overruns

In the framework of the seventh session of the 14th National Assembly (NA), Minister of Transport Nguyen Van The reported on the construction process of transport projects, including metro lines in Hanoi and Ho Chi Minh City. Accordingly, the construction of all five projects in these two cities is behind the schedule and have exceeded the initial investment calculations by a significant margin.

Notably, in Hanoi, the Cat Linh-Ha Dong elevated railway system, which is 99 per cent complete, has yet to be certified as safe for official operations. The two other metro line projects have been delayed 10 times already.

The weak capacity in building investment plans and evaluating the projects is the main reason behind the delay in construction and budget increases.

Specifically, the Metro Line No.3 project connecting Nhon and Hanoi stations is only 49 per cent complete. Work on the project started in September 2010 and was expected to end in September 2017. However, the deadline was later extended to December 2022 and as of now, the cost overrun is VND14.05 trillion ($610.87 million).

The situation is even direr at the city’s Metro Line No.1 linking the Yen Vien and Ngoc Hoi stations, which has yet to be launched at all.

In Ho Chi Minh City, Metro Line No.1 connecting Ben Thanh Market in District 1 and Suoi Tien Park in District 9, which is 63.91 per cent complete, has been suspended until investment adjustment procedures are finished. Meanwhile, the cost overrun is reported at VND51.7 trillion ($2.25 billion).

Meanwhile, only two packages of the second metro line between Ben Thanh Market and Tham Luong – the office building and the depot – have been completed. The seven remaining packages have yet to be executed due to a lack of capital and complicated project adjustment procedures.

According to the minister, there are numerous reasons for these unexpected incidents. The weak capacity in building investment plans and evaluating the projects is the main reason behind the delay in construction and budget increases. Notably, due to a lack of experience, consultancy firms failed to calculate the exact investment capital compared to the real demand as well as necessary infrastructure works. Thus, the projects had to be adjusted, departing significantly from the initial plan.

Besides, the lack of reciprocal capital, in collaboration with problems in selecting contractors, impacted the construction process.

In response, Minister The said the ministry’s inspectors have reviewed all projects that were reported to show signs of poor quality. The ministry has also co-ordinated with the Government Inspectorate, the State Audit of Vietnam (SAV), and the police to investigate violations at these projects.

All individuals and organisations found to have committed violations in the execution of urban railway projects must be held accountable under the law.

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