Payment bottleneck puts the brakes on Hanoi metro test

The test run date for the Cat Linh – Ha Dong Metro Section in Hanoi, whose construction began in 2011, remains undecided after contractor China Railway Sixth Group Co Ltd asked for a payment of $50 million, which Vietnam authorities have rejected.

The Chinese director of the project, Tang Hong, told reporters Wednesday that the money was not an extra payment but has been agreed to in the contract for paying subcontractors and experts for the test run, which has been delayed since February because of the coronavirus pandemic.

"Vietnamese authorities have so far paid over 78 percent of the contract, but we need 86 percent," Hong said.

Without this money, suppliers will not send their experts to Vietnam to test the equipment, and the 20-day test run cannot be conducted, he added.

Vietnamese authorities, however, said that the Chinese contractor needs to meet certain criteria to receive the payment.

Vu Hong Phuong, Director of the Hanoi Metropolitan Railway Management Board (MRB), said that the contractor has not submitted documents with details for some equipment, and it cannot make a payment though it has the funds on hand.

Phuong said that according to the contract, Vietnamese authorities will pay 95 percent of the contract after the contractor hands over the project, and the remaining 5 percent will be paid two years later to ensure the contractor’s maintenance responsibility.

This means Vietnamese authorities want to pay after the test run is conducted, while the Chinese contractor wants the money now to do the test run.

Phuong also said that notwithstanding any shortage of funds, any delay in the test run is the contractor’s responsibility.

For now, both parties are still negotiating the issue. Among 150 Chinese experts needed for the remaining work, 26 are set to come arrive on June 12. It is unclear when the rest will come.

A safety evaluation is needed before commercial operation can begin. Again, the experts who are to do the evaluation, from French firm Apave-Certifer-Tricc, have not been able to enter Vietnam.

The Cat Linh-Ha Dong Metro Section runs 13 kilometers from downtown Dong Da District to Yen Nghia in the southwestern district of Ha Dong. It is part of Route 2, one of eight metro routes planned in Hanoi.

Construction began in October 2011 and was originally scheduled for completion in 2013. But several hurdles, including loan disbursement issues with China that were only resolved in December 2017, stalled it for years.

Its cost has doubled to VND18 trillion ($775 million), with 77 percent of it coming from official development assistance (ODA) loans from China.