Saigon cuts first metro line costs by $147 million

By Huu Cong November 13, 2019 | 03:34 am PT

An elevated section of the Metro Line 1 in HCMC. Photo by VnExpress/Huu Khoa.

The HCMC administration has cut unnecessary expenses to lower its Metro Line 1 costs by VND3.4 trillion ($146.53 million).

The municipal People’s Committee has submitted to the city legislature, the People’s Council, documents lowering investment costs for the 20 km Ben Thanh – Suoi Tien line from VND47 trillion ($2.03 billion) to VND43.6 trillion ($1.88 billion).

The HCMC People’s Council will appraise the documents and make capital allocations after a meeting at the end of the year.

$147 million is the amount saved after the city made adjustments based on evaluations made by experts including scientists and officials, said Vice Chairman of the HCMC People’s Committee, Vo Van Hoan.

"The total investment capital has been greatly reduced, but this does not affect the quality of the (construction) packages. The project is 75 percent complete, so all major variables are basically identified and there is very little chance of costs ballooning," he said. He did not elaborate.

In principle, the central government will disburse funds once the city legislature has made its decision on capital allocation. But, because there are many complicated steps involved in the disbursement, the city expects to receive the funds by March or April next year.

The city People’s Committee will therefore advance VND1.7 trillion ($73.24 million) from its own funds to pay investors, contractors and labourers so that works can continue, Hoan said.

So far, the city has made three advances totalling VND5 trillion ($215.28 million) to pay contractors for work done.

Saigon’s Metro Line 1 will run 20 kilometers (12.43 miles) through the districts of 1, 2, 9, BinhThanh, and Thu Duc of HCMC, and Di An District in the neighboring province of Binh Duong.

The project was approved in 2007 with a total investment of VND17.4 trillion ($749.4 million). This was raised to VND47 trillion ($2.03 billion) in 2010 after design changes and fluctuations in the exchange rate of the Japanese Yen, but the increase was not approved by the relevant ministries.

Given these hitches, work on the metro line, which began in August 2012 and was originally scheduled to finish in 2017 and become operational this year, has been rescheduled for completion in 2021.