Economy - December 28, 2018 | 11:42 am GMT+7

Saigon's first metro line off track, in crisis mode

Saigon’s first metro line, tangled in bureaucratic bungling, funding shortages and a personnel crisis, looks set to miss its 2020 deadline.

The state auditing agency says the HCMC administration and the management board of the Ben Thanh-Suoi Tien metro line have made several mistakes regarding the project from 2007 to June 2016.

Big project cost jump

Saigon’s first metro line is continually hampered by lack of funds. Photo by VnExpress/Huu Cong

Approved in 2007, Saigon's Ben Thanh-Suoi Tien metro line is to run 20 kilometers (12 miles) through the city's 1, 2, 9, Binh Thanh and Thu Duc districts, and the neighboring Binh Duong Province's Di An District. The project was initially approved with an investment of VND17.4 trillion ($747.6 million), but in 2009, consultants recalculated the investment needed at VND47.3 trillion ($2 billion).

The city came up with the following reasons for this significant increase: an increase in the volume of the project to benefit from economies of scale (more locomotives, wagons, station equipment), an increase in price of raw materials, exchange fluctuations between the VND and the Japanese yen (JPY) and further risks associated with changing regulations.

After consulting with the ministries, in August 2011, the Prime Minister allowed the HCMC People's Committee to approve the changes, with the new investment capital at $2 billion. However, other regulations had changed, so the project had to be submitted to the National Assembly for approval.

As of now, the new investment estimate for the project has still not been approved.

Work stoppage threat

The Ben Thanh-Suoi Tien Metro Line seen to the right of Cat Lai Intersection in the city's District 2. 

Photo by VnExpress/Huu Khoa

For the period 2016-2020, the project needed about VND28 trillion (over $1.2 billion). However, as of April, the Ministry of Planning and Investment had only allocated VND7.5 trillion ($321.89 million) for it, leaving the remaining VND20.5 trillion ($879.82 million) unpaid.

Without approval for the total investment sum and funds from the central government, the metro project fell repeatedly into debt, forcing the HCMC People’s Committee to fork out its own funds four times to give the project management board money totaling VND3.3 trillion ($141.82 million) to pay contractors and workers.

The prolonged state of indebtedness prompted Japanese Ambassador Umeda Kunio to send a letter to the government, ministries and the HCMC People’s Committee requesting payment of $100 million and urging public agencies to push the matter upwards and ask for the earliest approval.

"The pressure on our contractors has reached its limit. If these issues are not resolved by the end of December, I regret to inform that construction will have to be stopped," the envoy wrote.

Invalid approval

The state auditing agency has concluded recently that the approval given by the HCMC People’s Committee for total capital adjustment of the project was invalid. 

The approval violated procedures and exceeded the administration’s authority, the agency said. It noted that after 2010, projects exceeding VND35 trillion ($1.5 billion) had to be approved by the National Assembly.

The city’s adjustment of project completion time from 2017 to 2019 was also held to be in breach of procedures. If a project was extended for more than one year, the change had to be reported to the National Assembly.

Human resources crisis

Deputy director of the project’s management board Hoang Nhu Cuong has left the country to travel to the U.S. in early December without approval of the city People’s Committee. Authorities are currently looking into this issue.

The auditing agency has identified Cuong as having acted outside his authority in signing a 2014 decision approving a capital adjustment of VND7 trillion ($300.8 million).

In addition, as of November, 50 personnel have quit the management board. In particular, the head of the board of directors Le Nguyen Minh Quang has handed in his resignation requests twice, as has project director Duong Huu Hoa, citing health issues, but neither request has been approved.

After making a second resignation request, the head of planning and contracts, Phan Nhat Linh, unilaterally terminated his labor contract from December 31.

2020 start unlikely

The metro line is only 56 percent complete, and is most likely to be finished by 2020. 

Photo by VnExpress/Quynh Tran

The intention to build a metro network in Saigon was first mentioned in the late 1990s. From 2001 to 2007, the city discussed the network’s construction.

In February 2008, work officially commenced on a 24 hectares depot section in District 9, but this ran into land clearance issues. After a four-year delay, the project finally kicked off on August 28, 2012.

The line is designed to run 2.6 kilometers underground with three stations, while its elevated section will have 11 stations and over 17 kilometers rail tracks.

The leader of the management board at that time, Nguyen Do Luong, said he believed that metro will become the traffic circuit of a modern city, contributing to the socio-economic development of Saigon.

The then Japanese Ambassador to Vietnam, Yasuaki Tanizaki, also hailed the project as "a turning point in changing people's means of transport".

The project was expected to be completed in 2017 and go operational this year, but the deadline had to be extended by another two years. However, with only 56 percent of the work completed, it is most likely that the project misses its 2020 deadline.

Story by Huu Cong