Transport ministry blamed for building metro without capital recoup plans

By Nguyen Ha   September 23, 2019 | 02:32 am PT
Transport ministry blamed for building metro without capital recoup plans
A train of Hanoi's Cat Linh - Ha Dong metro line runs on track on a pilot basis. Photo by VnExpress/Giang Huy.
The Ministry of Transport began Hanoi’s first metro project knowing it would make losses, but making no plans to recoup its capital, state auditors say.

The State Audit Office of Vietnam said in a recent report that the ministry had made a series of mistakes in planning and implementing the Cat Linh-Ha Dong line, Hanoi’s first metro project. The ministry had known since the beginning the project would suffer losses but prepared no plan to make up for it.

The forecast of passenger numbers by the Chinese consulting firm was several times higher than that of the Transport Development and Strategy Institute, it noted.

The report also said that a cost-benefit analysis indicated losses that would have to be made up, but concerned agencies did not evaluate this.

The transport ministry also erred in not seeking approval from the National Assembly when it decided to increase the investment from VND8.8 trillion ($377 million) to VND18 trillion ($771 million), it said.

"It also did not show any financial and socio-economic efficacy brought about by the increased investment."

The ministry erred further in allowing Chinese contractors to design and approve the project design without organizing a competition as legally required.

While ODA loans from China have helped fund the project, they have also carried disadvantages, including being required to use Chinese contractors, who have been given work accounting for 77 percent of the investment value, the auditors added.

The use of ODA loans has not been effective, as there were delays in dealing with the administrative challenges.

The project was scheduled to be completed in 2014, but was later extended to 2017 and even now has not started commercial operations. "The transport ministry has not shown how the contractors will be held responsible for these delays."

The State Audit Office suggested that officials responsible for the mistakes made in the metro project are duly punished.

Minister of Transport Nguyen Van The had told the National Assembly in June that the Chinese contractor, China Railway Sixth Group Co Ltd, has done well in constructing the line, but lacked experience in putting the line into commercial operation.

Work on the Cat Linh-Ha Dong elevated railway began in 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.

The metro eventually entered the testing phase in March with all 13 cars carrying out trial runs on both lines. The ministry wanted commercial operations to begin at the end of April, but this deadline too was missed.

When completed, Hanoi’s first metro line will run from Cat Linh Station in downtown Dong Da District to the Yen Nghia Station in southwest Ha Dong District.

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