HCMC's delayed anti-flooding project generates $78,000 daily interest for investor

By Le Tuyet, Gia Minh   May 27, 2024 | 03:23 pm PT
HCMC's delayed anti-flooding project generates $78,000 daily interest for investor
The tidal sluice gate on Doi Canal in District 8 as part of the HCMC's mega anti-flooding project in 2023. Photo by VnExpress/Quynh Tran
The investor of a mega anti-flooding project of Ho Chi Minh City said it now has to pay nearly VND2 billion (US$78,400) of loan interest per day after the project was delayed for six years.

In a letter sent to the city's Party chief Nguyen Van Nen, HCMC-based Trung Nam BT 1547 Co. Ltd. said the project's suspension and prolonged delays resulted from issues that the company was not responsible for and could not resolve on its own.

With the project missing its deadline, the company now must pay loan interest of nearly VND2 billion per day.

Therefore, the company has requested that this incurred interest be recognized in the project by adjusting the total investment amount, like what the city has done with metro line No.1.

Work started on the project in June 2016. It was supposed to finish after three years.

Costing VND10 trillion, the project aims to manage high tide flooding and respond to climate change effects over an area to the right of the Saigon River and downtown HCMC, spanning 570 square kilometers and home to 6.5 million people.

Invested in by Trung Nam under the build-transfer (BT) model, it runs through districts 1, 4, 7, 8, Nha Be and Binh Chanh with six drainage gates. The project also involves dykes spanning 7.8 km along the Saigon River.

However, the project was suspended in 2018 due to land clearance issues, and another time in 2020 due to the city People's Committee not signing a contract extension.

The main issue with the project is the payment plan for the investor. The fact that the HCMC People's Committee signed a build-transfer contract with the investor, where the amount of land the company receives as payment is worth 16% of the project's cost (while the rest would be paid in cash), was considered inappropriate as the law has no specific regulations on the payment ratio by land and cash.

Moreover, the government’s Decree 15 requires reporting to the competent authority on public investment before approving a public-private investment partnership project.

However, at that time, the city government reported and was approved by the city People's Council but had not yet received central government approval.

The government in November 2021 issued a resolution holding HCMC authorities responsible for the completion of the project.

However, despite the government's efforts, the project remains stuck due to problems with the BT contract, with the city citing legal obstacles preventing it from renewing the contract.

In late 2021, city chairman Phan Van Mai said the city had to spend a lot of time and effort on fighting the pandemic, and not paid enough attention to the project.

The project has been 90% complete for almost three years.

In its letter, Trung Nam company said that raising the investment capital was a prerequisite for signing the annex to complete the entire project.

The company has sent multiple documents to the city People's Committee about this issue but has not received any directives to proceed in the past two years.

"This delay will further waste the budget, and the company cannot determine the project's cost," the investor letter stated.

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