Investor of Saigon anti-flooding project claims huge losses after suspension

By Staff reporters   October 30, 2018 | 07:33 pm PT
Investor of Saigon anti-flooding project claims huge losses after suspension
A tidal drainage system in Nha Be District in southern Ho Chi Minh City, part of the city's mega anti-flood project. Photo by VnExpress/Quynh Tran
The suspension of a HCMC flood prevention project has cost Trung Nam Group over $8.57 million in losses, the firm says.

An anti-flooding project that covers 100 hectares (250 acres) in districts 1, 4, 7, 8, Binh Chanh and Nha Be had been suspended since late April after a supervision consultant found out that its investor had used Chinese steel for part of the project instead of from G7 countries as stipulated in the contract signed between the city and the domestic private investor.

Nguyen Tam Tien, CEO of city-based Trung Nam Group, said the VND10-trillion ($430-million) project was 72 percent complete, and the stoppage has incurred losses of more than VND200 billion ($8.57 million) to the firm.

A local joint-venture chosen by the city as a supervision consultant for the project said the valves of the sewer system had to be made with stainless steel produced by G7 countries, but Trung Nam had used alloy steel from China instead.

Following this discovery, the entire project was put on hold.

But Tien said that apart from the financial impacts, the suspension also affected the project’s quality.

Work on the project started in June 2016 and was first scheduled for completion in June 2019, but the city’s leaders asked for the deadline to be moved forward to summer 2018, saying the chronic flooding problem must be resolved as soon as possible.

The project involves building a new drainage system and adding more pumping stations that will be able to keep a 750 square-kilometer area in the downtown section and along the Saigon River dry.

Around 6.5 million people, or half of the city’s population, would benefit from this.

In late August, HCMC sought guidance from the central government on how to move on with the project, and the government said it was for the city itself to decide.

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In a statement sent to the city People’s Committee in mid-October, the municipal Department of Agriculture and Rural Development, assigned to appraise the quality of the project since the beginning, said the city should resume soon and that the investor had not violated the contract.

Trung Nam has fulfilled all terms and conditions in the build-transfer contract it signed with the city, and the investor had been approved by the department to make changes in the use of steel, it said.

The department said it has carried out careful analysis of the Chinese alloyed steel and guaranteed that the replacement can ensure the durability, stability and force-resistance for the sewers. It said the supervision consultant should just follow the technical and construction design already approved by the department.

It also insisted that the city should not put the project on hold any longer because the suspension of an incomplete anti-flooding project can cause erosion and at the same time, affect the quality of the project in the future.

“If the project is left untouched for too long, it is possible that it can collapse as it is built on an area that is frequently affected by seasonal tide; and if anything happens then, it would take a lot of time and money for fixing,” said Pham Van Long, chief design consultant of the project.

Local media reports have said that the supervision consultant has pointed out that the approved construction design makes it very clear that the investor should use steel from G7, but more than 2,000 tons of Chinese steel have already been imported into Vietnam for the project since last year.

"The fact the agriculture and rural development department approves the adjustment is just a way to legalize something that had already happened," it said.

HCMC is vulnerable to flooding, and many of its streets would be transformed into small rivers almost every time it pours or the tide rises.

The city will need up to VND97.3 trillion ($4.38 billion) for flood prevention projects by 2020, local media reported, citing official sources.

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