Japanese contractor may stop work on Saigon metro line

In a letter sent to the government, ministries and the Ho Chi Minh City People’s Committee, Japanese Ambassador to Vietnam Umeda Kunio said unpaid bills for the Japanese contractor of the city’s first metro line has climbed to $100 million.

If HCMC cannot pay the bill by the end of this year, the contractor, Sumitomo Corporation, will stop its work, he said.

Kunio said Vietnamese government and HCMC have been "seriously" late in disbursing funds for the Ben Thanh - Suoi Tien metro line, even after the problem has been discussed several times between the governments of Japan and Vietnam, local media reported.

The line, approved by the city back in 2007, was to be built using official development assistance (ODA) from the Japan International Cooperation Agency (JICA), but a delay in approving a revised plan to adjust the investment cost upwards has resulted in a lack of funding for the project.

The initial cost of the metro line was estimated at VND17.4 trillion ($740 million). At this estimate, the project did not fall under the category that needs to be reviewed by the National Assembly, Vietnam’s national legislative body.

In 2009, consultants recalculated the investment needed at VND47.3 trillion ($2 billion).

In 2011, the Prime Minister agreed that HCMC can revise the original estimate, but the revised cost pushed the project into the category needing National Assembly (NA) approval.

The metro system is now considered a key national project requiring the NA’s approval before the government makes any financial decision. While that approval is pending, there is no point in conducting capital assessment and investment disbursement surveys, the Ministry of Planning and Investment said earlier this year.

Politburo intervention proposed

Given the situation, the Japanese ambassador has suggested that HCMC writes to the Politburo, the Party's decision-making body, as well as the NA Standing Committee and ask for the earliest approval possible.

HCMC had said that it would use its own budget to make advance payments to contractors, but Ambassador Kunio said the city has not been able to pay contractors as promised.

The HCMC Urban Railways Management Authority last month said it needs the city to use its own budget so that it can pay contractors for the parts they have finished.

"The city now has to provide around VND1 trillion ($42.85 million) for the project to be continued," Hoang Nhu Cuong, deputy director of the HCMC Management Authority for Urban Railways, said at a municipal meeting.

Contractors have completed work worth VND2 trillion, but only VND220 billion ($9.43 million) has been paid due to legal procedural issues, he said.

Work on the city’s first metro line started in August 2012. The line runs 20 kilometers (12.43 miles) through five districts of 1, 2, 9, Binh Thanh and Thu Duc and Di An District in the neighboring province of Binh Duong.

It will run underground from Ben Thanh Market for 2.6 km past the Opera House and Ba Son Shipyard, and then cross the Saigon River on an elevated track that passes through District 2 on the way to Suoi Tien Park and the terminus at Long Binh in District 9.

So far, more than half of the project has been completed. A consortium comprising Vietnam’s Civil Engineering Construction Corporation No. 6 (Cienco 6) and Japan's Sumitomo Corporation is the contractor.

The project, expected to help the city deal with its chronic traffic gridlock problem, was first set to open in 2017. The date was then pushed to 2020, but this deadline is unlikely to be met, too.