Saigon metro line investor slammed for failure to renew consultant pact

By Trung Son   March 16, 2021 | 06:23 am PT
Saigon metro line investor slammed for failure to renew consultant pact
Local people dismantle their houses to give up space for the construction of metro line No.2 in HCMC's Tan Binh District, August 2020. Photo by VnExpress/Huu Khoa.
The HCMC administration has "severely criticized" the investor of metro line No.2 for failing to renew an independent consultant contract in time for the project to proceed.

The criticism was made following advice from the municipal Department of Home Affairs.

As investor of the Ben Thanh – Tham Luong Metro Line, the second metro line of the city that will run 11 kilometers between districts 1 and 12, the HCMC Management Authority for Urban Railways (MAUR) was late in signing an Independent Consultant (IC) Agreement contract, causing capital disbursement delays that have affected the project’s progress, quality as also reflected badly on the city.

Such delays have affected the progress of the project, its quality and the city's prestige, the administration said.

The metro line No.2 originally had a consortium of three German companies, one Swiss company and a Vietnamese company as its Independent Consultant, providing engineering, design and supervision services. The services cost nearly 44 million euros ($52.4 million), funded by a non-refundable grant provided by German state-owned development bank KfW.

The consultant’s services commenced in January 2012, but stopped in October 2018 after disputes broke out over fees for service packages not originally included in the first IC Agreement.

The MAUR had failed to resume the IC agreement since.

The consultancy price tag for the metro line has risen by nearly 29 percent following years of delays, jumping an additional 12.6 million euros ($15.5 million) from the original sum agreed in 2012, the MAUR announced early this year.

The consultancy is demanding the extra payment for making adjustments in the design, the investor said.

An independent consultant contract is also needed to extend a loan agreement with the KfW that had already expired December 30 last year.

The agreement will enable bidding for two construction packages, tunnels and underground stations and land acquisition, which in turn will enable further borrowing from the Asian Development Bank and European Investment Bank.

Approved 10 years ago, HCMC’s metro line No.2 had an original price tage of $1.3 billion, which had then ballooned to $2.1 billion by the end of 2019 over rising material and construction costs.

Three international development banks, ADB, KfW and EIB, are funding the project with nearly VND37 trillion ($1.6 billion), and Vietnam is to contribute the remaining sum as counterpart funds.

The route is one of eight metro lines planned in the city with a combined length of 220 kilometers and a price tag of nearly $25 billion.

Disagreements over compensation have repeatedly delayed land acquisition, causing the project to be rescheduled several times.

In a report sent to the Ministry of Investment and Planning on Sunday, HCMC said work on the line would start in mid-2022, with land clearance set to be completed this year.

Its first phase is scheduled to finish in 2026, when it will carry 140,000 passengers a day.

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