Saigon’s first metro line faces further delays due to $44 million debt

By Huu Cong   March 9, 2018 | 10:48 am GMT+7
Saigon’s first metro line faces further delays due to $44 million debt
Part of Saigon's first metro line rises above houses. Photo by VnExpress/Quynh Tran

Project managers are urging the city to pay up while waiting for funding from the central government.

Ho Chi Minh City’s railway management unit has urged the municipal government to allocate $43.9 million from its own budget to pay contractors for the city's first metro line while waiting for funding from Hanoi.

Construction of the metro system in Ho Chi Minh City is considered a key national project and requires the legislative National Assembly’s approval before the government makes any financial decision. While that approval is pending, there is no point conducting capital assessment and investment disbursement surveys, the Ministry of Planning and Investment has said.

Without funding from the central government, the city now owes contractors $43.9 million and has little choice but to settle the debt itself to avoid further construction delays.

The PM has instructed the Ministry of Transport and Ministry of Planning and Investment to complete a project appraisal to justify the funding and submit it to the National Assembly before March 30.

This is not the first time Ho Chi Minh City has been forced to use its own budget for construction of the metro line. In 2016 and 2017, the city had to make three prepayments worth a total of $101 million (VND2.3 trillion) due to lack of government funding.

The project was launched in 2012 with a deadline for completion set for 2020 to build a 20km metro line linking five of the city’s districts (1, 2, 9, Binh Thanh, Thu Duc) and stretching to Di An District in Binh Duong Province. Around 50 percent of the project has been completed, but with its constant thirst for investment, it remains unclear whether the deadline will be met.

The project was adopted by Ho Chi Minh City and central authorities 11 years ago but has been delayed several times.

Failure to settle financial liabilities could pose serious threats to Ho Chi Minh City, including potential lawsuits and loss of reputation, said a leader responsible for railway management in the city.

Ho Chi Minh City, the country’s biggest city with a population of 13 million, has been struggling to deal with worsening traffic congestion for years. The number of personal vehicles has been booming with 7.6 million motorbikes and 700,000 cars on the roads, while public transport is far from being considered developed.

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