HCM City authorities have proposed increasing capitalisation for the city’s first two metro lines as the projects continue to face a capital shortage.

The metro line No. 1 from Ben Thanh in District 1 to Suoi Tien Theme Park in District 9 was approved by the city in April 2007 with an investment of VND17.4 trillion (US$766.4 million). - VNA/VNS Photo Thanh Vu

The city People’s Committee has sent a report to the Government on the details of cost overruns.

The metro line No 1 from Ben Thanh in District 1 to Suoi Tien Theme Park in District 9 was approved by the city in April 2007 with an investment of VND17.4 trillion (US$766.4 million). At that time, approval by the National Assembly (NA) was not needed.

After investment costs were re-calculated by consulting agencies, costs increased to more than VND47.3 trillion ($2.08 billion).

The city government attributed the surging costs to price changes of materials, minimum wage hikes in the 2006-2009 period, and the depreciation of the Vietnamese dong and Japanese yen, among others.

The PM agreed with the city government to approve the project adjustments in August 2011. With investments reaching more than VND47.3 trillion, the NA then had to approve the amount.

As proposed by the city government, the PM assigns an agency to report to the NA on investment adjustments and assists the city in advancing capital to continue work on metro line No 1.

According to the city People’s Committee, the city has signed three loan agreements worth VND31.2 trillion, of which VND11.9 trillion has been disbursed.

The project has implemented four bidding packages and has completed around 48 per cent of the work.

As for metro line No 2, which connects Ben Thanh with Tham Luong in District 12, the city People’s Committee approved a design by a local consulting firm in 2010 with a total investment of $1.37 billion.

In 2012, the IC, a consortium from Germany chosen as the international consulting firm two years later, revised the detailed design of the project with a total investment of $2.1 billion.

In 2015, the city government petitioned the PM to adjust the investment cost of the metro line No 2 project.

The city government has asked the PM to approve the project’s investment and implementation adjustments and allow the city to assess and approve project adjustments.

According to the Ministry of Transport, Ministry of Planning and Investment and the State Bank of Viet Nam, metro line No 2 can be approved by the city authority but comments from the PM are needed before implementation.

According to the Ministry of Construction and Ministry of Finance, the project needs to be reported to the PM before it is submitted to the NA for approval./.

VNF/VNA