Six urban railway projects are under construction in the country’s two largest economic centers – Hanoi and HCM City. Of these, four projects are in Hanoi, including Cat Linh-Ha Dong, Nhon-Hanoi Station, Nam Thang Long-Tran Hung Dao, and Yen Vien-Ngoc Hoi. The other two, Ben Thanh-Suoi Tien and Ben Thanh-Tham Luong, are in HCM City.

The common characteristics of all the projects are the slow pace of implementation and the capital expenditure increase, which erodes socio-economic development in both economic centers.

The project on Nhon-Hanoi Station urban railway, 12.5 kilometers long, started in 2010, but still has not reached the end after two times raising the investment capital from 783 million euros to 1.17 billion euros (VND32.91 trillion). Most recently, the required investment expenditure was raised for the third time to VND34.8 trillion (+ VND1.9 trillion), while the deadline has been extended to 2027. 

The tardiness in implementation is attributed to the time-consuming site clearance and the lack of capital. In 2018-2019, because of the capital shortage, contractors had to cut back operations. Some contractors have reported the problem to the Dispute Board (DB) and the International Arbitration Center (IAC).

Currently, the project is continuing, but is still facing difficulties caused by a dispute between the project inspection consultants and project investors after the deadline was extended to 2027.

In HCM City, the 19.7 kilometer Ben Thanh-Suoi Tien urban railway, which kicked off in 2012, has failed to finish on schedule many times. A project train has been put into trial operation.

Because of the slow site clearance, the execution of the Ben Thanh-Suoi Tien project has also been slow, while investment expenditures have risen from VND17.387 trillion to VND43,757 trillion (+ VND26.37 trillion).

Over the last decade, when the project was deployed, the contractor stopped construction many times and made a claim for damages because of slow capital allocation and the lack of an execution site.

The Yen Vien-Ngoc Hoi in Hanoi, 28.7 kilometers in length, got approval from the Ministry of Transport (MOT) in 2008 and was expected to be completed by 2017. However, the project did not kick off until now.

The initial total investment of the project was estimated at VND19.046 trillion. However, in 2019, MOT re-calculated the required capital, predicting that the project would cost VND81.53 trillion.

The same problem is occurring with the Nam Thang Long-Tran Hung Dao urban railway in Hanoi. It was approved in 2008 and predicted to be completed by 2015, but to date, the project still has not started. The required investment capital has been raised from VND19.555 trillion to VND35.678 trillion (+ VND16.124 trillion).

The major problem of the project relates to the location for building the C9 terminal by Hoan Kiem Lake. Opinions about the issue vary.

Meanwhile, the Ben Thanh-Tham Luong project in HCMC has been delayed until 2026 under the latest decision (it initially got approval in 2010 and was scheduled to be completed by 2018). The execution still has not begun as the investors are organizing bids again. The total investment capital has been raised from VND26.116 trillion to VND47.89 trillion (+ VND21.774 trillion).

Another approach

The lack of a clean site for execution is the most important problem behind the slow implementation of infrastructure projects which has forced investors to raise investment capital.

In the case of Nhon-Hanoi Station, because of problems related to compensation for site clearance, the contractors could not execute the construction as planned. Therefore, in 2021, the joint contractors claimed compensation of $114 million dollars.

The Hanoi authorities have recently admitted that tardiness in site clearance has ‘seriously affected’ the projects’ implementation pace. The other problem lies in unreasonable design. The Cat Linh-Ha Dong project is an example: its design had to be adjusted because the land area was not large enough for a two-storey terminal. Finally, a three-story terminal was built to ensure the operational capacity of the terminal.

In the case of the 12.5 kilometer Nhon-Hanoi Station project, there are four kilometers underground. However, the underground section execution has been entangled with the foundations of some construction works. As a result, it has taken more time to negotiate with people and compensate them for site clearance.

Vu Diep