VietNamNet Bridge – The Japan Times on August 12 reported that the Ministry of Transport of Vietnam has agreed in principle to pay VND155 billion of compensation to the Japanese contractor Tokyu for arising costs caused by the delay of the Nhat Tan Bridge project in Hanoi.

Tokyu case should be seen as lesson for ODA-funded project implementation

The Nhat Tan Bridge is under construction.

According to Japan Times, the Ministry has agreed to pay VND155 billion, equivalent to JPY700 million, instead of VND200 billion as the contractor’s request. This is the first time Vietnam has paid compensation for arising expenses incurred in a public project.

However, the newspaper said that it was not entirely sure whether the agreement would be implemented or not. Vietnam has requested Tokyu to show sufficient evidence for the arising costs.

In addition, the Ministry of Finance also expressed concern that this would create a precedent and Vietnam will have pay for arising costs for other delayed projects.

This incident was reported by Vietnamese newspapers early this year. The information was disclosed by Deputy Minister of Transport Nguyen Hong Truong in a meeting with the Hanoi People's Committee in January 2013.

At that time, the spokesman for the Government – Mr. Vu Duc Dam – said that this is a very unfortunate incident. The government assigned the Ministry of Transport in conjunction with the Hanoi People's Committee to work with the contractor to ensure progress and harmony between the interests of the relevant parties.

However, according to the Transport Newspaper, dated August 8, in a meeting between Minister of Transport Dinh La Thang and Tokyu officials, Mr. Hiroshi Asakami – Tokyu Project Director in Vietnam denied the "claim for compensation" or "contract fine."

He confirmed that the above costs incurred in relation to the implementation of the project, due to changes in scope of work, which were checked and carefully negotiated between parties.

Minister Dinh La Thang said that the arising cost in construction is common at other projects, not just the Nhat Tan Bridge project. The Ministry of Transport would direct the investor to check and pay for contractors in accordance with the laws and regulations of Vietnam, Thang said.

The difference is the way we call this amount as "compensation" or “arising costs” but the VND200 billion is real.

Nhat Tan Bridge project is considered a friendly project between Vietnam and Japan which was originally scheduled for completion in October 2010 to celebrate the 1,000th anniversary of Hanoi. However, the inauguration has been fixed in December 2014 due to delays in site clearance.

In the total value of JPY80 billion to build the bridge, the Japanese have granted JPY54.1 billion in concessional loans.

Dan Tri