First tramway project teaches Vietnam capital a bitter lesson

By Minh Hung, Thanh Nien News

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Concrete supports built for the first of five metro lines in Hanoi. The project consultant has demanded for €3 million in compensation due to delays, apart from increasing costs for extended consultancy. Photo by Ngoc Thang
Hanoi mayor Nguyen The Thao became furious about the slow and delayed construction of the capital city’s first tramway at a recent meeting discussing the issue.
“You guys just sit there and quarrel. Money [compensation] will have to be paid, so the project can’t be delayed any further. It’s time for a breakthrough to facilitate the process,” he told attendees of the meeting on February 24 with the Hanoi Metropolitan Railway Management – the investor of the tramway project connecting the Hanoi Railway Station and Tu Liem District.
The 12.5 kilometers (7.8 miles) tramway project, which broke ground in 2010, was originally scheduled for completion in 2015 before it was delayed to 2017 and recently to 2018.
Thao instructed Tu Liem District authorities to complete site clearance by late April and the investor to reach an agreement with the project consultant on compensation in March.
“If there is no improvement, the city will launch an inspection into individuals and entities involved,” he said.
But he said there would be no clear deadline for the project without pointing out the culpability of individuals involved. The 2018 deadline is still a challenge, he said.
Costly trial
At the February 24 meeting, Thao said the tramway is the city’s first such project - a kind of “trial” - thus relevant agencies have no experience to build upon in implementing it.
He also said the plans were unclear and related agencies were not coordinating well with each other.
Due to delays, the project’s consultant, France’s Systra-International Consulting Engineers for Rail and Urban Transport, has demanded €3 million (US$4.12 million) in compensation.
The company also proposed upping the contract value from €22 million to €43 million for extended consultation.
The project investor is negotiating with Systra for €1.3 million in compensation and an additional amount for ongoing consultancy.
In an editorial on February 25, Giao Duc Viet Nam (Vietnam Education) newspaper wrote: “It would have been much better if the Hanoi mayor had become so furious earlier. Now billions of dong have been spent just for a bitter lesson.
“No matter how much it [compensation and increasing costs] is, who is responsible when residents’ money is burned?”
It said the Systra’s recent proposed amount for extended consultancy is much more than total development investment for a province like Bac Kan or Ninh Thuan last year.
“A familiar question will be raised: who is responsible? The answer may be like Thang Van Phuc, former deputy minister of the interior, once said: ‘In many cases, people will blame the system’,” the editorial said.
Displacement problem
According to the project investor, one of the major hurdles was site clearance for the main construction packages.
Tu Liem District authorities have approved a compensation plan for only 42 of 143 cases at the terminal in package 1.
Up to 13 percent of the area for package 4 is still not cleared for construction.
Package 2 – constructing mid-way stops – has been halted due to the lack of a consultant since a contract with Systra ended last November.
More and more delays
Compensation and increasing costs incurred by project delays have become more common in Vietnam in recent years.
Last year, slow site clearance increased the cost of a package to build the Nhat Tan Bridge in Hanoi by VND155 billion (US$7.34 million).
Hiroshi Asakami, the project manager of the Japanese-owned Tokyu Corporation, said the money was additional fees caused by changes in the scope of works.
Tokyu was contracted to build a road leading to the bridge that will span the Red River.
Hanoi authorities have failed to provide it with clear land in time, forcing the road project's deadline to be pushed back to May 2014, meaning a 27-month delay.
Recently, Hanoi authorities have reportedly refused to build a new bridge in place of the out-of-date Long Bien Bridge also because of fears for late site clearance.
This land is whose land?
According to a recent editorial in Thanh Nien newspaper, all late infrastructure projects use the same excuse that local residents refuse to accept compensation.
“Seventy percent of complaints involve land, of which 80 percent involve compensation and resettlement… But it is strange that land revocation policies remain unchanged for 15 years and have been implemented for all localities and all projects,” the editorial said.
“Site clearance for property projects is faster than in public service projects because the investors in property projects are able to ‘grease payment’ for the site clearance team and for displaced residents,” it said.
The editorial also criticized wrongdoings in site clearance that frustrated affected residents.
For example, at the Hanoi Beltway 2 project, residents did not accepted site clearance plan because they said that some people had modified the plan to avoid land owned by certain people.
“A fair and transparent sharing of benefits in all cases is always a solution for the site clearance problem,” the editorial said.
“If no one is responsible for the money spent from the state exchequer in compensation of billions of dong to the consultant for late site clearance, the problem will remain unsolved.” 
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