Contractors of Ho Chi Minh City's first metro line are seeking compensation of more than US$90 million from the city, claiming that construction work has been affected by sluggish site clearance.
Many parts of the project, which connects the city center to District 9, are currently more than two years behind schedule, according to Japanese corporation Sumitomo and Vietnam’s state-owned builder Cienco 6.
They have sent the city a written request, demanding a payment of VND2.5 billion ($111,000) a day for the 27-month delay.
The companies in August 2012 broke ground on the second part of the first metro line in District 9, which borders Binh Duong Province.
The city government was supposed to finish relocating residents and clearing the site in January 2013.
But the city only did that in March 2015, after earlier having to urge Binh Duong government to clear two hectares of land in its area.
Bui Xuan Cuong, director of Ho Chi Minh City’s transport department, said the city is negotiating with the contractors about the compensation request. It’s not clear where the payment may come from.
Pham Sanh, a lecturer at the HCMC University of Transport, said the money will likely come from state budget, which is taxpayers' money.
Sanh said the city could have avoided the expensive problem by planning the project more carefully.
He said there is a legal loophole that allows a project to start even before site clearance is finished. This project in particular faced a lot of difficulties because some areas fall in Binh Duong Province.
Pham Xuan Mai, a transport lecturer at Ho Chi Minh City University of Technology, said the 19.7-kilometer metro line would be the most expensive worldwide, in part due to the high clearance costs.
The line was planned with a total investment of $2.49 billion, or $120 million a kilometer, compared to the average cost of $70 million when a line runs mostly underground.
The line is one of the eight planned for the country’s first subway network, using foreign official development assistance and the city’s budget.
According to the city’s estimates, the delay in site clearance might push the completion to the line to 2020, well beyond the late 2018 deadline set forth in a planned approved by the government.