An elevated railway under construction in Hanoi. The Chinese contractor has asked for an additional $339 billion, a 61 percent bump in the projected costs. PHOTO COURTESY OF DAN TRI
Transport Minister Dinh La Thang suspended Friday the head of the national railway authority for comments the latter made about broad public criticism of a US$339 million cost bump caused by a stalled elevated railway project in Hanoi.
Nguyen Huu Thang,director of Vietnam Railways, was quoted Thursday in Tien Phong (Pioneer) newspaper as saying that "a little adjustment has inspired so much fanfare."
Minister Dinh La Thang said the comment affected the prestige of the transport ministry.
It is not clear yet how long the suspension will last.
Minister Thang also asked the railway leader to file a report explaining his role in the ballooning costs.
Vietnam Railways was tasked with overseeing the construction of the Cat Linh – Ha Dong elevated railway project. China Railway Sixth Group Co. Ltd. – a state-owned enterprise – was assigned to serve as the main contractor, providing the project’s engineering, procurement and construction (EPC).
This week brought wide criticism from media and government officials who pointed out that the project was first scheduled to break ground in August 2008 and finish in November 2013. Its initial cost was estimated in 2008 as $552 million.
But work only began in October 2011 and, late last year, the Chinese contractor asked the investor raise its projected costs by 61 percent.
Deputy Prime Minister Hoang Trung Hai has ordered the Ministry of Transport and the Hanoi government to determine who is to blame for the slow progress railway project funded mostly by Chinese money.
The project's initial estimated (in 2008) was $552 million. Hai said the delays have added US$339 million to the project's cost.
China provided $419 million in official development assistance (ODA) and the remainder came from Vietnam's state budget.
The 13-km of elevated track was planned to stretch from Cat Linh Street to Yen Nghia Bus Station in Ha Dong District making stops at 12 stations.
The train, once finished, is expected to run at a maximum speed of 80 kph.
Although the central and municipal governments repeatedly asked the developer to finish site clearance by late 2013, three of the 13 kilometers have yet to be cleared.
The delay boosted site clearance costs from $37.57 million to $62.63 million, according to the Railway Project Management Unit.
The Ministry of Transport recently responded by seeking government approval on the requested funds while, at the same time, blaming rising material costs, last minute design changes and a lack of competence on the part of the Chinese contractor for the ballooning costs.
The deadline for the project has been pushed back once again and the railway is now scheduled to come into operation in June 2015.
Asked why the ministry chose a Chinese contractor with no experience in delivering EPC, Deputy Minister of Transport Nguyen Hong Truong said it was a mandatory condition stated in the ODA loan agreement that Vietnam signed with China.