Hanoi
Ministry explains why Hanoi's long-delayed sky train stays still
Although Hanoi`s first elevated railway line running from Cat Linh to Ha Dong has completed 99% of workload, the project still encounters many obstacles and risks further delay.
In the report sent to Vietnam’s National Assembly, the Ministry of Transport listed site clearance and lack of experience among the causes for Hanoi's long-delayed sky train.
The ministry said that although Hanoi's first elevated railway line running from Cat Linh to Ha Dong has completed 99% of workload, the project still encounters many obstacles and risks of further delay as the Chinese Engineering, Procurement, Construction (EPC) contractor could not ensure the progress.
The project has huge investment, which is technically complex with the application of new technologies applied for the first time in Vietnam. Many items have never been executed in Vietnam and must be applied Chinese protocols and technologies, the ministry said.
The ministry added that as the project is implemented in downtown Hanoi, site clearance and the relocation of road technical infrastructure were big complications. In addition, the interchanges between the metro line and other means of public transport had not been planned, so the time for discussion, agreement and approval lengthened, contributing to the standstill.
Especially, the project experienced two periods of high inflation in Vietnam (inflation reached 19.9% in 2008; 11.8% and 18.13% in 2010, 2011, respectively). The combined inflation rate of these three years alone was 49.83%, which negatively affected costs of labor, construction materials and site clearance. This led to the the project’s cost overrun.
The original cost estimate of $552.86 million has ballooned to more than $868 million, including $670 million in loans from China.
On the other hand, the backward Vietnam’s railway industry coupled with the low rate of localization for mechanical products also pushed up the price of equipment and the project’s total investment.
The ministry admitted that it lacks experience in the field and the Chinese contractor, as well, has no expertise in executing turnkey project.
In addition, the disbursement for the additional loans has encountered many issues because the parties had not agreed on the legal terms of the financing agreements.
Work on the Cat Linh-Ha Dong sky train, which extends more than 13 kilometers, started in October 2011 and was originally scheduled for completion in 2013. Its inauguration day remains uncertain, for now.
The ministry said that although Hanoi's first elevated railway line running from Cat Linh to Ha Dong has completed 99% of workload, the project still encounters many obstacles and risks of further delay as the Chinese Engineering, Procurement, Construction (EPC) contractor could not ensure the progress.
Cat Linh - Ha Dong Urban Railway. Photo: Internet
|
The ministry added that as the project is implemented in downtown Hanoi, site clearance and the relocation of road technical infrastructure were big complications. In addition, the interchanges between the metro line and other means of public transport had not been planned, so the time for discussion, agreement and approval lengthened, contributing to the standstill.
Especially, the project experienced two periods of high inflation in Vietnam (inflation reached 19.9% in 2008; 11.8% and 18.13% in 2010, 2011, respectively). The combined inflation rate of these three years alone was 49.83%, which negatively affected costs of labor, construction materials and site clearance. This led to the the project’s cost overrun.
The original cost estimate of $552.86 million has ballooned to more than $868 million, including $670 million in loans from China.
On the other hand, the backward Vietnam’s railway industry coupled with the low rate of localization for mechanical products also pushed up the price of equipment and the project’s total investment.
The ministry admitted that it lacks experience in the field and the Chinese contractor, as well, has no expertise in executing turnkey project.
In addition, the disbursement for the additional loans has encountered many issues because the parties had not agreed on the legal terms of the financing agreements.
Work on the Cat Linh-Ha Dong sky train, which extends more than 13 kilometers, started in October 2011 and was originally scheduled for completion in 2013. Its inauguration day remains uncertain, for now.
