Problems with capital and unit prices at metro line 2 in Ho Chi Minh City

Metro Line 2 (Ben Thanh - Tham Luong) in Ho Chi Minh City has 99% of the site cleared, but construction cannot begin in 2025 because the budget has not been allocated and there are problems related to the unit prices of the bid packages.

Metro Line 2 (Ben Thanh - Tham Luong) in Ho Chi Minh City has 99% of the site cleared, but construction cannot begin in 2025 because the budget has not been allocated and there are problems related to the unit prices of the bid packages.

Metro line 2 will run underground under Cach Mang Thang Tam Street. Photo: Le Toan

Construction will start in 2026 at the earliest

After nearly 2 weeks of officially putting metro line No. 1 (Ben Thanh - Suoi Tien) into operation, the number of passengers using this public transport has reached the milestone of more than 1 million passengers. This shows that the city's people are looking forward to the operation of the next metro lines, and first of all, line No. 2 (Ben Thanh - Tham Luong).

According to the report of the Ho Chi Minh City Urban Railway Management Board (MAUR) sent to the City People's Committee in mid-December 2024, the new Metro Line 2 Construction Project (Ben Thanh - Tham Luong) is in the investment preparation stage. Of which, the most difficult and time-consuming item is site clearance, which has been completed by nearly 99%. Units are relocating electricity works; water supply; drainage, signs... at 12 locations, expected to be completed by the end of the second quarter of 2025.

Metro Line 2 project has 8 construction packages, of which the construction package of Tham Luong Depot Office Building (CP1 Package) has been completed and put into use. However, the main packages for the construction of the railway and station have not yet started.

According to MAUR's report, the general legal consultancy packages are stuck with market prices, so the budget has not been approved for bidding. In addition, MAUR is implementing commercial mediation procedures for outstanding issues to complete and liquidate Contract CS2 - Project Implementation Consulting (IC) and Contract for Consulting on Social Development Program and Gender Development Trends (CS3).

One of the most important issues is the capital to implement the Project. At the end of November 2024, the Party Committee of the Ho Chi Minh City People's Committee issued a notice concluding that it agreed to use the city's budget to invest in the Project, instead of continuing to use ODA loans.

Immediately afterwards, in early December 2024, Ho Chi Minh City State Financial Investment Company (HFIC) sent a document to the City People's Committee reporting on the method of capital mobilization to invest in metro line 2. HFIC assessed that in the 2026-2030 period, with a capital demand of VND 28,849 - 29,817 billion, the ability to balance the city budget allocated for the medium-term public investment plan for the 2026-2030 period from the issuance of local government bonds with the above volume is necessary and meets the needs of the Project.

According to HFIC, with the expected volume of local government bonds issued up to VND 30,669 billion in the period of 2026 - 2030 to invest in the metro line 2 project, the issuance guarantee method is difficult to implement, so the issuance bidding method will be more suitable. Therefore, HFIC proposes that it is necessary to develop a phased issuance plan by year in accordance with the progress and actual capital of the Project to ensure the feasibility of the issuance plan and the efficiency of capital use.

Regarding the Project progress after switching to using budget capital, according to MAUR's calculations, if bidding is conducted in parallel with the Project adjustment process, the main package will start construction in 2026 at the earliest.

The delay of line 1 is a lesson to speed up line 2

Compared to the previous construction of metro line 1, up to now, metro line 2 has had more favorable conditions, such as having a 99% “clean” site, the office building and Tham Luong depot have been completed. On the other hand, from investing in metro line 1, the procedure process and project management capacity of state management agencies will draw many valuable lessons.

Metro Line 2 (Ben Thanh - Tham Luong) is over 11 km long, extending from the center of Ho Chi Minh City to the Northwest gateway, passing through 6 districts 1, 3, 10, Tan Binh, Tan Phu and 12. The project will run 9.2 km underground, the rest will be elevated. The entire line has 10 stations, including 9 underground stations and one elevated station.

According to the original plan, the project was completed in 2016, but due to many problems related to ODA loans, the progress was delayed. Most recently, Ho Chi Minh City requested to postpone the project's progress until 2030.

Mr. Phan Cong Bang, Head of MAUR, said that the official operation of metro line 1 is a premise to promote investment in metro line 2. Currently, preparations for investment in metro line 2 are being urgently implemented.

According to the Head of MAUR, Metro Line 1 project has left many lessons to make Metro Line 2 faster. In which, the two most important factors are site clearance and contract preparation, legality, and clear responsibilities between the parties.

According to the assessment of many departments and branches of the City, Ho Chi Minh City's decision to use budget capital to invest in Metro Line 2 instead of ODA capital will shorten the procedure process and promote the project's commencement earlier. In particular, according to MAUR, switching to budget capital investment will help MAUR be flexible in applying a group of policy mechanisms to implement Metro Line 2 faster.

From the shortcomings in investing in metro line 1, Dr. Dinh The Hien, a financial economist, said that Ho Chi Minh City's decision to use the budget to invest in metro line 2 is a long-term strategic orientation to help self-sufficient resources to invest in the urban railway system, instead of relying on ODA loans.

“When investing with budget capital, investment procedures will be simpler and the implementation process will be shortened compared to ODA loans. Moreover, Ho Chi Minh City has the right to choose technology, equipment, contractors, including choosing domestic contractors to facilitate the operation and maintenance of the metro network in the future,” Mr. Hien commented.

Source: https://baodautu.vn/vuong-mac-ve-von-don-gia-tai-tuyen-metro-so-2-tphcm-d240135.html