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Vietnam minister cites ‘force majeure’ as reason for buying $63mn Chinese trains

Vietnam minister cites ‘force majeure’ as reason for buying $63mn Chinese trains

Wednesday, June 10, 2015, 12:07 GMT+7

Vietnamese Minister of Transport Dinh La Thang acknowledged the plan to buy 13 Chinese-made trains for a Hanoi-based urban railway project would be blasted, but hoped the public would understand that it was “force majeure,” or an unavoidable circumstance.

>> An audio version of the story is available here

Vietnam will spend US$63.2 million purchasing as many as 13 Chinese-made trains to carry passengers on the $868.04 million Cat Linh-Ha Dong railway in the capital, the project management unit (PMU) said in a report late last week.

The supplier, Beijing Rolling Stock Equipment Co., has proposed six internal and external design plans for the trains, now pending approval from the transport ministry.

Once approved, the PMU will start placing orders for the stainless steel trains, each consisting of four cars.

The Chinese train purchase plan has immediately raised concerns among members of the public, who doubt the quality of the vehicles.

“I have received many text messages expressing disagreement that Chinese trains be used in the project,” Minister Thang told reporters in Hanoi on Tuesday.

The minister added, however, that he was left with no other choice because “as per the contract, Vietnam is required to buy trains made by Chinese companies.”

“The decision to buy 13 Chinese-made trains is unchangeable,” he said.

“This is one of the required clauses of an official development assistance (ODA) agreement signed by the Vietnamese and Chinese governments through China’s Eximbank.”

The Cat Linh – Ha Dong urban railway project broke ground in October 2011, at an initial investment estimate of $552 million, $419 million of which is covered by Chinese development assistance loans.

The transport ministry is considering increasing the total investment in the project to $868.04 million due to cost overruns during the course of construction.    

The Vietnam Railway Authority, under the transport ministry, is the project developer, whereas China Railway Sixth Group, a subsidiary of construction conglomerate China Railway Group, is the EPC (engineering, procurement, and construction) contractor.

Under an EPC contract, the contractor designs the installation, procures the necessary materials, and builds the project.

As an EPC contractor, the Chinese side has the decisive say in procurement, including the trains.

In any ODA-funded project, Vietnam must accept that businesses from the lender country will be in charge of engineering, procurement and construction.

“Even when the contractor has weak ability, we cannot have a new one due to the terms of the ODA agreement,” Thang told reporters, adding he hopes for sympathy from the public as it is “a tough issue” for the ministry.

A mock-up train is slated to be displayed for public comment later this year, whereas the delivery of all 13 trains is scheduled for the first quarter of next year.

The scandal-rigged Cat Linh-Ha Dong project has made headlines several times since groundbreaking.

Construction had been scheduled for completion in November 2013, and later delayed to December 2015. But it might not be finished until the end of the first quarter of next year, according to current construction development.

In mid-November 2014, construction was suspended for several weeks after one passer-by was killed and two others were injured by falling reels of steel from a construction site of the project.

When construction resumed in December that year, a 10-meter-long scaffold at a project construction site collapsed all of a sudden and nearly killed four people in a taxi running in the area at the time of the accident.

In late January, Nguyen Huu Thang, head of the Vietnam Railway Authority, the project’s developer, was found dead for an unknown reason in his office in Hanoi.

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