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Construction of Hanoi urban railway project gets tardy due to indebted Chinese contractor

Construction of Hanoi urban railway project gets tardy due to indebted Chinese contractor

Friday, March 04, 2016, 16:23 GMT+7

An infamous Chinese-contracted urban railway project in Hanoi is lagging behind schedule as the chief contractor is heavily indebted to some sub-contractors.

Progress in the completion of half of the 12 stops of the Cat Linh – Ha Dong urban railway is now nine to 22 days slower than slated, Du Giang, the project’s executive director, admitted at a recent meeting with the Vietnamese Ministry of Transport.

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.

Giang attributed the sluggish progress to the Lunar New Year holiday that concluded last month, when workers returned home for celebration and only a few of them got back to work after that, and a VND400 billion (US$17.86 million) debt the group owes to its sub-contractors.

The project director said everything will be resolved if “[we] have money.”

When asked by Deputy Minister of Transport Nguyen Hong Truong as to who is responsible for the capital shortage, Giang answered that the EPC contractor is to blame.

The Chinese side has yet to approve an additional disbursement of $19.2 million as requested by the main contractor, Giang said.

However, Trieu Khac Dung, deputy head of the transport ministry’s agency in charge of construction project quality assurance, said the debt of the contractor is as huge as VND554 billion ($24.73 million), which led to the tardy progress.

The EPC contract is running short of money as China is shoring up efforts to halt cash outflow, which affects the Cat Linh – Ha Dong project, he explained.

Kids look down to the construction site of the urban railway project. Photo: Tuoi Tre

While the sub-contractors have already brought equipment, machinery and employees to the construction sites, work could not get started due to the lack of money, according to the Vietnamese official.

“It is like getting your gun ready but there are no bullets inside,” Dung said.

Dung thus suggested that the transport ministry work with the Chinese Embassy in Hanoi and the Export-Import Bank of China to ask for capital allotment to ensure progress for the project.

In response, Giang, the project director, said the EPC contractor will soon work with relevant Chinese agencies to seek approval for the $19.2 million disbursement.

He added that the deputy general director of the China Railway Sixth Group is scheduled to arrive in Hanoi on Sunday to talk to the transport ministry and the project management unit about the issue.

Deputy Minister Truong said relevant sides must ensure the project completion by the end of this year, and ordered that the sub-contractors continue working while waiting for the main contractor to clear its debts.

The Cat Linh – Ha Dong urban railway project broke ground in October 2011, at an initially estimated investment of $552 million.

In November 2014, the transport ministry proposed that the total investment be increased to $868.04 million due to a cost overrun during the course of construction.

The project has been hit by several scandals, including a fatal accident in November 2014, since groundbreaking.

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