The Vietnam Office of the Japan International Cooperation Agency (JICA) has asked the Vietnamese government to consider promptly giving funds to Ho Chi Minh City Urban Railways No. 1 Company Limited (HURC 1), which is at risk of halting operation.
In his recent letter to Tran Van Son, Minister-Chairman of the Government Office, Shimizu Akira, Chief Representative of the JICA Vietnam Office, mentioned some issues related to the city’s Metro Line No. 1, including the urgent need of providing a budget to HURC 1 so that it can maintain operations.
HURC 1, the operator of the city’s first metro project, is facing a big problem as its initial charter capital has been used up to pay for operating expenses in the past time and is now facing the risk of suspension due to lack of funds, the JICA said.
Earlier in January this year, JICA sent an official letter to the Ministry of Planning and Investment and the Ministry of Finance requesting early allocation of funding to the company.
HURC 1’s financial problem may not only seriously affect the progress of technology transfer from JICA to the metro project, but also influence the progress of the metro line, Akira said.
Securing funds to operate the company well is very important for the metro line to be put into commercial operation smoothly as schedule, the JICA official stated.
If the funding is delayed, it will cause undesirable impacts on the overall operation progress of the metro project, he warned.
In its recent report to the Government Office, HURC 1, which was established seven years ago to receive, manage, operate, and maintain the city’s Metro Line No. 1, said it has been unable to pay its staff since February of this year.
The lack of funding has also prevented HURC 1 from paying social insurance premiums for its employees since July.
Established in 2015 as a state-owned enterprise under the management of the Ho Chi Minh City administration, HURC 1 was granted a charter capital of VND14 billion (US$601,000).
HURC 1 has earned no revenue during its lifetime as Metro Line No. 1 has yet to be completed, forcing the company to maintain operations by using advances from its charter capital.
HURC has yet to be issued expenditures for operations and has been unable to receive any advances from its depleted charter capital since August 2021.
Consequently, the company could be forced to suspend operations due to a lack of funding, according to HURC 1’s report.
In December last year, the Ho Chi Minh City’s administration submitted a report to the Prime Minister about the HURC 1’s financial problem and the Government Office later asked the two ministries to provide instructions to the city authorities.
The Ministry of Planning and Investment asked that the city consider using the state budget or other appropriate sources to finance the company’s operations to the extent permitted by law, while the finance ministry has suggested that the municipal administration ask the government to raise HURC 1’s charter capital.
As both suggestions from the two ministries would be time-consuming to implement, HURC 1 proposed that the prime minister consider giving a state budget advance to the company while awaiting a more feasible solution from the ministries.
The metro project, which started in August 2012, has a total investment of VND43.7 trillion (US$1.87 billion), most of which has come from Japan’s official development assistance (ODA).
The project had been slated to be completed in the fourth quarter of 2021 after several delays, but due to the impact of COVID-19, the completion date has been rescheduled to the last quarter of 2023.
Currently, 91 percent of the metro line, which runs from Ben Thanh Market in District 1 to Suoi Tien Theme Park in Thu Duc City, has been completed, HURC 1 said.