Ho Chi Minh City’s Phu My Bridge may have to charge tolls for a longer time or in a greater amount due to a huge cost overrun in the investment earmarked for its construction.

The bridge, which connects the city’s District 2 and 7, had previously been expected to collect tolls for 26 years, a schedule which now proves to be impossible to reach.

The BOT (build – operate – transfer) project to build the bridge was approved by the municipal government in 2004 at a total investment of VND1.8 trillion (US$84.91 million).

While construction had been expected to be completed in 2007, it was not until September 2009 that the bridge was actually open to traffic.

From then to 2011, there were a number of different reports on the overrun costs of the bridge, with the reported total investments ranging from VND2 trillion to VND3.2 trillion.

The city’s government thus assigned an independent audit unit to inspect the real investment for the bridge.

The audit result was released in May 2013, reporting that the total costs to build Phu My Bridge had overrun to VND3.25 trillion ($153.3 million), or nearly double the initial figure.

Inadequate toll revenues

Phu My Bridge Corporation (PMC), which operates the bridge, attributed the overrun costs to bank loans and forex rate difference, which are respectively worth VND464.5 billion and VND637.5 billion.

When the investors borrowed loans in foreign currencies for construction of the bridge, the forex rate was only VND15,500 per USD and VND20,502 per EUR, compared to the current VND21,000 per USD and VND28,685 per EUR, the company said.

Moreover, the toll revenues are not as high as expected and they are not enough to recoup even the initial investment estimate of VND1.8 trillion, according to PMC general director Nguyen Thanh Thai.

In 2012, toll revenues totaled VND95 billion, while the contract requires that they reach VND158 billion. Similarly, last year the toll collection reached VND102 billion rather than the required VND180 billion.

Thai said toll revenues are low because the roads connecting the bridge to main traffic are not completed, resulting in few vehicles passing by the bridge, while the operator is not allowed to charge tolls on motorbikes.

PMC pointed a finger at the city’s government, which it accused of failing to follow its guarantees. Under the contract, the city is supposed to limit the number of vehicles from ports in District 4 and 7 that enter the city, and ask them to use the bridge instead.

The municipal government also rejected PMC’s proposal to charge a VND2,000 toll per motorbike, Thai added.

Bui Xuan Cuong, deputy director of the city’s transport department, said the municipal government has approved the PMC proposal to adjust the fee collection plan for Phu My Bridge.

The two parties will negotiate to determine the new toll fee or collection term. It is reported that the new term could be as long as 40 years.