Vietnam Business Channel

Japanese Ambassador says HCMC metro line work may be stopped because of late payments

Japanese Ambassador to Vietnam, Umeda Kunio, has sent a letter to HCMC Party Chief Nguyen Tien Nhan, that essentially threatens that Japanese work on the HCMC metro line will cease at the end of December unless monies that are owed to Japanese and Vietnamese contractors are paid.

The HCMC metro line project has been funded by Japanese loans since 2007 as well as money from the Vietnamese government, but the Vietnamese government stopped financing the project from State funds in October 2017, according to the ambassador, even though the HCMC government had pledged to advance payments from its own budget until the central Government could allocate its State budget to the project.

Ambassador Umeda said that more than $100 million USD is owed to the projects consultancy and construction contractors and that the financial pressure on contractors had reached its limits. If these problems are not resolved, work on the project could cease in late December.

The ambassador remarked that the contract for the project’s consulting unit with NJPT, a consortium led by Japan’s Nippon Koei, had expired in April 2017. Though many meetings to extend the contract have been held, it has not been amended yet and the consortium had no other choice but to continue its consultancy services. NJPT has not received any payments for the past 19 months and is now owed $20 million USD, which is affecting the payments to other contractors.

Ambassador Umeda has recommended that HCMC authorities urgently instruct its relevant departments and agencies, particularly the municipal Management Authority for Urban Railways (MAUR), on ways of dealing with these problems as soon as possible and begin to make payments to all contractors so that work on the railway does not suffer additional delays.

He explained that while the contractors were making every effort to put the railway route into operation by the end of 2020 as planned, the Japanese side had proposed the municipal authority direct the relevant agencies to make disbursements for the project soon.

The ambassador stressed that the HCMC metro line No.1 is a project that symbolizes the friendly relations between Japan and Vietnam and is a vital project that will contribute to the improvement of the living environment and the further economic development of the city and that Japan’s goal is to see the project completed as soon as possible.