This decision is expected to remove capital obstacles, speed up progress and create the premise for the next metro projects in Ho Chi Minh City.
Metro Line 2 was approved in 2010 with an initial total investment of 1.3 billion USD (more than 26,000 billion VND).
By 2019, the total investment was adjusted to nearly 2.1 billion USD (equivalent to 47,900 billion VND), of which ODA loans accounted for the majority, about 37,487 billion VND, from three main sponsors: Asian Development Bank (ADB), German Reconstruction Bank (KfW) and European Investment Bank (EIB).
However, land clearance issues and delays in funding arrangements have prevented the project from starting on schedule. Metro Line 2 has been approved to start construction in 2025 and complete in 2030.
Metro Line 2 is behind schedule, causing all five loan agreements with sponsors to expire.
The CS2B consulting package - which plays an important role in construction supervision and selection of the main contractor - has also been temporarily suspended from closing and opening bids.
According to the Ho Chi Minh City Urban Railway Management Board (MAUR), to complete construction by 2030, Metro Line 2 project needs to start construction in 2025. The bidding and mobilization of CS2B consultants must be completed in 2025 to ensure progress.
Faced with difficulties in ODA loans, the Party Committee of the Ho Chi Minh City People's Committee has agreed to switch to using the city's budget to implement the next phases of Metro Line 2.
In addition, Ho Chi Minh City will add the EPC general contractor mechanism (design, procurement, construction and handover) to the Urban Railway Development Project according to Conclusion No. 49 of the Politburo.
Metro Line 2 was identified by Ho Chi Minh City as a pilot project to apply new policy mechanisms in the above project, with the goal of shortening time and increasing implementation efficiency.
According to Dr. Duong Nhu Hung - Ho Chi Minh City University of Technology, using the city budget for Metro Line 2 helps Ho Chi Minh City be more proactive in capital sources, avoiding constraints from the terms of international funding organizations.
At the same time, this approach will enhance the capacity of domestic contractors, promote the development of supporting industries and ensure project progress.
However, Mr. Hung also emphasized that capital mobilization needs to be diverse and flexible. Methods such as developing land funds along the metro line, issuing bonds or public-private partnerships (PPP) should be considered to reduce pressure on the budget.
Dr. Pham Viet Thuan - Director of the Institute of Natural Resources and Environment Economics of Ho Chi Minh City - highly appreciated the EPC general contractor model. He said that applying this model will help limit problems such as capital increase and slow progress, which have occurred in Metro Line 1 (Ben Thanh - Suoi Tien).
Mr. Thuan proposed that authorities should encourage the use of domestic and international contractor consortia, from consulting, design to construction.
According to him, the EPC general contractor is fully responsible, from design to construction, ensuring the consistency and efficiency of the project. The participation of domestic and international contractors will increase initiative and reduce dependence on foreign contractors.
In case the foreign contractor withdraws, the general contractor can still coordinate and take full responsibility, ensuring that the project is not interrupted.
A representative of the Ho Chi Minh City Urban Railway Management Board said they are coordinating with relevant parties to complete the implementation plan.
To prepare for implementation, the Ho Chi Minh City State Financial Investment Company is also coordinating with the Department of Finance and related units to research appropriate capital mobilization plans.
