Cost of ODA projects rise due to delays
Many HCM City projects funded by official development assistance have seen costs increase significantly, mainly due to delays caused by the financial crisis and inflation.
The 19.7-km Ben Thanh – Suoi Tien urban railway project from downtown to District 9, the city's first underground route, is a prime example.
Designed to run 2.6-km underground and the rest at an elevation, it was approved in April 2007 at a cost of US$1.1 billion. But the cost has since shot up to $2.3 billion.
Tran Quang Phuong, director of the Department of Transport, said when its feasibility was studied from 2003 to 2006, the financial crisis and inflation were not even considered.
"Prices of construction materials increased by 40 – 100 per cent between 2007 and 2009," he said.
Also adding to the cost was the city's request to tweak the design to allow more coaches and use better technologies.
The first study was done out by a local company and when it was vetted by a consortium of local and foreign experts, the cost went up to $2.2 billion. A Singaporean consultancy confirmed the cost in 2008.
Truong Trong Nghia, deputy head of the city People's Council's Economics and Budget Commission, feared that in the next five years the cost will go up even more.
"HCM City will have six underground routes by 2020. Therefore, we should find a way to control costs of such projects."
Other major projects whose costs have shot up include the Nhieu Loc – Thi Nghe canal sanitation project, which was supposed to have been completed in 2007 at a cost of $200 million. The new completion date is next year while the cost has gone up to $317 million.
The first stage of the East-West Highway and Water Environmental Hygiene project was scheduled to finish in 2008 and cost VND14 trillion ($184.6 million). It will now cost a whopping VND17.6 trillion when it is completed next year.
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