Funding delay holds up Hanoi's metro rail project: official

He told the project’s creditors at a recent meeting that some contractors have finished between 30%-58% of their work so far.

However, he admitted that there have been delays, including problems with engineering, procurement and construction contracts and with technical designs.

The line, running 12.5 kilometers from Nhon to Hanoi Station, is one of several metro lines planned for the capital's metropolitan area. Together they will form a rail network that can ease traffic congestion and reduce emissions.

Statistics showed that the city has just disbursed about 13% of official development assistance (ODA) funds, or 113.25 million euros out of the total 899 million euros, for the line. Work began in 2010, with the cost estimate originally set at US$1.2 billion and operation scheduled in 2017.

Norio Saito from the Asia Development Bank, one of the creditors, suggested the city supervise and resolve difficulties in site clearance to speed up the construction process.

The city’s mayor pointed out that ODA funds and other low-interest loans often took a long time to be disbursed, and not only in Hanoi. He said there will be a meeting with the finance ministry to resolve the problem, adding that a new project manager has also been hired recently.

According to the investment ministry, Vietnam has managed to disburse only US$2.68 billion or 56% of the targeted spending so far this year, down 18.6% from a year ago.

“Chronically low disbursement has hiked up the costs of [ODA-funded] projects and increased debt-service burden,” said Deputy Prime Minister Pham Binh Minh at a meeting with international donors in October.

“On average, a project which is one year behind schedule will cost 17% more than initially expected. If the project is delayed for two or three years, the cost will be 1.5 times higher than projected,” he said.