Consultant for HCMC’s 2nd metro line ends contract over fee dispute

The consortium of three German companies and a Swiss and Vietnamese company said it has ended the independent consultant (IC) agreement contract after it and the HCMC Management Authority for Urban Railways (MAUR) could not agree on an appendix for renewal.

MAUR said in a report to the city administration that it is making preparations to invite bids for a new consultant for the Ben Thanh – Tham Luong line that will run 11 kilometers between districts 1 and 12.

The consortium was providing engineering, design and supervision services. Its fee of 44 million euros (US$52.4 million) came out of a non-refundable grant provided by German state-owned development bank KfW.

It began work in January 2012 but stopped in October 2018 after a dispute over fees for service packages not included in the first IC Agreement.

However, MAUR had failed to resume the IC agreement ever since, without providing a specific reason.

It said last year the consultancy had demanded nearly 29 percent, or 12.6 million euros ($15.5 million), more than the original sum agreed in 2012.

The two sides held several rounds of negotiations but failed to reach an agreement.

In March last year the city administration “severely criticized” MAUR for failing to renew the IC contract in time for the work to proceed.

Such delays have affected the progress of the project, its quality, and the city’s prestige, it thundered.

Line No.2, approved in 2010, had an original price tag of $1.3 billion, but ballooned to $2.1 billion by the end of 2019 on rising material and construction costs.

The Asian Development Bank and the European Investment Bank are also funding the project, providing nearly VND37 trillion ($1.6 billion), with the government providing the rest.

The line is one of eight planned in the city with a combined length of 220 kilometers and at a cost of nearly $25 billion.

The first is nearing completion.