HCMC’s 2nd metro line awaits construction 12 years since approval

Huu Viet, 53, gave up more than half of his street-front house on Cach Mang Thang Tam Street in Tan Binh District almost two years ago for the construction of HCMC’s metro line No.2.

The house spreads over 56 square meters and his family gave up 38 square meters to build Ben Thanh – Tham Luong metro line, the second metro line in the city that will run 11 kilometers between Districts 1 and 12.

Viet said the compensation of VND5 billion (US$205,465) was only 70% of the market price but after being convinced by authorities and understanding the benefits of the metro, the family agreed with the site clearance plan.

He said his family was not the only one as his neighbors all wish to see the metro up and running in the near future to boost business activities in the area, and make travel more convenient.

“My house now is small, which affects our daily activities, but I have had it fixed and rebuilt. I only hope the line will soon start operation so we can eventually settle.”

A house in HCMC’s District 1 is demolished to give space for building HCMC’s second metro line in 2020. Photo by VnExpress/Gia Minh

But in the past few days, Viet got upset as the city had recently asked permission to delay the project further, with the completion deadline pushed to 2030.

HCMC’s second metro line was approved 12 years ago at the cost of $1.3 billion. As initially planned, the line would be completed in 2016. The deadline was later changed to 2026.

Viet’s is one of 603 families affected by the line construction.

Until now, around 500 have handed over a cleared site for the project. Some have moved to other places and most have accepted to live in “super thin” houses.

Apart from losing their space, those affected families said they have lost a significant source of revenue as they no long have the premises to do business or to rent out.

Problems after problems

Metro line No.2 runs through six districts of 1, 3, 10, 12, Tan Binh and Tan Phu, requiring over 251,000 square meters of land to be cleared.

The site clearance plan for the line was approved in 2010 but it took until October 2015 for HCMC to eventually form a team to take care of compensating and relocating affected families.

However, just one year after the team was formed, the compensation process was suspended as the relocation plan was adjusted.

In 2019, when the deadline for completing the metro was approved to be pushed to 2026, the city started to speed up the site clearance progress, but another issue emerged: disagreements in compensation in District 3.

District 3 lies in downtown HCMC and therefore compensation and relocation fees for affected families are different, and the Management Authority for Urban Railways (MAUR) had to wait longer than needed for the city People’s Committee to approve the land price coefficient for the district. Following the committee’s approval, affected families in the district disagreed with the compensation, drawing out negotiations.

By now, the MAUR said compensation procedures have been completed for 584 out of the affected families, and 499 of them had handed over cleared sites for the project.

The total compensation fund is estimated at over VND4.35 trillion ($191.4 million), the authority said in January.

In June, construction of HCMC’s metro line No. 2 was officially rescheduled to 2025 instead of starting this year as the city needs to find a new consultant.

The former consultant, a consortium of three German companies and a Swiss and Vietnamese firm, ended the independent consultant (IC) agreement contract with the MAUR in March after both sides failed to agree on an appendix for renewal.

The former consultant was supposed to provide engineering, design and supervision services. Its fee of 44 million euro ($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, without providing a specific reason.

It said last year the consultancy had demanded nearly 29%, or 12.6 million euro, 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 work to proceed.

As expected, it would take around 12-18 months for MAUR to find a new consultant while the investor can only invite bids for construction contractors in 2024 for work to start in 2025 and complete in 2030.

The impacts

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

With its tardiness dragging on, five contracts to borrow money for the project from German Development Bank (KfW), Asian Development Bank (ADB), and European Investment Bank (EIB) have all expired.

HCMC has asked to extend contracts signed with the KfW and ADB.

A section of Cach Mang Thang Tam Street in Tan Binh District is cleared to give space for HCMC’s metro line No.2, August 2022. Photo by VnExpress/Quynh Tran

Vu Anh Tuan, director of the transport research and development center at Vietnamese-German University in Binh Duong Province that borders HCMC, said the slow progress does not only affect the daily life of local people but also HCMC’s prestige and opportunities when it comes to borrowing foreign loans.

The more the project is delayed, the higher the cost as the price for site clearance, paying workers and buying building materials have kept rising steadily, he said.

In addition, the slow progress of metro line No.2 has affected a master plan to create a transport system to boost connection between the downtown and northwest area of the city.

“These are burdens that cannot be measured mathematically for now,” said Tuan.

Vo Kim Cuong, former deputy chief architect of HCMC, said major public transport projects falling behind schedule has been the issue of HCMC for years due to lax discipline.

The city now has to assign specific responsibility to each unit and individual, and even impose sanctions if any projects are delayed.

Regarding metro projects, line No.2 is not the only delayed project.

Construction started on the first metro line, which runs 19.7 kilometers from District 1 to Thu Duc City, 10 years ago with completion set for 2018. But after many delays, it has not been completed and the exact day that it would be up and running is still not clear.