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Saturday, July 2, 2022

HCMC incurs loss of VND232 billion as Ring Road No. 2 project stalled

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HCMC – Construction on a section of the Ring Road No. 2 project in HCMC has been delayed for two years, leaving the city with an interest sum of VND232 billion during the period, Lao Dong reported.

The HCMC Management Board for Traffic Works Construction and Investment has just reported to the HCMC Department of Transport on the stalled progress of the section stretching 2.75 kilometers from Pham Van Dong Street to the Go Dua Intersection in Thu Duc City.

The progress came to a standstill in March 2020 due to site clearance and space handover issues, according to the report.

Work on the section was assumed by Van Phu Bac Ai JS Company in 2017 under the build-transfer format at a total cost of VND2.5 trillion, including more than VND1.4 trillion for site clearance and compensation.

Under this BT contract, the contractor will advance monies for site clearance, compensation and construction, while the city will reimburse the investment in the form of land in exchange for infrastructure.

As stated in the report, site clearance on the section was 71.36% complete and the contractor had advanced over VND960 billion from its own budget. Construction was 43.8% complete when work was halted in March 2020, pending site clearance, the handover of reciprocal land to the contractor and other related paperwork.

Delays in the handover of land to the contractor and other administrative procedures, resulting in the suspension of the construction work, have led to an extra interest sum on bank loans, estimated at VND10 billion a month, or VND232 billion to date.

The HCMC Management Board for Traffic Works Construction and Investment therefore has proposed the municipal government address the contractor’s suggestions on rescheduling the project’s timeline, revising the BT contract and handing over the land.

The section is one of four stretches that need to be constructed to complete the Ring Road No. 2 project. The other three sections with a combined length of over 11 kilometers require an additional VND26.29 trillion using public investment and are to be completed between now and 2025.

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