The proposal was from a report which the Government had sent to the NA about the project. The report was signed on October 22 by the Minister of Transport who is authorized by the Prime Minister.
According to the report, work of the project started in March 2007 and it was expected to be built in 2018. However, lateness in site clearance and re-establishment of technical designs for Ben Thanh depot to suit not only metro line no.1 but also no. 2, 3A and 4 has extended the time to build and operate the route till 2020.
Initial investment capital of the project was VND17.4 trillion ($1.1 billion). In 2011, the city approved total investment capital adjustment to VND47.3 trillion ($2.5 billion) of which Japanese official development assistance (ODA) loans account for 88.4 percent totaling VND41.8 trillion.
The remaining amount of nearly VND5.5 trillion is reciprocal capital from the city’s budget. The total capital increase has been attributed to objective fluctuations in material and fuel prices and minimum wage hike in 2006-2009.
In addition, investment has been up in locomotives, coaches and station equipment to meet travel demand by 2040 instead of 2020 as per the investment project.
The funds increase also aims at equipping modern equipment for a maintenance factory, a management building to operate the entire urban railway system in the city and the headquarters of Urban Railways Operation and Maintenance Company.
The Japanese yen to Vietnamese dong exchange rate has caused significant changes in total investment capital. The value in the Japanese Yen is almost double but nearly triple in the Vietnamese dong. Standby costs and price escalation have also contributed to the capital rise.
The Ministry of Transport said that ODA capital allocation has been unable to meet requirements and slowed the project’s progress. Specifically, the project needs VND21 trillion in the phase of 2016-2020 but the government has allocated VND7.5 trillion meeting 36 percent of demand.
According to plan in 2017, the project needs VND5.4 trillion but so far the city has received VND2.1 trillion meeting 39 percent. So it is short of VND13.4 trillion in the phase of 2016-2020 and VND3.3 trillion in 2017.