Workers at the VND10-trillion ($431-million) anti-flooding project
in District 7, HCMC, May 2020. Photo by VnExpress/Huu Nguyen. 

A VND10-trillion ($431-million) to prevent urban flooding in HCMC could be suspended as the contract with the investor has run out of time. 

The city-based Trung Nam Group, main investor of the anti-flooding project that covers 100 hectares (250 acres) in districts 1, 4, 7, 8, Binh Chanh and Nha Be, said the city is yet to sign a project extension, preventing it from continuing the work.

The current contract had set June this year as the deadline for work to be completed and the entire project to become operational in December. This deadline had been adjusted from a previous one set in June last year.

If the contract is not extended, there is no way the bank will disburse the remaining sum of VND1.8 trillion ($77.6 million) for Trung Nam to continue the project, the company's CEO Nguyen Tam Tien said Wednesday at a meeting with city authorities.

"Given the current situation, we cannot continue to work on the project for more than two months; and if obstacles related to extending the contract are not removed, we would have no choice but to suspend the entire project," he said.

Delays, delays

The project was set for completion in April 2018. It was put on hold for 10 months for two reasons. In 2018, the Bank for Investment and Development of Vietnam (BIDV) could not disburse funds because the city had yet to sign the disbursement report.

This was followed by a controversy after a supervision consultant found out that Trung Nam had used Chinese steel for the valves of the project’s sewer system. The contract it had signed stipulated that the steel had to be sourced from G7 countries.

Trung Nam insisted that it had fulfilled all terms and conditions in the build-transfer contract it had signed with the city, and that the concerned municipal department had approved changes in the use of steel. The firm also gave its assurance that the quality of the Chinese steel used for the valves was suitable with the project’s functions.

When the dispute was resolved and work eventually resumed in February 2 last year, Trung Nam signed another contract with the city to extend the deadline for the project to start operations this year.

However, the private company encountered another problem when affected districts failed to hand over cleared sites for the project by June 30, 2019 as they’d promised earlier.

"If those districts handed over cleared land for the project in time, it would have been completed and started operating by now, and the situation of an expired contract would not have arisen," Tien said.

He added that if the project is suspended yet again, it would take as long as five months to resume because of administrative procedures that the company has to fulfil to pick up where it had left off.

Disagreements surface

Part of the anti-flooding project at the barrier of District 7 and Nha Be District,
May 2020. Photo by Trung Nam Group.

Tien said Trung Nam had already come to terms with the city administration late September on what items in the project needed to be included in the extended contract, but the municipal Department of Planning and Investment has refused to sign it.

Sources told VnExpress that the department would not sign the contract extension because it has yet to reach an agreement on the payment method for the project.

Previously, the government had advised that HCMC will pay for the project with land and will only make cash payments when that resource runs out.

The city later asked for permission to cover 15 percent of the project’s cost with land and pay the rest as cash. No final decision has been taken on the payment issue.

Started in 2016, the entire project is completed 93 percent, according to some estimates.

The project aims to build a new drainage system and add more pumping stations that will be able to keep dry a 750 square-kilometer area in the downtown section along the Saigon River.

Residents of Vietnam’s biggest city have been waiting for the project to give them respite from the chronic flooding they have been suffering years after years.

For almost two decades, urban flooding has been a major headache for HCMC, and no comprehensive solution has been identified yet.

The city’s development plan before 1975 was designed for around two million residents but that population has risen to 13 million, excluding migrants, and yet, the drainage system has not been upgraded.

Experts have said that the drainage plans being used now are outdated. They have also warned that without a sea change in flood-fighting efforts, the current situation will not just continue, but get progressively worse.