Hanoi’s bus rapid transit (BRT) developer has addressed reports that the system’s buses cost more than they should, arguing that the allegations were made without a clear understanding of the project’s procurement contract.
The Hanoi BRT system, consisting of 35 buses, began operating in January 2017 between Yen Nghia Bus Station in the outer district of Ha Dong and Kim Ma Station in Dong Da District.
Local newspapers critical of the developer and project’s costs have questioned why the system’s buses cost an average of VND5.54 billion (US$247,321) each, whereas the most deluxe 47-seater passenger bus fetches no more than VND4.2 billion ($187,500).
Complicating the matter is confusion behind the developer’s decision to terminate the original contract to purchase the BRT buses through a tender winner and the launch of a second tender to choose a new supplier.
On Wednesday, Pham Hoang Tuan, director of the BRT project management unit (PMU), admitted that there have been misunderstandings about the bus price and supplier selection, adding that the buses are supplied by a joint venture between local automaker THACO and Thien Thanh An at only VND5.03 billion ($224,554) each.
“That price includes operations and driver training costs,” he explained.
“The real bus price is only VND4.91 billion [$219,196] apiece.”
The Hanoi BRT system is funded by the World Bank, Tuan continued, adding that the creditor approved an additional fund of VND17.7 billion ($790,179) for signal cable installation and auto-door systems at the BRT stations.
People board a BRT bus in Hanoi.
In the meantime, Mai Phuoc Nghe, deputy general director of THACO, also said the THACO-Thien Thanh An venture won the BRT procurement contract for VND176.29 billion ($7.9 million).
“Each bus costs VND4.45 billion [$198,661], excluding taxes,” he said.
Nghe added that the buses are worth the price, considering they are specifically designed to serve the Hanoi project using the most up-to-date technology.
“The buses can carry up to 90 passengers, compared to 80 passengers on the conventional vehicles,” he asserted.
As for opening the tender offer twice, the PMU said the first contract winner was the Openasia Equipment Limited-Volvo Bus consortium, which won the bid at $11.65 million.
After the contract had been signed, the developer and the contractor were unable to see eye to eye on several issues, such as payment and repayment.
The PMU said it had obtained approval from the World Bank and the Hanoi administration to terminate the contract with the Openasia Equipment Limited-Volvo Bus joint venture and offered another tender.
This time the THACO-Thien Thanh An won the bid with a much cheaper offer, $7.9 million compared to $11.65 million.
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