Hyundai-Thu Duc spat finds calm end

BOO Thu Duc director Truong Khac Hoanh, last week told VIR that the company had concluded obligations to pay back $2.2 million to Hyundai Rotem Company. Hyundai Rotem also came to an agreement with BOO Thu Duc Corporation to render $0.3 million to the local firm.

In reaching this agreement, the two sides also terminated an engineering, procurement and construction (EPC) contract between BOO Thu Duc Corporation and Hyundai Rotem signed in 2005.

Deputy Prime Minister Nguyen Xuan Phuc, in the recently-issued official dispatch No.7836/VPCP-KNTN, also concurred with the solution raised by Ho Chi Minh City People’s Committee.

The dispute runs all the way back to December 2004, when the people’s committee granted an investment licence to BOO Thu Duc Corporation to invest, operate and own the Thu Duc water treatment plant with a capacity of 300,000 cubic metres per day under a build-own-operate contract.

The project would supply treated water to more than one million residents in Districts 2, 9, 7 and Nha Be.  

The total investment cost in nominal prices was estimated at VND1,547 billion ($74 million), of which VND1,047 billion ($50 million) was financed from the Development Bank of Vietnam.

After the contractor completed 91 per cent of the construction, Thu Duc BOO Corporation unilaterally terminated the EPC contract signed with Hyundai Mobis Company and transferred the remaining work to another contractor in late 2008.

Hyundai Rotem Company had failed to implement a  renewal credit guarantees at the bank as initially committed, according to Thu Duc BOO Corporation.

The local firm also kept $5.7 million of guarantee credit of Hyundai Rotem Company which had been transferred to the project owner’s account.

The Korean company told the Vietnamese government and related state agencies that Thu Duc BOO Corporation was at fault for the delay because it had not handed over the land within 60 days after signing the EPC contract as committed.

Hyundai Rotem, as a result, asked the local firm to pay back the surety bond.  Hyundai said it wanted to finish the remaining 9 per cent of the project.

The Ho Chi Minh City People Committee, in considering the dispute, worked for nearly five years to bring both sides to sit down together and seek a resolution.