High speed railway project will raise national debts

“In the context that Vietnam’s foreign debts accounted for 38.9 percent of its GDP, borrowing international capital to invest in the huge project of North-South high speed railway project will make the national debts heavier,” Dang Vu Minh, the chair of National Assembly’s Committee for Science, Technology and Environment, marked at a meeting on May 20.

Though building the high-speed railway is necessary to meet the social and economic development and the increasing transportation need in next years, the committee and the agencies in charge of examining the project at the meeting concentrated much on the country’s debt burden.

Minh said that the government estimated total initial investment expense of the project at about 1,000 trillion dong or $56 billion averaging $35.6 million cost for each kilometre. But the project is mainly on building tunnels, bridges, so the real investment cost will be much higher than the estimation.

On the other hand, the cost for the first phase of the infrastructure project (Hanoi-Vinh section and Nha Trang -HCM City section) is about $21 billion till 2020; hence Vietnam’s annual capital need for the project from now to 2020 will be $2.63 billion depending on Official Development Assistance (ODA) and ADB’s Ordinary Capital Resources (OCR).

Up to now, the government’s debts occupy over 42 percent of GDP whereas the domestic capital accumulation and the foreign currency reserves remain low. In the situation, the committee is afraid of Vietnam’s ability in raising such a huge capital amount for North-South high speed railway construction. Minh said and proposed the government to report details on the issue.

Examination agencies said that the future high-speed railway will only transport passengers (not goods) so the ticket prices will be equivalent with 75 percent of airfares. Thus the quickest capital turnover time will be 45 years against the 10-year duration that is standardised to be the effective capital refund time.

“If the ticket price of high speed trains is equal to 75 percent of airfares, very many people will be not able to use the transport mean. Those who are potential customers of the railroad system can choose expressway or airlines to travel. When the low-cost airline service becomes popular, the competitive risk between these transportation means and high-speed trains will be very high”, said Minh.

Previously, the government had proposed four investment plans for North-South high speed railway project.

1: Expanding the current railway system (single rail, 1,000 mm in width) to the 1,435 mm rails through widening rail ground, replacing the railroad sleeper, and building new rails.

According to the government, the plan is not feasible and the investment efficiency is very low because the 1,000 mm rail and 1,435 mm rail have a lot of very different technical requirements.

2: Upgrading the current single rail to dual-rail in width of 1,435 mm for the trains of 200 kilometres an hour. The dual rail will be used for transportation of passengers and goods. When doing construction, the whole current railway (1,000mm wide) system will fall into stagnation and cause the traffic jams along the country from North to South.

3: Upgrading the current railroad system to meet the foremost demand and building dual railway sections (with the width of 1,435 mm) to transport both passengers and goods with the speed of 200 kilometres an hour. However, the building of 1,435 mm railways cannot reach the target of transporting passengers with high speed.

4: Upgrading the current railroad system to meet the local transportation demand and building the 300 km/hour railroad section for only passenger transport.

Among these, the government decided to select the fourth plan and they are seeking the agreement of examination agency. The fourth plan has lower costs and higher feasibility compared to other plans, allegedly, can handle with transport of both passenger and goods, which will not cause heavy pressure on investment capital for Vietnam, Minh proposed.

The NA will discuss about this again on May 21 afternoon.

Traffic and Transport Investment, Consulting and Construction Joint Stock Co (TRICC) reported the North-South high speed railway is total 1,570 kilometres long, crossing 20 provinces and cities. Foremost, the investors will build and put Hanoi-Vinh section into operation and then Nha Trang-HCM City section. By 2035, the whole railway will be clear with 27 stations.

As estimated, it will take 5 hours and 38 minutes to travel from Hanoi to HCM City by the railway.

VNexpress

Tags: Vietnam Infrastructure, Vietnam high-speed railway, Vietnam transport