Hanoi city plans to borrow over VND2,300 billion (US$98.35 million) from the Vietnamese government to soon put the long-delayed Cat Linh - Ha Dong Railway project into operation.
Hanoi borrows nearly US$100 million to operate Cat Linh - Ha Dong Railway. Photo: Internet
The railway project was approved since 2008, with an initially-approved cost of VND8.77 trillion (some US$376.4 million at current exchange rate). However, the project has undergone overruns of VND9.23 trillion (US$396 million) to a total cost of VND18 trillion (US$868 million at previous exchange rate). Of the total, US$669 million was sourced from Chinese ODA and the rest was Vietnam's counterpart fund.
Of this amount, US$577 million was allocated to infrastructure construction and US$98 million will be used to finance the commercial operation.
The US$98-million loan will be used to purchase automatic ticket controllers, equipment for train maintenance, locomotives, and cover training and technology transfer.
A report from the Hanoi People's Committee said that central agencies have agreed to authorize the Railway Project Management Board to sign an agreement to borrow the amount from foreign sources with the interest rate of 4% per year.
If failing to pay the debt on time, the borrower must pay the penalty of late payment equal to 150% re-lending interest rate applicable to the overdue days. Loan principal and debt interest will be paid every six months.