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Nov 13, 2018 / 21:50

Private capital suggested for Vietnam's whopping north-south express railway

Linh Pham

Private investors would pour money into the purchase, operation, and maintenance of trains as a way to share the government’s loan burden.

A domestic consultant consortium said that the government should allow private sector to invest in the north-south express railway project whose pre-feasibility studies are scheduled to be submitted to the National Assembly (NA) in October 2019.
 
Deputy Minister of Transport at the event. Photo: Zing.vn
Deputy Minister of Transport at the event. Photo: Zing.vn
The project, which costs an estimated US$58.71 billion, should be operated under the form of the public-private partnership (PPP), of which private capital would account for 20% of the total investment, according to the consortium of Transport Engineering Design Incorporated (TEDI), Transport Investment & Construction Consultant JSC (TRICC), and Transport Engineering Design Sub - Institute (TEDI SOUTH).  

Private investors would pour money into the purchase, operation, and maintenance of trains as a way to share the government’s burdens of loans as the country's public debt approaches the ceiling.

The consortium at a conference on November 12 chaired by the Ministry of Transport (MOT) said that the ratio of private investment is reasonable after they referred to investment models in Japan, France, China, and Taiwan. 

Concerns remain

Speaking at the meeting, some experts said that the cost of US$38 million for a kilometer of express railway is too high in comparison with US$27 million in China and US$26 million in Spain. 

Deputy Minister of Transport Nguyen Ngoc Dong said that the rate in Vietnam is high due to site clearance and a lack of expertise and technologies.   

The MOT’s representatives said that the express railway, which is designed to operate at the speed of 200-320 kilometers/hour, is able to compete with aviation but safer. 

But the experts cared for the internal rate of return (IRR) of the costly project. Reports at the event showed that the IRR would range from 8.9% to 10.6% if the fare is equal to 50% and 100% of air tickets of economy class, respectively.  

But no data of transport capacity and demand for the express railway has mentioned. 
 
North-south railway. Photo: Internet
North-south railway. Photo: Internet
Currently, Vietnam Railway Corporation is running the north-south railway which has operated since 1976, taking some 30 hours from Hanoi to Ho Chi Minh City. 

The north-south express railway project was first proposed by the MOT. It was rejected by the NA in 2010. By 2015, the MOT resumed the plan, carrying out surveys, field trips, and meetings with different localities in order to submit the pre-feasibility studies to the NA before 2020. 

With the length of 1,570 kilometers and claiming around 7,875 hectares of land, the railway would connect Hanoi and Ho Chi Minh City. 

Japanese and South Korean experts have provided consultancy of the project. They estimated that the whole rail trajectory would take eight hours and 19 minutes at the speed of 200 kilometers/hour to be covered. 

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