Second chance here for the high speed train
The Vietnamese government last week asked the Ministry of Transport (MoT) to “work urgently with the Ministry of Planning and Investment to carry out analysis, comparison and selection, and come up with an optimal scheme of investment and construction of the railway project, especially in terms of the speed and mode of transport, the roadmap and the time of preparation, implementation and completion of this project.
It is believed that the government will seek approval from the National Assembly (NA) for the grand plan for the 2021-2026 legislature.
If approved, the 17-year fate of this project carrying both passengers and cargo will be a milestone, with the ultimate goal that it would take just six hours to travel from Hanoi to Ho Chi Minh City. .
The MoT will write a feasibility report, adopt a design and carry out site clearance before officially starting construction in 2028-2029 of a number of tender documents for the two sections of Hanoi-Vinh and Nha Trang-Ho Chi Minh City.
It has been proposed that the project trains use technologies similar to the Shinkansen train in Japan. Shinkansen uses a range of advanced technologies, achieving not only high speed but also high levels of safety and comfort.
The biggest hurdles over the past decades that have made the adoption of such a high-speed railway difficult have been the choice of speed, investment capital and capital raising programs, in particular especially in the context of a limited state budget.
The General Bureau of Statistics said that in the first seven months of this year, total state budget revenue was estimated at $47.54 billion, up 18.1 percent year on year. Total state budget expenditure is estimated at $36.64 billion, up 3.7% year-on-year. This resulted in a budget surplus of $10.9 billion over 7 months.
Last year, Vietnam recorded a budget deficit of $12.46 billion, down $2.48 billion from initial estimates and equal to 3.41% of realized GDP worth 365 .21 billion.
According to the MoT’s pre-feasibility report on the project, the 1,435mm double-track railway will be about 1,545km long and pass through 20 cities and provinces.
It will start at Ngoc Hoi station in Hanoi and end at Thu Thiem station in Ho Chi Minh City. The electric railway could allow a speed of 320 km/h.
Total capital for the entire project is estimated to be approximately $58.7 billion, including nearly $2 billion for site clearance, $31.5 billion for construction, $15 billion for the purchase and installation of equipment, $5.8 billion for project management and consulting, and $4 billion for provisions. .
To ensure the efficiency of investments and the capacity of the state budget, the project should be divided into two stages. Under the first stage, the investment will be made in the Hanoi-Vinh and Nha Trang-Ho Chi Minh City sections of 665 km with a total capital estimated at 24.7 billion dollars. This stage will be built in 2027-2031 and will become operational in 2032.
Under the second stage, the Vinh-Nha Trang section will be built with a total length of 894 km and an estimated amount of 34 billion dollars. The Vinh-Danang and Danang-Nha Trang sections will be open to traffic by 2040 and 2045-2050, respectively.
The MoT has conducted numerous studies on this project since 2005, with consultation with various ministries, central organizations, experts and scientists to develop and revise the pre-feasibility report for the project. A state assessment board was set up in 2019 by the government to assess the pre-feasibility report.
In 2010, the $55.8 billion railway project was submitted by the government to the NA for review. However, the legislature rejected the project due to capital shortages and differing views in the choice of technology.
According to designs at the time, the expressway would allow passenger trains to travel at 300 km per hour and would have a total of 27 stations. The total time from Hanoi to Ho Chi Minh City would be around five and a half hours.
Using 4,170 hectares of land and Japanese technology, the railway was then to be built between 2012 and 2035, with the first phase to be completed by 2020.
Then Transport Minister Ho Nghia Dung said that each year he would need to mobilize $4.37 billion from the state budget, official development assistance and companies for the project.
Dang Vu Minh, then chairman of the National Assembly’s Committee for Science, Technology and Environment (CSTE), said that on average, one kilometer of railway would require funding of $35.6 million. .
“Many have said that the project also includes the construction of tunnels and assorted bridges. This means that the total investment capital needed for the project would be far from the estimates,” Minh said.
Moreover, under the government’s plans to develop Vietnam’s transport networks before 2020, investment capital demand for the traffic sector over the past decade is estimated to have been $160 billion, of which $70 billions of dollars for the railways. “It’s a big challenge for the project,” Minh said.
A CSTE report on the project said that the total capital for the first phase of the project would be $21 billion, meaning that each year would need $2.63 billion which depended mainly on foreign loans. “This project will be a burden on the government’s debt, which has already been estimated at 42% of GDP, while the country’s stock of foreign currency has remained low,” the report said.
Additionally, Vietnam’s GDP in 2010 was $110 billion. “With an average growth rate of 6-7% per year, the country will not be able to provide enough investment capital for many sectors, while the capital for this project is too large,” the report adds. .