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Cat Linh-Ha Dong railway collects VND46billion in revenues in ten months, subsidy proposed

Following ten months of commercial operations, the Cat Linh - Ha Dong elevated urban railway has served more than 5.4 million passengers and taken VND46 billion (US$2 million) in revenue.
Cat Linh - Ha Dong elevated urban railway in Hanoi officially went into operation in November 2021. — VNA/VNS Photo Hoang Hieu

The Ministry of Transport said that because this is the only operating line in the unfinished urban railway network of the capital city, its connection to other public transport is still limited.

However, the number of passengers is increasing due to its safety, convenience, rapid speed and punctuality. 

The daily average of people taking the train is 18,300, half of which use monthly tickets.

Despite high operating costs, fare rates must be low to attract people to this means of public transport. 

Hanoi is planning to use its budget to subsidise the Cat Linh - Ha Dong line operator in the same manner as for public buses. 

Options are being discussed, which say that the subsidy rate is 80 per cent for monthly tickets, and 50 per cent for daily tickets. 

Cat Linh - Ha Dong urban railway officially went into operation in November 2021, after ten years of construction. 

With free travel in the first 15 days, the line made VND2 billion in revenue in the first month, welcoming over 4.4 million passengers. The figures continue to increase in the following months.

In August 2022, the number of passengers reached 6.1 million, with a revenue of nearly VND6 billion.

In a recent meeting with the railway project management board, deputy transport minister Nguyen Danh Huy required a detailed and thorough evaluation of audit conclusions, which must specify groups of issues, causes and reasons, responsibilities and related stakeholders. 

This will help propose solutions and recommendations to solve the current problems.

According to the State Audit in their conclusion dated December 2018, the total investment in the project was adjusted without notice to the Prime Minister and the National Assembly, which did not follow regulations. 

The total amount to be deducted and recovered from the project is VND874 billion ($38 million). 

The Government can reduce its spending through related mechanisms when making final payments with the main contractor EPC from China, which are deductions due to incorrect calculations of over VND175 billion ($7.3 million); negotiation between the investor and the main contractor to reduce more than VND428 billion ($18 million); accounting calculations to reduce the costs of investment, management, principal debt and interest of over VND269 billion ($11.3 million). 

In this project, the labour unit cost calculation was also audited and recommended for adjustment, which would require years to reach an agreement. 

The railway management board also asked the transport ministry to change the project completion date to November 2023, coinciding with the warranty expiration (after two years of operation). 

During the warranty period, equipment replacement is under the main contractor's responsibility, while spare supplies procured according to the contract will only be put into use after November 6, 2023. 

The extension of the project completion date is to finish procedures as per regulations and spare equipment procurement, and will not affect the project or lead to additional costs, said the board.

Source: Vietnam News


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