The leasing term of the Da Lat - Trai Mat railway line has been brought down to 18 years from the 30 years proposed last year, according to a proposal from the Vietnam Railway Authority (VRA) approved by the Ministry of Transport.

Investment in the line, a public-private partnership (PPP), is estimated at VND198 billion ($88 million), including interest on borrowings and site clearance costs, up from an estimate made last year of VND110 billion ($49 million).

The line is almost 7 km long and part of the route from Phan Rang city in south-central Ninh Thuan province to Da Lat in the central highlands province of Lam Dong. It was built in 1932 but due to war was abandoned in 1972. 

In 1991 it was repaired to take tourists to Trai Mat, an agriculture farm in Da Lat, and also to nearby tourism areas.

It failed to attract tourists, however, and its ongoing maintenance has become a burden for the country’s railway sector. 

The line now has three trains making six trips a day, with tickets costing VND20,000 ($0.90).

VRA has estimated that annual revenue from the route over the last three years has been VND2.981 billion ($133,830), while maintenance costs are VND1.27 billion ($57,000), operational costs VND2.691 billion ($120,800), and infrastructure costs VND280 million ($12,570).

The Da Lat - Trai Mat line is the first to be leased in Vietnam to improve use and its condition.

Mr. Khuong The Duy, Deputy Head of VRA, said that every year the State must cover losses of VND983 million ($44,130) on the line. 

The figure is forecast to increase because of declining tourist interest and degraded infrastructure.

The Trai Mat - Dat Lat line also has landed property. 

At the station in Da Lat is an old villa on 43,686 sq m in significant disrepair but able to be turned into a tourism destination.

Investors have expressed an interest in the project, including the Bach Dang Complex Company, Saigon Railways, and the Duong Sat Dong Duong Trading Investment Joint Stock Company. 

Saigon Railways and Duong Sat Dong Duong possess advantages in securing the project. 

The latter is famous for its high-quality trains, such as the Fansipan Express and the Hue - Da Nang tourism train.

The selected investor is expected to improve the quality of station infrastructure and trains and restore the old villa to make the Da Lat - Trai Mat interesting once more.

Vietnam Railways is trying to turn a profit after recording losses over recent years due to fierce competition from airlines. Revenue in 2015 was equal to just 48 per cent of the 2014 figure.

VN Economic Times