Minister of Transport Nguyen Van Thang on November 20 at the ongoing National Assembly session spoke about the North-South high-speed railway project implementation.

Thang said the project has been considered and researched for 18 years with thorough calculations. The forecasts about transport capacity and demand show that 2027 is the reasonable year for Vietnam to kick off the project.

The government has instructed the Ministry of Natural Resources and the Environment (MONRE) to consider adjusting land use planning and update demand for land use for the project which covers an area of 10,827 hectares. Local planning also needs to update information about routes, orientations, construction works and land bank demand.

Regarding the scale of the project, the North-South high-speed railway will start at Ngoc Hoi Station in Hanoi and end at Thu Thiem Station in HCM City.

Some National Assembly deputies suggested that it would be better if the railway route ends in Can Tho (instead of HCM City) to help develop the economy in the Mekong Delta.

In reply, Thang said there are two separate railway projects under consideration, including the Hanoi – Lang Son and HCM City – Can Tho, which aim at developing local economies in the Red and Mekong River Deltas.

Regarding the former project, relevant agencies are considering borrowing capital to implement. As for the latter project, this would be the railway meeting standards for both passenger and cargo transport with a speed of 160-200km/h for passenger, and 120km/h for cargo transport.

“As the demand for cargo transport on the two routes is very high, the railways must carry both passengers and cargo,” Thang reported.

“As for the HCM City – Can Tho project, the pre-feasibility study has been completed and relevant parties are considering capital arrangement,” he said.

Explaining the use of different means of transport, Thang said the most effective cargo transportation model is inland waterways and coastal routes which are less costly, environmentally friendly and suitable to Vietnam’s conditions (there are concentrated economic zones and urban areas in coastal areas).

The cargo transport by land is a good choice for short-term distance which brings convenience for goods forwarding.

The North-South high-speed railway should be designed to serve passenger transport and national defence and security protection. Cargo transport may be considered after 2050, if demand increases.

“Calculations have found that by 2050, the existing three transport modes (sea, land and railway) have more than enough capacity to carry cargo,” Thang said, citing the statistics of the countries with similar terrain conditions such as Japan and China. The market share of cargo transport by railways is not high and is on the decline.

Loans

Thang cited the experience of the countries with high-speed railways as saying that PPP (private public partnership) is not feasible for such a project. Many countries have to nationalize railways or have to raise support levels. That is why the government proposes developing the project as a public investment project.

Regarding the economic and financial effects, Thang said the project is estimated to bring major socio-economic benefits. However, in the first four years of operation, revenue would be just enough to cover operation expenses, while the state will have to partially pay for infrastructure maintenance.

The North-South high-speed railway project is estimated to cost $67 billion. Expected to be completed by 2035, the capital will be disbursed within 12 years, or $5.6 billion each year. The investment capital is expected to be recovered after 33.6 years.

Thang said the loans won’t be higher than 30 percent of total capital needed. No official decision has been made about whether to borrow capital domestically or use ODA (official development assistance) capital.

“The important thing we need to consider is efficiency. If ODA capital has low interest rates and has no binds attached, that's great. Otherwise, we will borrow domestically,” he said, adding that Vietnam needs to use the cheapest possible capital.

Mentioning project implementation, Thang said, for huge projects, it is necessary to hire foreign firms for two stages – project management and supervision consultation.

“These are crucial issues that must be taken into account because they will determine whether the project meets requirements in terms of progress and capital,” Thang said.

Tran Thuong