Experts query the government’s ability to raise funds for a proposed VND100 trillion ($4.3 billion) railroad line to the China border and its requirement.
The proposed Lao Cai – Hanoi – Hai Phong Railway will run up to the Hekou County railway station in China’s Yunnan Province. In Vietnam, from the border province of Lao Cai, it will run 392 kilometers to the port city of Hai Phong through Hanoi.
Vietnam is nearing the debt ceiling enshrined in its laws and also has several other key rail projects that require huge sums of capital, a representative of the Vietnam Railway Transport and Economic Association (VRTEA) told the media.
The capital for this project would possibly come from the government’s coffers or international loans since railway projects are costly and do not attract private investment, he said.
In 2014 the Ministry of Transport had invited the private sector to invest in 16 rail projects, but only one managed to attract funding.
Nguyen Ngoc Dong, then Deputy Minister of Transport, explained this is because railroad projects are three or four times as expensive as roads but take a long time to recover their investment, making private investors wary.
The VRTEA expert said Vietnam has many other rail projects it needs to focus on and also earmarks money for subsidies for existing routes.
The transport ministry and the railway sector are already studying a new north-south high-speed railway that is expected to cost $58 billion, which has already sparked controversy over its lack of clarity regarding financial efficiency, as well as where the capital will come from, he said.
Meanwhile, the current north-south railway is in dire need of maintenance and upgrade, given that it is decrepit, he added. “The government needs to focus on completing existing projects instead of launching new ones; then none end up being completed.”
Many multimillion-dollar railroad maintenance and upgrade projects are on hold for lack of capital. For instance, repairs to the 131-kilometer line from Hanoi to Ha Long, scheduled to be finished in 2011, are yet to be completed, he said.
Pham Chi Lan, economist and a former member of the prime minister’s research department, said the new project costs too much of taxpayers’ money. There already is a railroad route from Hai Phong to the China border, and the volume of goods that needs to be transported is not so great as to justify building a whole new line.
The $4.3 billion could instead be used to address the severe lack of transport infrastructure in the Mekong Delta and roads between the delta and Ho Chi Minh City since this is hampering the development of HCMC, Vietnam’s growth driver, she said.
There are sufficient roads between Hai Phong City and Lao Cai Province, precluding the need for the new rail route, she added.
The China Railway No.5 Engineering Group, the Chinese consultant for the project, is producing a final report. It has estimated that the route will cost VND100 trillion ($4.3 billion) and require 1,650 hectares of land.
The route will also have 73 large bridges with a total length of 130km, 25 tunnels totaling 25km and nine existing stations and 29 new ones.
It will carry an estimated 10 million tons of cargo a year with 15 trains running every day in each direction.
The existing railway route between Lao Cai Province on the border and Hai Phong has a maximum designed speed of 80 km, but it is of poor quality, according to the transport ministry.