HCMC proposes bond issuance for metro line funding

Ho Chi Minh City authorities plan to issue municipal bonds to finance the development of six metro lines, with an expected cost of VND837.25 trillion ($33 billion) by 2035.

The proposal was made in an urban metro development plan presented at the 17th session of the 10th municipal People’s Council on Monday. The local government is expected to submit the plan to the government this month, to the Politburo in the third quarter of 2024, and to the National Assembly later this year.

Presenting the plan, Vice Chairman of the HCMC People’s Committee Duong Ngoc Hai said that the projected funding for the construction and initial operation of six metro lines, spanning 183 kilometers with 148 stations by 2035, will exclude interest during construction and capital already allocated for the in-progress metro line 1 project.

The city will have completed two metro lines totaling 31 km with 24 stations and two depots by 2030. It aims to complete 351 km by 2024 and 510 km spanning ten metro lines by 2060, according to the plan.

Citing the plan, Tran Quang Lam, director of the municipal Department of Transport, noted that public investment will primarily fund metro projects, leveraging domestic contractor resources. He therefore requested a mechanism to allow contractors to participate in metro design and construction. Lam added that HCMC will coordinate with relevant agencies and units to select appropriate technology.

To achieve the goal of 183 km of metro lines by 2035, Lam recommended 28 mechanisms and policies related to planning; land revocation, compensation, and resettlement; capital mobilization; investment procedures and authority for project implementation; technical standards and technology; and metro management and operation.

Additionally, HCMC plans to build its metro lines following the Transit-Oriented Development (TOD) pattern, which differs from current standards and planning, Lam stated. The city also wants to mobilize capital by issuing local government bonds with low interest rates, he proposed.

Under the plan, HCMC intends to establish an urban railway corporation wholly owned by the municipal government. This corporation will be responsible for capital mobilization, investment management in construction, and multi-sector business operations to utilize the assets under its management.

Metro line 1, or the Ben Thanh-Suoi Tien project - the first of its kind in the metropolis, started construction in 2012 with an initial operational target of 2018. With an estimated investment of VND43.7 trillion ($1.72 billion), the 20 km line connecting Ben Thanh (District 1) to Long Binh depot (Thu Duc city) has three underground stations and 11 elevated stations. However, the project may not open until late 2024 due to constant setbacks at the HCMC Urban Railway Management Board.

Besides, the Ben Thanh-Tham Luong project, also known as metro line 2, has faced prolonged delays since its originally scheduled construction commencement in 2014. The 11 km line, with 10 stations across six districts, has seen its official opening date rescheduled twice, now set for 2030 instead of the initial and adjusted targets of 2018 and 2026. Its total costs have overrun to VND47.9 trillion ($1.89 billion) from VND26.12 trillion ($1.03 billion) due to compensation and site clearance obstacles.