Lower speed proposed for North-South Railway project over efficiency concerns

A maximum speed of 320 kilometers per hour for the North-South Express Railway as proposed by the transport ministry might lead to investment inefficiency, says the project consultant.

A design speed of 250 kph for trains carrying both passengers and cargo would help ensure revenues for the giant project, the consultant told a workshop Wednesday on the project's pre-feasibility study, chaired by Minister of Planning and Investment Nguyen Chi Dung.

The consulting consortium comprises the Consultancy and Construction Limited Company under the University of Transport, Evo MC Company Limited, Ove Arup & Partners Hong Kong Limited, and Hung Phu Trading and Construction Consultant JSC.

The consultancy said the 320 kph option would serve 81 million passengers by 2050, below the target of 103 million, and maximum annual revenues from passengers would only be $2.93-3.77 billion, meaning revenue risks.

Moreover, the investment duration of 30 years is too long, making costs hard to control due to price variations and leading to a loss of opportunities rising from the North-South economic corridor.

The higher-speed option also means total reliance on foreign technologies, while the alternative would provide a wider choice of technologies amidst the trend in Europe of express railways running between 200 and 250 kph.

For the 250 kph option, total investment is estimated at $61.67 billion, with $38.95 billion or 63.15% likely to be sourced from auctions of land along the planned railway system, according to the consultant.

With annual revenues of $11 billion, comprising $4.3 billion from passenger tickets, $6.1 billion from cargo, and $0.5 billion from station space leasing, the 250 kph project could ensure financial efficiency.

The slower-speed option offers a 18% reduction in operation and 28% decrease in energy consumption costs.

Construction preparations are expected to take place in 2023-2025, and the first phase of construction between Ho Chi Minh City and the central province of Khanh Hoa (361 kilometers) worth $16 billion is set for 2025-2031. Phase 2 from Hanoi to the central city of Danang (677 kilometers), also worth $16 billion, is scheduled for 2031-2038, followed by phase three to complete the Danang - Khanh Hoa section (469 kilometers).

Nguyen Ngoc Long, former head of the Transport Construction Investment Management Authority under the Ministry of Transport, even suggested a speed below 150 kph, which is similar to that in Laos.

According to the Ministry of Transport’s proposal introduced in February 2019, the 320 kph project was expected to cost $58.71 billion, with $1.98 billion for site clearance, $31.58 billion for construction, $15 billion for equipment, and $5.82 billion for project management and consultancy. Stand-by expenses would mount to $4.07 billion.

The 1,545-kilometer railway project would pass through 20 provinces and cities including Hanoi, Ha Nam, Nam Dinh, Ninh Binh (in the north), Thanh Hoa, Nghe An, Ha Tinh, Quang Binh, Quang Tri, Thua Thien Hue, Danang, Quang Nam, Quang Ngai, Binh Dinh, Phu Yen, Khanh Hoa, Ninh Thuan, Binh Thuan (central region), Dong Nai, and Ho Chi Minh City (the south). The starting point of the project is Ngoc Hoi Station in Hanoi, and the final is Thu Thiem Station in HCMC.

The proposed multi-billion-dollar project, shelved a few years ago due to hefty cost estimates, may be implemented over the next 10 years to bolster the country's ailing rail network. Its planned investment of $58.71 billion is equivalent to about 16% of Vietnam's GDP in 2021.

In a meeting on July 22, Prime Minister Pham Minh Chinh asked the Japanese Bank for International Cooperation to help Vietnam research and develop its North-South high-speed railway.

The PM told Maeda Tadashi, chairman of the policy-based financial institution, that the development of the giant project could be "phased out, section by section, with easier parts to commence first, followed by the more difficult."