Vietnam gov’t requests thorough cost calculations for first high-speed railway

The Vietnamese government has asked subordinated agencies to meticulously calculate the estimated cost of the colossal transnational high-speed railway project to prevent financial risks.

Calculations should take into account all natural and socio-economic conditions and characteristics of the project to identify a preliminary cost that is the most accurate as possible, avoiding cost overruns during implementation, the government said in conclusions after a meeting last Saturday.

The request was made as cost overruns have been common for Vietnam’s first three metro lines in Hanoi and Ho Chi Minh City.

The government also proposed special policies and mechanisms be issued to mobilize maximum resources, fast-track procedures, and give the National Assembly and government more freedom to implement the project.

Public investment will take the lead in financing the project, including the central and local budgets, borrowings, and bond issuances. Other forms, such as build-operate-transfer (BOT) and build-transfer (BT) formats and other non-state sources, should also be considered, the government concluded.

The Ministry of Transport was asked to coordinate with the Ministry of Finance to assess the impact of the project on the nation’s public debt and foreign debt and its economic effectiveness, considering potential reductions of travel cost and logistics cost, land rent increases, and the country’s competitiveness.

The government requested that all project dossiers be submitted to the National Assembly, the country’s parliament, before its regular eighth plenum starts on October 21.

The government asked the transport ministry to lead efforts to study projects to build three railway routes linking with Chinese ones: Lao Cai-Hanoi-Hai Phong, Hanoi-Dong Dang (Lang Son province), and Mong Cai (Quang Ninh province)-Ha Long (Quang Ninh province)-Hai Phong.

The priority should be given to the Lao Cai-Hanoi-Hai Phong, with a view to starting construction next year.

The North-South high-speed railway is slated to have a length of 1,541 kilometers and a maximum speed of 350 kilometers per hour. It will run through 20 provinces and cities, with the two ends being Hanoi and Ho Chi Minh City, the country’s two largest cities.

The initial cost is $67.34 billion, higher than $58.7 billion of a similar project proposed in 2019.

Deputy Minister of Transport Nguyen Danh Huy said last week that the country will mainly rely on itself in building the high-speed railway, minimizing foreign strings attached.