Investing in one kilometer of North-South high-speed railway requires 38 million USD

On the afternoon of November 12, after listening to the TEDI - TRICC - TEDISOUTH Consulting Joint Venture announce the final report on the pre-feasibility study of the North-South high-speed railway project, some transportation experts calculated that with a total investment of 58.7 billion USD for 1,500 km, the investment rate per km is 38 million USD, nearly 1.5 times the investment rate for railway construction in Beijing, Shanghai in China (27 million USD) and Spain (26 million USD).

Experts say that this investment figure is very high for a country with a developing economy and public debt of over 60% like Vietnam. Therefore, they recommend that before developing a project to submit to the National Assembly for investment approval, the Ministry of Transport needs to calculate the financial issue more carefully.

Explaining this, Deputy Minister of Transport Nguyen Ngoc Dong said that other countries do not have to pay for land clearance so they cannot be compared with them. "Chinese land is state-owned, when the state needs to take it for a project, it only solves the resettlement of people without compensation. Therefore, their construction costs are much lower than ours," Mr. Dong said.

In addition, China and some European countries have an advantage over Vietnam in that they have mastered high-speed railway construction technology and have professional and well-trained construction companies, while Vietnam has just begun to build a roadmap for training and technology research.

To build a high-speed railway system, according to Deputy Minister Dong, Vietnam will have to buy everything from locomotives, operating equipment, and technology from abroad, so the cost will be much higher than domestic production.

The representative of the Ministry of Transport also said that the amount of 58.71 billion USD for the North-South high-speed railway is only the initial estimated cost for investment in construction and equipment procurement. This cost has been calculated by consultants and separated based on the volume of construction required. "However, when operating, it is determined that there will be losses in the first period, the state must support the maintenance and repair costs for 10-12 years," Mr. Dong emphasized.

According to the final pre-feasibility report of the North-South high-speed railway project, the project has a total investment capital of 58.71 billion USD. Of which, the first phase will be completed in 2032 with the Hanoi - Vinh section (estimated at 13.97 billion USD) and Nha Trang - Ho Chi Minh City (estimated at 13.37 billion USD). The remaining section connecting Vinh - Nha Trang will start construction in 2035 and be completed in 2050.

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The project is invested in the form of public-private partnership (PPP), in which the state invests in infrastructure with a total capital of 80%. The capital mobilized by the investor is about 20% of the total project capital to purchase train equipment and exploit to recover capital.

The Ministry of Transport plans to complete the pre-feasibility study report in November 2018; the State Appraisal Council will appraise from December 2018 to April 2019; report to competent authorities in May - July 2019 and complete the pre-feasibility study report to submit to the Government in August 2019. The project will be submitted to the National Assembly for comments in August 2019 and approved by the end of 2019.