Expanding National Highway 1: Imposing tolls to reduce budget pressure.

Deputy Minister of Transport Nguyen Hong Truong

At the regular press conference on the afternoon of April 2nd, Deputy Minister of Transport Nguyen Hong Truong stated that the Government has agreed to the plan for the State and investors to jointly expand National Highway 1, because relying solely on the budget would mean that some sections of the road would only be completed after 2020.

The plan to restrict private vehicles in major cities, the project to expand National Highway 1, and the construction of a high-speed railway were the main topics discussed by Deputy Minister of Transport Nguyen Hong Truong at a press conference on the afternoon of April 2nd. Mr. Truong also answered reporters' questions about the difficulties faced by Vinashin, Vinalines, and other companies.

The increased tolls are still offset by the improved road conditions.

According to Mr. Truong, expanding National Highway 1 is urgent, but currently the budget is limited. Therefore, in addition to budget funds, social resources must be mobilized through BOT (build-operate-transfer) and PPP (public-private partnership) models. Approximately 21 BOT toll stations will still be located at a distance of 70km/station as currently stipulated. However, the Government also requires that, to ensure capacity and investment efficiency, BOT projects should not exceed 20 years. Therefore, to ensure the 70km/toll station distance, in addition to the 30-40km built under the BOT model, the remaining 30km will be funded by the state budget (government-guaranteed bonds).

“When establishing the road maintenance fund, it was clearly stated that BOT toll stations would remain. These stations use the collected fees to recoup investment and maintain and repair BOT projects, not to use money from the road maintenance fund for road maintenance. Depending on the economic situation, the Ministry of Transport and the Ministry of Finance may advise the Government to reduce toll rates during certain periods. Currently, some toll stations are at the stage of increasing toll rates, but the Ministry recommends that the Government not increase them given the current economic situation,” Mr. Truong explained regarding concerns about double charging.

Responding to Tuoi Tre newspaper regarding the potential risks of implementing the BOT project to expand National Highway 1 based on a 3.5-fold increase in tolls (equivalent to 35,000 VND/trip for vehicles with 12 seats or fewer) without any official legal document regulating this fee level, Mr. Truong stated that he had consulted the practical implementation of BOT projects in many countries to arrive at an average fee level comparable to other countries in the region. He added that from 2016 onwards, the 3.5-fold increase would only be applied to BOT toll stations with low traffic volume, while stations with high traffic volume would see a 2-2.5-fold increase.

“This project has been agreed upon by the relevant ministries, so the Ministry of Transport has proposed to the Government to boldly proceed. If the expansion of National Highway 1 is funded by the state budget, it will require approximately 120,000 billion VND, a considerable amount given the current budget. The Ministry has proposed issuing government-guaranteed bonds to fund the expansion of National Highway 1, but due to issues related to the public debt ceiling, the National Assembly will decide on this matter. To secure funding, the Government has agreed to a joint approach between the State and investors, because waiting for the state budget to fund it would mean that only some sections of the road would be upgraded after 2020, not the entire road,” Mr. Truong explained.

According to Mr. Truong, the increased fees are not a significant concern as they will be added to transportation costs. He argues that when roads are in good condition, vehicle travel time is faster and transportation costs are lower, so a slight increase in road tolls will still be offset. “We have calculated this. When the Ho Chi Minh City - Trung Luong expressway started collecting tolls, the number of vehicles decreased by 40% compared to before the tolls were collected. But after three months, due to frequent traffic congestion on the old National Highway 1, all trucks returned to the expressway. Transportation businesses will calculate the benefits between toll collection and time savings, ensuring smooth vehicle operation and reduced breakdowns. Collecting tolls will not make things more difficult for transportation businesses if the roads are in better condition,” Mr. Truong said.

Two options for building a new high-speed railway.

Regarding railway construction, Mr. Truong stated that due to insufficient resources for high-speed rail construction, the Ministry of Transport has adjusted its strategy to focus on high-speed rail. Currently, the Ministry of Transport is developing two parallel plans: continuing to upgrade the existing railway to achieve speeds of 90-110 km/hour, allowing trains to run between Hanoi and Ho Chi Minh City from 3 PM to 5 PM with an average speed of 100 km/hour. This plan is being implemented by the Vietnam Railway Corporation, which will carry out specific measures from now until 2020.

Option two, according to Mr. Truong, involves the Ministry of Transport coordinating with the Japan International Cooperation Agency to build a double-track railway with a 1.435m gauge, compatible with the current locomotive and rolling stock systems used in other countries, and achieving train speeds exceeding 200km/hour. This option would be used for both freight and passenger trains. The Vietnam Railways Corporation is currently coordinating research and will report to the Government in the near future. Resources will be mobilized through a BOT (Build-Operate-Transfer) model with international investors and domestic resources to gradually build each section, rather than simultaneously, with a completion timeline potentially reaching 2030.

Vinashin's debt will take many years to settle.

Regarding the situation of crew members on Vinalines' ships currently detained abroad, Deputy Minister Nguyen Hong Truong explained that the reason is that the company is facing difficulties due to a lack of cargo to operate. The Ministry of Transport has instructed Vinalines to handle the situation by continuing to effectively operate the ships that are still operational, and selling ships when conditions permit to generate capital for investment in those currently in operation. The Ministry has also instructed Vinalines to organize working groups to visit the ships to provide assistance and deliver food and supplies to the crew.

Regarding the difficulties faced by Vinashin and Vinalines, Mr. Truong stated that Vinashin had faced challenges and Vinalines was on the verge of bankruptcy from a market perspective. However, after a year of directives from the Government and the Ministry of Transport, the employment of both enterprises is now being maintained and secured. The remaining debt will take many years to resolve. “The remaining debt has been frozen by the Government; Vinashin will repay it later when it has sufficient funds. When maritime transport develops, we will return to repay that debt. Countries around the world do the same. In any country, when a business falls into crisis, it takes many years to resolve. The Government has approved the restructuring decision, so hopefully in a few years we will see a new Vinashin and Vinalines,” Mr. Truong said.

According to Tuoi Tre - TH