The inside of a passenger train carriage for Metro Line No.1 in HCM City. The city is seeking more private investment to build its metro lines (Photo: VNA) Dr.Vu Anh Tuan, Director of Viet Duc Transport Research Centre, said the city wasfacing hurdles finding private investors for the metrolines.
“Investors arehesitant because these metro projects are all done on amassive scale and require a huge amount of capital, while revenue from ticketsales is not enough to cover operating costs,” he said.
Moreover, alack of a legal framework on private-public partnership (PPP)investment in traffic and railway projects has added tothe problem, according to Tuan.
Dr. Huynh TheDu, lecturer at Fulbright University, said it was important to learn from the experienceof other countries such as the Republic of Korea and China, which initiallyrelied on advanced technology and foreign loans for their firstrailway lines. Later, they focused on domestic private investment andtechnology, which lowered the costs greatly.
Most of themetro lines in HCM City are being funded by ODA loans.
For example,the first metro line with a total investment of 43.757 trillion VND (1.9billion USD) is being built with an ODA loan from Japan of 38.265 trillionVND, and reciprocal capital of 5.492 trillion VND.
Totalinvestment for metro line 2 is 47.891 trillion VND, of which ODA is 37.487trillion VND from the Asian Development Bank (ADB), German KfW Development Bank(KfW) and European Investment Bank (EIB). The reciprocal capital is 10.404trillion VND.
The firstphase of metro line No 5 will be funded by ODA loans from the ADB, KfW,EIB and the Spanish government.
“The problemwith the use of ODA loans is the delay in disbursement procedures, whichprolongs the projects and increases the public debt,” he said.
Solutions
Tuan saidthat administrative procedures must be minimised and favourableconditions created for investors both at home and abroad underpublic-private partnerships.
Because of themassive investment needed, the state must undertake the construction ofinfrastructures such as tunnel structures, elevated roads, stations and depots.
It will needto raise capital by selling bonds and creating a publictransport development fund from various sources (such as feecollection for driving in the downtown area, and tolls for roaduse, fuel charges and others).
The privatesector could purchase train carriages and the operating systems.
Over the nextdecade, HCM City will need about 924 trillion VND (42billion USD) for 85 transport infrastructure projects, including 55 roads andbridges, seven waterway transport, eight railway and 15 road works.
In particular,the city needs 833 million USD in private investment for its metrolines.
This includesthe sections of metro line No 2 between Ben Thanh Market and Thu Thiem andbetween Tham Luong and Tay Ninh Bus Terminal.
Metro line No3A extending from Ben Thanh Market to Tan Kien Terminal in Binh Chanh district willrequire 3.02 billion USD.
Metro line No3B from Cong Hoa Crossroads to Hiep Binh Chanh will cost 1.88 billion USD,while metro line No 4 between the Thanh Xuan and Hiep Phuoc urban areas willalso run through multiple districts and cost 3.53 billion USD.
Line No 4Bbetween Gia Dinh Park in Binh Thanh district and Lang Cha Ca Terminal in Go Vapdistrict will require 1.33 billion USD.
All of themare expected to be built under the public-private partnership investmentmode, but the city has yet to find private funding for them.
Accordingto HCM City’s Management Authority for Urban Railways (MAUR), theExport-Import Bank of the Republic of Korea has recently asked the citygovernment for permission to conduct an investment study for the second phaseof Metro Line No 5.
This linewill connect the Bay Hien intersection with the new Can Giuoc BusStation and Da Phuoc Depot, under the PPP mode.
The bank saidit would provide funding for the project’s pre-feasibility study, which willcover technical, financial and legal aspects, according to MAUR.
The city plansto build a total of eight metro lines running a total 220 kmwith total investment of nearly 25 billion USD. It also wants tobuild urban areas along the metro routes and underground spaces aroundmetro stations to save land and ensure public transport.
With apopulation of about 13 million, the country’s largest city has beenstruggling with traffic congestion for years.
The number ofpersonal vehicles has surged, with 825,000 cars and more than8 million motorbikes, while public transport remains underdeveloped./.
VNA
