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Confusion derailing railway sector plans

Update: June, 24/2015 - 08:57

Workers repair a section of rail tracks in Thanh Hoa Province. A lack of investment guidelines and overlapping functions among management agencies are discouraging private investor involvement in the railway sector, experts say — VNA/VNS Photo The Duyet
HA NOI (VNS) — Uncertainty among both State agencies and prospective investors about different investment forms is preventing effective mobilisation of all resources for developing the railway sector, says Deputy Transport Minister Nguyen Ngoc Dong.

He told a review meeting last week that private investors found the sector attractive, but were discouraged by several snags in project implementation, including a lack of guidelines, ineffective co-ordination and overlapping functions among management agencies.

Vu Ta Tung, General Director of Viet Nam Railway Corporation (VRC), concurred with the Deputy Minister, saying it was not sure how it should act upon the many proposals it received from investors.

"For instance, many investors complain that the Ministry of Transport has not issued guidelines on how to implement a public private partnership (PPP) project," he said.

"Both the VRC and investors lack confidence in complying with State regulations on different forms of investment," he added.

He cited as an example a project to build a railway logistics centre and domestic container warehouse at the Yen Vien Station.

The VRC has proposed to the Transport Ministry that the right to operate the container warehouse at Yen Vien Station in Ha Noi is leased out to private firms. It has also chosen the Logistics ILT Railway Joint Stock Company as a firm capable of developing container transportation by rail, but the ministry is in the process of selecting a consultant to ensure that the investment is effective, and therefore, yet to respond to the proposal.

Vu Quang Khoi, Director of the Viet Nam Railway Authority, said determining how to recoup investment remained a problem, especially for small projects.

"Investors are anxious. Will they gain capital directly from the work or through the collection of transportation fees?" he was quoted by Tin tuc (News) newspaper as saying.

Besides, the Transport Ministry and VRC haven't announced the standards for technical evaluation of railway infrastructure that can provide a foundation for investors to operate, he said.

Deputy Minister Dong said the above-mentioned difficulties resulted from a lack of clarity in establishing who is in charge of managing infrastructure development for the railway sector.

He said the different kinds of infrastructure required need to be classified properly before calling for investors. He said the ministry would issue regulations soon on the functions and responsibilities of State agencies in implementing PPP projects.

Vu Nam Nguyen, deputy Director General of the Railway Project Management Unit, highlighted a contradiction in the railway sector.

"While the VRC, which directly manages the sector, is supposed to propose investment projects, it is functioning mainly as a State management agency that receives and responds to investors' proposals," he said.

Deputy Minister Dong asked the corporation to be more active in implementing schemes and propose in a timely manner mechanisms for overcoming obstacles.

For existing railway lines and related infrastructure like railway stations and warehouses, the VRC should receive investment proposals, study them and set up plans or submit a report to the Transport Ministry on problems that need to be solved, he said.

Pilot mechanism

On transferring the right to operate existing railway projects, the Viet Nam Railway Authority has proposed that the PPP committee under the Transport Ministry allows it to implement a pilot mechanism to assess its feasibility.

Under this mechanism, the Railway Project Management Unit would be the State agency authorized to propose investment forms for projects establishing new routes like Ha Noi-Hai Phong, Ba Ria-Vung Tau and Sai Gon-Loc Ninh.

The PPP committee will be responsible for the relocation of roads and stations, including the removal of Da Nang Station and other related works out of the city centre.

Meanwhile, Ho Minh Hong, General Director of the Deo Ca Investment Joint Stock Company, said state participation and assistance was crucial for railway projects as they require substantial investment that can only be recouped over many years.

He said PPP was the most suitable investment model for railway projects as the State can provide support for activities like site clearance, freeing private investors to focus on building stations and installing equipment. — VNS

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