Struggling railway operator asks for $34.5 million interest-free loan

June, 26/2021 - 08:17
The Vietnam Railways Corporation (VNR) has asked for a loan package worth VNĐ800 billion (US$34.5 million) with zero interest to overcome the difficulties of the COVID-19 pandemic.

 

The railway industry is encountering a lot of difficulties due to the impacts of the COVID-19 pandemic. — VNA/VNS Photo Nguyễn Thành

HÀ NỘI — The Việt Nam Railways Corporation (VNR) has asked for a loan package worth VNĐ800 billion (US$34.5 million) with zero interest to overcome the difficulties of the COVID-19 pandemic.

The State-owned operator of the railway system is facing the risk of temporary closure due to the pandemic.

The proposal was recently submitted to the Committee for Management of State Capital at Enterprises to help VNR maintain its operation.

Vũ Anh Minh, VNR’s chairman, said although the corporation had made efforts to slash costs, it incurred losses of more than VNĐ1.3 trillion in 2020 and anticipated another loss worth VNĐ942 billion in 2021.

VNR said the loan would be added to its working capital while it was facing the risk of not having enough cash to pay employees if the pandemic is prolonged into 2022.

VNR also proposed policies to support its 13,000 employees who could lose their jobs.

VNR said May to August was often the peak time of the year for railway passenger transportation which would help increase its revenue. However, the fourth wave of infections has severely affected VNR’s revenue.

In May, VNR temporarily halted the operation of 393 trains and at some points of time, all local routes were halted while only the North-South route ran.

Its revenue was reported at VNĐ1.1 trillion in the first five months of this year, 81 per cent of the same period last year and just 60 per cent of 2019.

Passenger transportation revenue in January – May totalled VNĐ400 billion, equivalent to 51.4 per cent of the same period last year.

The only good sign was that cargo transportation increased by 26 per cent to 2.4 million tonnes with revenue rising by 21 per cent to VNĐ713 billion.

VNR also proposed extending the reduction in the fee to use the State-invested railway infrastructure. The fee was reduced from 8 per cent to 4 per cent of revenue in 2021. — VNS

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