Hà Nội Railway Station, where the North-South high speed railway starts. The cost to build the railway is more than double the US$26 billion plan estimated by the Ministry of Planning and Investment. — VNA/VNS Photo Huy Hùng

HÀ NỘI — The transport ministry’s US$58 billion plan for the North-South high speed railway faces daunting financial challenges, the Committee for Management of State Capital (CMSC) has said.

The 'super committee' recently released a report on the railway project.

The committee told the Ministry of Planning and Investment (MPI) it was concerned about the feasibility of attracting investment for the ambitious plan, among other other issues, with its cost estimates more than double the $26 billion plan the MPI estimated.

A CMSC representative said that as it stands, the transport ministry’s public-private partnership investment ratio – the State budget covering 80 per cent of the costs with private enterprises shouldering the remaining 20 per cent – need to be reconsidered.

A ratio skewered heavily towards the State suggests the project might not be feasible and could fail to attract private capital, the committee said.

The committee asked the Ministry of Finance and the MPI to look more thoroughly into the transport ministry’s proposal, bearing in mind the public debt ceiling and the State budget’s ability to balance expenditure and revenues.

With the project’s construction time estimated to take 30 years – from 2020 to 2050, other factors that could hike the project’s costs must be accounted for – including inflation, possible device and machinery replacements, and increasing material prices and workforce wages.

Nguyễn Thị Phú Hà, vice chair of the CMSC, said Việt Nam lakcs the technological mastery and experience to build the high-speed railway on its own.

Vũ Đại Thắng, deputy minister of MPI, said concerns over Việt Nam’s technological self-sufficiency remain the same as 10 years ago as the country still relies heavily on imports.

Delayed progress and costs overrun issues afflicting urban railway projects in Hà Nội and HCM City, for example, have resulted in controversies and drawn public anger, furthering the need to carefully select the right technology to ensure safe operations and economic viability.

The committee asked for an independent assessment of the transport ministry’s plan to build the rail with designed speed of 350km/h, with many experts and the public questioning the need for such rapid speed.

Hà also noted the need to examine the investment rate of nearly $38 million per kilometre of the railway and compare it to projects of similar nature.

CMSC also told the transport ministry to supplement updated figures and analyses of the capacity of all current modes of transport – road, waterway, rail and air – operating on the North-South axis to see how the high-speed railway could affect them.

The proposed rail project is planned to be 1,559km long and pass through 20 localities, with the beginning and end points in Hà Nội and HCM City. — VNS