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Hanoi to borrow VND30.6 trillion for urban railway project
The Saigon Times Daily
Friday,  Nov 29, 2019,17:14 (GMT+7)

Hanoi to borrow VND30.6 trillion for urban railway project

The Saigon Times Daily

A view of Hoan Kiem Lake area in Hanoi, where the Nam Thang Long-Tran Hung Dao urban railway will pass through - PHOTO: DAN TRI

HCMC - The Hanoi City government has proposed taking out nearly VND30.6 trillion (US$1.3 billion) in official development assistance (ODA) loans to develop the Nam Thang Long-Tran Hung Dao urban railway project.

The municipal government has proposed that the People’s Council add the project into the list of projects using ODA loans for the city, news site Motthegioi reported.

The city’s second metro line project, which will be built in the 2021-2025 period, requires an estimated investment of nearly VND35.7 trillion. Of the total, some VND30.6 trillion is expected to be sourced from ODA loans and VND5.1 trillion from the city’s reciprocal capital, accounting for 85.6% and 14.4%, respectively, of the total investment.

According to the city government, the use of ODA loans for the project is reasonable, as the capital has a long repayment term of 30 years and low interest rates, at 0.1%-0.2% per year.

Hanoi’s total debt was nearly VND11.9 trillion last year. The debt may fall to VND10.7 trillion this year and rise again to VND11.7 trillion next year.

In the 2021-2025 period, the city will continue disbursing some VND38.1 trillion for ODA-financed projects. 

Loans issued during this period will be balanced to ensure that the city’s total debt will not exceed 70% of its annual revenue.

Also, plans to borrow and repay loans will be worked out after the adjusted investment for the project is approved and loan agreements are officially signed.

The Nam Thang Long-Tran Hung Dao urban railway project was approved in 2008 and was expected to be completed in 2015, with an initial investment of VND19.6 trillion. However, the Hanoi government later proposed that the prime minister approve the adjustment of the investment to VND35.7 trillion.

The city has explained that the scale, currency exchange rates, material costs and changes in policies are the main causes for the adjustment, which have raised the investment by VND1.8 trillion, VND2.2 trillion, VND6.8 trillion and VND5.3 trillion, respectively.

Accordingly, the speed of trains running on the route will be increased from 90 to 120 kilometers per hour. The maximum speed will be 110 kilometers per hour underground, 80 kilometers per hour on elevated sections and 15 kilometers per hour in depot areas.

Additionally, the number of trains will be reduced from 14 to 10 to meet the estimated number of passengers.

Due to these adjustments, the project completion deadline was proposed to be delayed until 2027.

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