Vietnam pays US$28.8 million debt per year for railway project

The Government has to pay debt totaling at least US$28.8 million a year to the Chinese side for the Cat Linh-Ha Dong urban railway in Hanoi City, news website VnEconomy.vn reports.


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The Finance Ministry has sent a notice to the Transport Ministry and the Bank for Investment and Development of Vietnam (BIDV) on the debt payment on January 21, and a commitment fee for a US$250-million loan of the Export-Import Bank of China (China Eximbank) for the big-ticket project.

Regarding the US$250-million loan, it takes nine years for the Government to settle it. The period lasts from January 2016 to November 2025. The loan is to be paid back in two annual installments of US$14.4 million each on January 21 and July 21.

As such, the Government must pay debt worth at least US$28.8 million to China Eximbank a year.

Besides, the Government has to pay China’s official development assistance (ODA) loan worth US$419 million for the urban railway project.

According to the notice, the Finance Ministry pledges to make timely payments for the US$250-million loan whose remaining debt is US$38.56 million.

The payments for January 21 include principal amounting to US$2.4 million, and loan interest worth over US$580,000.

The ministry said the Government completed capital withdrawal for the project in line with an agreement last month. The total amount of loans under the on-lending mechanism amounted to over US$43.3 million, with its commitment fee being US$657,700.

The ministry asked BIDV to review  principal, interest and commitment fee for on-lending loans, and transfer it to the Accumulation Fund for Debt Payment.

The 13.05-kilometer Cat Linh-Ha Dong urban railway is plagued by cost overruns, with its capital adjusted up to US$891.9 million from the original US$522 million.

Due to slow capital disbursements, the project is faced with frequent delays. The Transport Ministry is expected to send a report on the project’s schedule to the Government later this month.

The Chinese contractor of the project plans to operate 13 four-car trains on a trial basis in September this year. Upon a period of between three and six months, the railway will officially be in service.

SGT

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