Does private investment in high-speed railways need financial support from the State?

The state budget policy of lending a maximum of no more than 80% of the total investment for the North-South high-speed railway project in case the project is implemented in the form of business investment has been recognized and received many opinions.

Currently, many investors have proposed that the State lend 80% of the total investment with zero interest to build the North-South high-speed railway - Illustration photo: AI

That is one of the contents of the draft resolution of the National Assembly on a number of specific mechanisms and policies, especially applicable to the high-speed railway project on the North-South axis, recently submitted by the Minister of Construction to the Government.

According to the Ministry of Construction, implementing the direction of the Prime Minister, Deputy Prime Minister Tran Hong Ha, the Ministry of Construction has established a team to draft a resolution of the National Assembly on a number of specific mechanisms and policies, especially applicable to the high-speed railway project on the North-South axis. The team consists of 22 members from ministries and branches, headed by the Minister of Construction.

The policy of the state budget lending a maximum of no more than 80% of the total investment of the North-South high-speed railway project in case the project is implemented in the form of business investment has received many opinions from the Drafting Team.

Specifically, international experience shows that up to now, there has been no information about the case of private investment in the entire high-speed railway project with a scale similar to the high-speed railway project on the North-South axis that can recover capital and achieve profits without support and incentives from the State. For the private sector to participate in investing in high-speed railway lines, it is necessary to have financial support from the State to increase the feasibility of the project.

The process of preparing the pre-feasibility study report for the North-South high-speed railway project also shows that: in case the investor invests in the entire project, it is impossible to recover capital; the investor invests in locomotives, carriages, and equipment for operation, with the forecast of transportation demand in the pre-feasibility study report, the expected payback period is about 34 years; if revenue decreases by 5% compared to the forecast, the payback period is about 41.18 years.

After the Politburo issued Resolution No. 68-NQ/TW, the Government and the Ministry of Construction received investment proposals for the North-South high-speed railway project in the form of business investment from a number of domestic private investors. To increase feasibility, the investors proposed loans from the state budget with a loan limit of 80% of the total investment (excluding site clearance), 0% interest rate within 30 years; the remaining 20% ​​of the capital would be mobilized by the investors themselves.

In the case of the State lending to investors to build the North-South high-speed railway project, the Ministry of Construction believes that after the investor completes its debt repayment obligation to the State, the railway line will be owned by the investor. During the debt repayment period (expected 30 years), the assets formed after the investment will be the investor's assets mortgaged to the State.

According to the Ministry of Finance, the proposal for the Government to lend to project owners at a 0% interest rate for a period of 30 years is equivalent to the Government having to pay the interest on the loan. This will increase the direct interest payment obligation of the Government/total state budget revenue, potentially exceeding the ceiling, negatively affecting the national credit rating... In addition, the 0% interest rate weakens the ability to repay capital and reduces the motivation of enterprises to repay debt.

The Ministry of Construction has compiled proposals from a number of investors for the North-South high-speed railway project and made preliminary calculations assuming the State will lend according to the expected structure: 15% of the total investment in the first year (7.362 billion USD); from the second to fourth years, each year is 20% of the total investment (9.816 billion USD/year); and from the fifth year is 25% of the total investment (12.27 billion USD).

The results show that: with a preferential interest rate of 1%, by the 30th year, the total loan value including interest is about 64 billion USD; with a preferential interest rate of 5%, the total loan value including interest is about 182 billion USD, but after 30 years the State only collects about 49 billion USD.

The above index does not consider the risks affecting the project's debt repayment capacity (increasing total investment), and there is no data to assess the impact of the policy on the socio-economy and the state budget (direct interest repayment obligation of the Government/total state budget revenue, public debt ceiling, etc.). Therefore, the Ministry of Construction believes that this is a policy that needs to be considered carefully and cautiously.

TUAN PHUNG

Source: https://tuoitre.vn/tu-nhan-dau-tu-duong-sat-toc-do-cao-co-can-su-ho-tro-tai-chinh-cua-nha-nuoc-20251118172811182.htm