Lotte makes bid for vital rail route

The second phase of this rail route will be a massive boost to Vietnam’s trade in the north

The company proposed investing in the second phase of the project under the build-lease-transfer (BLT) format. If approved, Lotte is expected to submit the detailed investment plan within four months.

The Hanoi-Lao Cai route is 300 kilometres long and is the second-most important railroad in Vietnam, following the north-south railroad. It accounts for 30 per cent of national cargo transport by rail and 16 per cent of its passenger transport.

The aim of the project’s second phase is to raise the capacity of the route to 5 million passengers and 7.5 million tonnes of cargo per year, with 90 minutes shaved off the current travel time of seven hours.

Lotte is one of the Engineering & Construction contractors to take part in the first phase of the project, which cost $166 million, and was completed in late April this year. In South Korea, the company was involved in several rail projects such as the Gyeongbu high speed railway, the Cheongnyangni-Deokso double-decker train railroad, and the railroad linking the Busan centre to the city’s port.

The second phase of the Hanoi-Lao Cai railroad is expected to be completed within three years. Afterwards, Lotte will lease the infrastructure to Vietnam Railways. The leasing price and time period will be outlined in the investment plan.

The $166 million first phase was carried out with the official development assistance (ODA) capital from the Asian Development Bank (ADB), borrowed capital from the French Development Agency (AFD) and the French public treasury (DGTresor), and reciprocal capital from the Vietnamese government.

The Ministry of Transport is working with ADB to arrange capital for the second phase, which is expected to cost $113 million, of which Vietnam expects to borrow $48 million from the bank, $30 million from AFD, and $26 million from DGTresor.

Following the completion of the section linking Haiphong station to Lach Huyen port, the railway linking Kunming in China, Lao Cai, Yen Vien station in Hanoi, and finally Haiphong port will be complete. This development will directly help raise the competitiveness of Vietnamese goods – especially apatite mined in the northern province of Lao Cai – as the cost of transport will be much lower and this will be the shortest route linking provinces in the southwest of China to sea ports.

“The BLT format that Lotte has proposed is feasible and has been used in many other countries,” said Nguyen Ngoc Dong, Deputy Minister of Transport.

The Hanoi-Lao Cai route is part of the Kunming-Haiphong traffic corridor. It spans 285km in the northwest direction, along the north bank of the Red River, to Lao Cai at the border between Vietnam and China. The route passes through Hanoi, and Vinh Phuc, Phu Tho, Yen Bai, and Lao Cai provinces.