HCM City to build second metro line with state funds instead of ODA

The second metro line is expected to be completed by 2030. — VNA/VNS Photo

HCM CITY — HCM City will finance its second metro line through the state budget instead of using official development assistance (ODA) loans.

The 11-km Bến Thành - Tham Lương line connects Bến Thành Market in District 1 to Tham Lương Depot in District 12, following the first Bến Thành - Suối Tiên line set to commence operations next month.

The city has recently approved budget allocation for the project's remaining phases and plans to add a connection between the two metro lines in District 1.

The city will coordinate efforts between the Management Authority for Urban Railways (MAUR), the project manager, and other relevant stakeholders to finalise the implementation plan.

The HCM City State Financial Investment Company has been assigned the responsibility of collaborating with the Department of Finance and other agencies to investigate suitable funding options.

A comprehensive report on this plan will be submitted to the People’s Committee by this week.

The metro project is expected to cost VNĐ47.9 trillion (US$1.8 billion) and cover over 11km, with more than 9km built underground and the remaining section elevated.

Initially, the project was to be financed through ODA loans from the German Reconstruction Bank (KfW), the European Investment Bank, and the Asian Development Bank.

While the city government has not disclosed the rationale for the change in funding sources, a recent report from MAUR showed that securing financing has proven challenging due to modifications in the loan conditions imposed by international lenders.

The new metro line will traverse six districts, linking the city centre to the northwest gateway.

Approved over a decade ago, the project has undergone several modifications and is now expected to be completed by 2030.

The city recently announced plans to issue bonds for financing its long-anticipated metro projects, a strategy aimed at reducing reliance on ODA.

Under the city’s master plan, it aims to develop 183km of metro lines by 2035, requiring an estimated investment of $36 billion, which will include local budgets, central government support, ODA loans, and other financial avenues.

Currently, only two of the proposed eight lines and three monorails are under construction.

The first line, extending 19.7km from Bến Thành Market to Suối Tiên Theme Park, is set to commence operations on December 22, with trial runs already in progress.

Experts, however, have called for the city to evaluate public debt risks associated with bond issuance as a means of mitigating reliance on ODA.

The city must remain within a debt limit of 120 per cent of its budget revenue, experts said, adding that metro revenue will largely depend on ticket sales, which are expected to develop gradually. — VNS