China Eximbank provides RMB 530 million concessional loan for Hanoi-Dong Dang, Hanoi-Thai Nguyen, and Hanoi-Lao Cai Railway Signal Modernization Project (Linked to Project ID#85379)

In 2003, Vietnamese Deputy Minister of Planning and Investment and the Chinese Ambassador to Vietnam signed a preferential loan framework agreement regarding the Hanoi-Dong Dang, Hanoi-Thai Nguyen, and Hanoi-Lao Cai Railway Signal Modernization Project. Then, on October 31, 2005, China Eximbank and the Vietnam Ministry of Finance signed an RMB 530 million concessional loan agreement for this railway project. According to the Vietnam Ministry of Planning and Investment, the borrowing terms included a 3% interest rate and 15-year repayment period, but the grace period is unknown. The borrower used the loan proceeds to finance two separate EPC contracts: (1) ZTE Corporation and Vietnam Railway Corporation (VNR) signed on November 2, 2005 (VNR-ST-03) and (2) Vietnam’s Railway Management Board and China State Railway Group Company, Ltd. signed on September 25, 2006 (VNR-ST-04). Then, on October 13, 2013, China Eximbank and the Government of Vietnam signed a supplemental RMB 300 million government concessional loan (GCL) agreement for the Hanoi-Dong Dang, Hanoi-Thai Nguyen, and Hanoi-Lao Cai Railway Signal Modernization Project (see Project #85379). Some sources refer to the second GCL as supporting a second phase of the project. However, it is unclear if the loan proceeds were used to finance a different scope of work or simply address cost overruns under the original EPC contracts (since the original EPC contracts from 2005 and 2006 — VNR-ST-03 and VNR-ST-04 — were revised on October 28, 2013). This project involved the modernization of railway signals and information systems along the Hanoi-Lao Cai, Hanoi-Dong Dang, and Hanoi-Thai Nguyen railway routes and at Hanoi center (hub). On March 24, 2011, the project officially commenced and it was expected to reach completion by June 30, 2013. However, implementation was delayed by over 6 years due to issues with the general EPC contractor (ZTE Corporation) and its subcontractor: China Railway Signal & Communication Shanghai Engineering Bureau Group Co., Ltd. (上海工程局集团国际公). As of 2014, work resumed on the project. On December 31, 2019, a Vietnam State Audit was released and it noted that, at the time of the audit, the project was completed, but there were problems with the railway signaling system not aligning with other railway signaling systems in the area.

Additional details

1. This project is also known as Phase 1 of the Hanoi-Dong Dang, Hanoi-Thai Nguyen, and Hanoi-Lao Cai Railway Signal Modernization Project, the Hanoi-Dong Dang, Hanoi-Thai Nguyen, Hanoi-Lao Cai, and Hanoi Hub Railway Signal Modernization Project, and the Three Lines and One Hub Project. 2. The Vietnamese project title is Mỏ Đồng Lào Cai or dựng Dự án Hiện đại hóa thông tin tín hiệu đường sắt “3 tuyến đầu mối” (Hà Nội – Thái Nguyên; Hà Nội - Đồng Đăng; Hà Nội – Lào Cai). 3. The Chinese project title is 河内—老街及河内枢纽通讯信号现代化改造工程项目 or 三线一枢”项目 or 对越北铁路项目 or 南北方铁路三线一纽通信信号现代化改造项目. 4. The China Eximbank loan that supported this project is not included in the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020. 5. This China Eximbank loan is not a duplicate of Project #34683. Both capture 2005 concessional loans over RMB 500 million for railway signal projects in Vietnam, but these are actually two separate loans for two distinct projects (see "Aiding Transparency," p. 7).

Number of official sources

11

Number of total sources

27