China Eximbank provides $250 million preferential buyer's credit for Cat Linh-Ha Dong Light Rail Construction Project (Linked to Project ID#63214, #73326)

On May 30, 2008, the Chinese Government and and the Government of Vietnam signed a preferential loan framework agreement for the Cat Linh-Ha Dong Light Rail Construction Project. This subsequently produced three different loan agreements: (1) On October 22, 2008, China Eximbank and the Vietnam Ministry of Finance signed an RMB 1.2 billion ($169 million) government concessional loan (GCL) agreement [CHINA EXIMBANK GCL No.(14) Total No.(223)] for this railway project (see Project #73326). The borrowing terms of the GCL were as follows: 3% interest rate, 15-year maturity, and 5-year maturity. (2) On November 8, 2009, China Eximbank and the Vietnam Ministry of Finance signed a $250 million preferential buyer’s credit (PBC) agreement [CHINA EXIMBANK PBC No.2009 (24) Total No. (86)] for this railway project (Project #34616). The borrowing terms of the PBC were as follows: 4% interest rate, 15-year maturity, and 5-year maturity. (3) On May 11, 2017, China Eximbank and the Vietnam Ministry of Finance signed an RMB 1.678 million ($250.62 million) government concessional loan (GCL) agreement [CHINA EXIMBANK GCL No.2017 (24) Total No. (629)] for this railway project (see Project #63214). The loan terms are unknown. This GCL came into effect on December 28, 2017 and the fist disbursement took place on April 28, 2018. The borrower was to use the proceeds from these loans to partially finance an EPC contract with China Railway Sixth Bureau Group Co., Ltd., a subsidiary of China Railway Group. The purpose of the project is to construct a 13 km light rail — that travels at 80 km per hour — in the capital city of Hanoi that passes through 12 stations: Cat Linh, La Thanh, Thai Ha, Lang, Thuong Dinh, Vanh Dai 3, Phung Khoang, Van Quan, Ha Dong, La Khe, Van Khe, Yen Nghia. The project officially commenced on October 10, 2011 and the new railway line was originally scheduled to launch in June 2015, but the completion date of the project has been postponed at least four times. The project has encountered multiple problems and delays during implementation. In 2013, the project faced difficulties related to demolition and relocation, including the fact that the terrain was ideal for machinery and the construction site was close to traffic. Then, in 2014, the total cost of the project increased from $552.86 million to $868.04 million, forcing the Government of Vietnam to contract a supplementary loan from China Eximbank (see Project #63214). In January 2015, the project faced major criticism from the Vietnamese government for multiple accidents during construction. Vietnamese officials and experts have repeatedly raised concerns about the project’s safety, with several accidents killing or injuring workers and passersby. In early 2016, Vietnam’s Ministry of Transport and China Railway Sixth Bureau Group Co., Ltd agreed on a new launch date in December 2016, before correcting themselves that the line would not be launched until early 2017. In February 2017, the railway line’s completion was postponed for another year, with a new launch set for February 2018. In February 2017, the first set of trains (out of 13 total) was installed on the track . Each train is worth $63.2 million, and manufactured by China's Beijing Subway Rolling Stock Equipment Ltd. In 2018, the project manager submitted a proposal for the railway line to begin a test run in September 2018, setting the date for an official launch to be in 2021. On September 20, 2018, the first stage of a trial run was initiated, which was meant to last 3-6 months. The project is currently slated for completion on April 30, 2021. Photos were taken on November 6th 2021 as the first commercial operation of the railway commenced. More than 600 people were reportedly hired to support the implementation of this project.

Additional details

1. This project is also known as the Line 2A of the Hanoi Metro Project, the 13km Hanoi Light Rail Line 1 Project, the Hanoi Cat Linh to Ha Dong Light Rail Project, the Cat Linh-Hadong Metro Line Project, the Hanoi-Hadong Urban Railway Line Project, the Cat Linh-Ha Dong Flyover Project, the Cat Linh-Ha Dong Skytrain Project, and the Hanoi Urban Railway Project. The Vietnamese project title is dự án đường sắt Cát Linh - Hà Đông or dự án đường sắt đô thị Hà Nội. The Chinese project title is 河内轻轨二号线项目 or 越南河内轻轨项目. 2. None of the China Eximbank loans (collectively worth $669.62 million) that supported this project are included in the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020. 3. All key financing details are found in sources #136981 and #136985. The former outlines a draft report to the Vietnam National Assembly and the latter is a official decision document from the Vietnam Ministry of Transport.

Number of official sources

8

Number of total sources

35