Vietnam train services may be derailed by funding chaos

VIETNAM could cease to have an operating train system in less than two weeks unless a funding issue at Vietnam Railways ( VNR) is resolved, an official has said.

The stunning revelation came on Thursday when Vu Anh Minh, chairman of VNR’s member council, spoke at a meeting between the government’s working group and the Commission for Management of State Capital at Enterprises.

The railway operator hasn’t received a single dong from the state since November 2018, when a change in how it was managed stopped the flow of cash, leaving the corporation without a budget for vital railway maintenance.

The VNR used to be under the management of the transport ministry but in November 2018, it was transferred to the Commission for the Management of State Capital at Enterprises, as part of efforts to separate state capital management from corporate administration.

Before the transfer, annual budget estimates allocated to the VNR for maintenance work were made by the transport ministry, which can no longer allocate funding as it does not manage the VNR.

However, the Commission for Management of State Capital at Enterprises is also unable to approve the budget for the VNR as the railway law only allows it to monitor the use of the state budget for production and business purposes, not for asset management under which maintenance work for railways is categorised.

The funding shortfall has left more than 11,000 railway workers unpaid since the beginning of this year. If the problem is still unresolved by early next month, the corporation will have to halt train operation, Minh said.

He said to make up for the budget shortage, maintenance companies under the VNR had advanced about 200 billion dong ($8.7 million) to continue the work but these sources are limited.

Despite the financial struggles, the VNR still ordered maintenance companies to continue working to ensure trains run safely, VNR director-general Dang Sy Manh told Vietnam News Agency.

The VNR had reported its problems to the commission, the government and National Assembly Standing Committee to seek solutions, said Manh.

The transport ministry has proposed taking back the VNR under its control to clear the confusion.

Prime Minister Nguyen Xuan Phuc asked the ministry and the Commission for Management of State Capital at Enterprises to assess the proposal and report to the government early next month.

Deputy Minister of Transport Nguyen Ngoc Dong said the ministry had assigned consultant agencies to assess the pros and cons of re-transferring the VNR to the transport ministry.

The VNR operates more than 1,500 crossroads with railway lines and on more than 3,000km of railway lines crossing 34 provinces and cities across the country. More than 7.6 million people used trains in the first 11 months of last year.