Lotte E&C Pursues Upgrade of Railway Linking Hanoi with China

Tuan Minh

16:17 01/08/2016

BizLIVE - Lotte E&C has reaffirmed its intention to upgrade the Yen Vien-Lao Cai railway section at a cost of $113 million.

Lotte E&C Pursues Upgrade of Railway Linking Hanoi with China

A locomotive seen at Lao Cai train station. Photo:

Lotte Engineering & Construction (Lotte E&C), the construction arm of Lotte Group, has again asked for permission to carry out the second phase of a project to upgrade the Yen Viet-Lao Cai railway section in northern Vietnam at a cost of $113 million, the Dau Tu (Investment) newspaper reported.
This is the second time over the past one year the South Korean firm has sent a letter of intent to the Railway Project Management Unit (PMU) under the Vietnamese Ministry of Transport, showing its hope to partake in the upgrade of the railway that connects Hanoi and Hai Phong port city with China.
According to its proposal, Lotte E&C wants to implement the project under the Build-Lease-Transfer (BLT) format. With an internal rate of return (IRR) of 9.1%, it will take the firm around 20 years to recover its investment.
Notably, Lotte E&C does not ask for preferential treatment when investing in the project, except for payment guarantees from the Vietnamese government’s financial institutions.
Once the upgrade is completed, the section is expected to carry up to five million passengers and 7.5 million tons of cargo per year, and the travel time will be shortened by 90 minutes.
Le Kim Thanh, general director of the ministry’s railway PMU, was quoted by the newspaper as saying that the BLT format will be a novel and good option for the upgrade of the Yen Vien-Lao Cai section as it will provide funding without adding pressure on the country’s public debt.
Lotte E&C was a contractor of the recently-concluded first phase of the project to upgrade the railway section that cost $166 million. The Asian Development Bank (ADB) has yet to approve loans for the second phase.  
The 285-kilometer railway section, part of the Kunming-Hai Phong corridor, runs along the Red River and through four Vietnamese provinces. Yen Vien is a station on the outskirts of the capital city of Hanoi.
It is the main route for the transportation of apatite ore from Lao Cai province to Phu Tho province where it is processed into fertilizers.