Salary crunch may lead to suspension of North-South trains next month

Minh was speaking at a meeting with the prime minister’s working group and the Commission for the Management of State Capital at Enterprises (CMSC), which currently oversees VNR, held in Hanoi on February 20, reported Tuoi Tre newspaper. 

The State-run corporation is facing several hurdles, according to the chairman.

He noted that a number of hindrances were attributable to the policy system in place. VNR has reported its difficulties to the Ministry of Transport (MoT), CMSC and Prime Minister Nguyen Xuan Phuc in an attempt to seek solutions but no resolutions have been reached.

Prior to December 31 each year, the MoT is expected to calculate the maintenance budget estimates for VNR to fund its activities, including patrolling railways and controlling traffic and barriers at level crossings.

VNR can then sign contracts with 20 of its subsidiaries that are employing more than 11,300 people in the infrastructure sector. The staff are in charge of guarding a total of 1,519 level crossings and 3,059 kilometers of railways spanning 34 provinces and cities nationwide.

However, VNR has yet to receive the budget estimates for this year, he noted.

“Over 10,000 people have not received their salaries yet, and the cost of suspending trains is high,” he remarked, adding that the suspension will have an adverse impact as it will disrupt passenger and goods transport.

However, if the trains remain operational, the company will run afoul of the law. If an accident occurs at a level crossing, the leader of that unit may be prosecuted, he stressed.

The chairman explained that VNR and the MoT have sent many reports on the issue to the Government and the Standing Committee of the National Assembly.

He added that rail maintenance companies holding capital of up to VND10-20 billion (US$430,000-860,000) each are unable to take out bank loans.

Meanwhile, VNR cannot offer loans to these subsidiaries as the corporation does not have a lending function. As a result, VNR can neither sign contracts nor advance funds to these firms.

Gov’t considers returning VNR to MoT

Earlier this week, the Prime Minister requested an analysis of a proposal to place VNR under the umbrella of the MoT, following legal confusion that left the corporation with no budget for railway maintenance, reported the Vietnam News Agency.

The MoT and the CMSC were asked to weigh in on the proposal from experts and National Assembly deputies.

The ministry has repeatedly asked to take back control over VNR, which was handed over to the CMSC in September 2018, with its latest request being submitted to the Cabinet leader last June.

The ministry is responsible for making budget estimates for VNR to carry out maintenance work for the aging national railway network, as regulated in the Law on Railway Transport and relevant decrees.

But if it does so, the ministry will risk going against the Law on State Budget, which indicates that the ministry is only allowed to prepare a budget estimate for units under its management.

The CMSC is also legally unable to approve the budget for VNR. It is only permitted by the Railway Law to monitor the use of the State budget for production and business purposes, not for asset management, under which maintenance work for the railways is categorized.

The ministry suggested it would be best to return control over VNR to clear up the confusion and avoid having to amend the laws and related decrees.

The railway operator aims to  earn revenue of less than VND8 trillion this year, with an expected loss of VND168.4 billion. The losses, however, are not fully attributable to the failure of the local railway sector to catch up with other transport sectors, such as aviation.

The corporation has already identified the negative impact of an ongoing project to rehabilitate and upgrade infrastructure facilities on the Hanoi-HCMC rail route.