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Green Movement in Vietnam: HCMC progresses with electric fleet deployment and BRT implementation [free access]

October 1, 2021

In April 2021, Ho Chi Minh City (HCMC) received approval to deploy 77 electric buses. It has also invited bids for its World Bank-funded Ho Chi Minh City Green Transport Development Project and is expected to operationalise its first bus rapid transit (BRT) corridor in September 2023. The city government has announced overall investments worth USD42.3 billion (VND970.60 trillion) to upgrade the city’s transport infrastructure in this decade, including the development of the rail, road, and bus networks.

 

Box 1 gives a brief background of the city.

 

Box 1: Background of HCMC

 

Ho Chi Minh City, located in the centre of Southeast Asia, plays an important role as the transport hub for all major modes of transport—roadway, waterway, and airway—linking the provinces in the region, and also being an international gateway. The city has a total area of 2,096 square km and a population of 8.61 million.

 

Bus operations in the city are decentralised, with private operators providing bus services. The City Department of Transport has subsidised 2,359 buses of the fleet. The remaining 244 buses run on non-subsidised routes. The Ho Chi Minh City Management Center of Public Transport (MCPT) assigns passenger volume targets against the subsidy.

 

The table below gives a snapshot of the buses in the city.

 

Current bus fleet

2,603 buses

Current type of fleet

CNG and diesel; electric buses on key tourist routes

No. of stations/ stops/ routes

144 bus routes (including 105 subsidised bus routes and 39 non-subsidised bus routes) (FY2017); 128 bus routes (FY2020); 4,405 bus stops

Annual ridership             

255 million passengers (FY2019)

Fare system

Paper-based tickets purchased through cash payment

Opportunities

Supply of CNG buses; development of BRT lines

 

Source: Compiled by Global Mass Transit

 

 

Structure of public bus service operations 

 

HCMC is the city authority in Ho Chi Minh City. It is responsible for decisions regarding new routes, plans, proposals, and changes in the existing system. Recently, HCMC allowed advertisement revenue to be collected by the private service provider. It also scrapped some of the subsidised routes and added new non-subsidised routes. 

 

The HCMC Department of Transport (HCMC DOT) is under HCMC. It is responsible for the overall governance of the public bus system. It holds the right to release subsidy, decide bus routes, and determine bus schedules. The public bus service in HCM is based on a subsidy model. The authority provides fare subsidy on 105 selected routes to transport providers. The subsidy is evaluated against the passenger volume targets given to the service providers. The fleet is procured by the department.

 

The Ho Chi Minh City Management Center for Public Transport (MCPT) was established by the People’s Committee of Ho Chi Minh City. Its main roles and missions are as follows:

 

Multiple service operators bid for contracts for providing transport services and for operating buses on specific routes. The city has 13 major bus operators. They are responsible for operating bus services on subsidised and non-subsidised routes. The revenue is subsidised based on the passenger volume target set by HCMCDOT.

 

-          Non-subsidised buses: There are multiple providers operating on non-subsidised routes. Each operator has a designated route that is decided by the HCMC and HCMC DOT. The providers are responsible for the viability of operations.

 

-          Subsidised buses: The operator receives fare subsidy from HCMC DOT. The subsidy is released against the requirement of meeting the standards of the targeted passenger volume set by HCMC DOT. The operator is also liable for managing and collecting the advertisement revenue so as to reduce the amount of state subsidy required for sustaining operations. 

 

Figure 1 gives a snapshot of the share of each operator.

 

Figure 1: Service provider and market share

 

 

Source: Compiled by Global Mass Transit

 

 

Operations review and performance

 

As per the data from HCMC DOT, in 2017, the total operational cost borne by the public transport system on bus routes received a subsidy of about USD10.22 thousand. The revenue of the transport operators reached USD4.69 thousand.

 

Bus ridership shows a declining trend. The ridership was 306.6 million passengers in FY2017–18. It dropped to 255 million passengers in FY2019–20. Overall, between 2014 and 2018, it dropped by 6 percent.

 

Table xxx provides an overview of the operations performance of bus operators in HCMC.

 

Table xxx: Operations performance of bus operators in HCMC

 

  

Source: Compiled by Global Mass Transit

 

Policies supporting bus procurement and fleet modernisation   

 

Increasing modal share of public transport

 

According to the Transport Development Master Plan for Ho Chi Minh City announced in 2013, the government aimed to achieve a public transport share of 20–25 per cent by 2020 and a 35–45 per cent share by 2030.

 

Clean buses

 

In its 2020 plan, the Government of Vietnam announced plans to introduce 200 hybrid and 50 plug-in hybrid buses, which it expects will help to reduce emissions by up to 5 million metric tonnes of CO2 by 2030. Financially, the government will support hybrid and plug-in hybrid buses through grants from its low-carbon bus fund up to 30 per cent of the cost. It expects to allocate USD15 million by 2020 for this purpose, while from 2021 to 2030, another 21,700 low-carbon buses are expected to require USD326 million in grants.

 

Ho Chi Minh City Green Transport Development Project 

 

In 2015, the World Bank Group’s Board of Executive Directors approved a loan of USD124 million to improve the performance and efficiency of public transport in a high-priority corridor in Ho Chi Minh City.

 

The objective is to help HCMC implement the six-lane BRT network. The project will finance the development of a BRT corridor between An Lac in the southwest and Rach Chiec in the northeast, following Vo Van Kiet Boulevard and Mai Chi Tho Boulevard, stretching about 23 km, with 28 stations. The system is expected to have a ridership of 28,000 passengers per day. The project will also finance the procurement of at least 28 CNG bus to be run on the developed corridor.

 

The project had a total cost of USD137.45 million, and the original financing comprised an International Development Association (IDA) credit equivalent of USD124 million. The remaining investment was to be co-financed by the Socialist Republic of Vietnam (USD13.45 million). The IDA credit has a maturity of 25 years, including a grace period of five years.

 

Project implementation was delayed until 2018, when the city’s then new leadership began re-assessing the project’s feasibility. There were further delays owing to a city-wide reorganisation of project management units (PMUs) and the long administrative processes of changing the source of funding for the detailed design contract of the project. In June 2019, the city and the World Bank agreed on a revised timeframe for implementation.

 

In January 2020, the World Bank and the Ministry of Finance signed a financing agreement for a grant worth USD10.5 million to promote integrated urban development and transport connectivity along a new BRT corridor in Ho Chi Minh City. The grant, provided by the Government of Switzerland through the Swiss State Secretariat for Economic Affairs (SECO) and administered by the World Bank, is an additional financing for the project.

 

However, the government cut down the cost by USD12.4 million in November 2020. In July 2021, the World Bank invited expressions of interest (EoIs) to provide short-term consultancy services for the development of Ho Chi Minh City’s green transport.

 

The original closing date for the project was December 31, 2020.But now the project is expected to be completed by September 2023.

 

2018–2020 Investment Plan for Public Buses by HCMC DOT  

 

According to the 2018–2020 investment plan for the public buses of HCMC DOT, the department aims to use CNG to run 75 per cent of its new buses, accounting for 657 buses in the city’s fleet.About428 buses out of the 657-bus fleet have been procured and are operational.

 

Upcoming plans and procurement  

 

Deployment of electric buses

 

HCMC has submitted a proposal to the city authority for expanding the public transport system by deploying an electric bus fleet on five routes. Vingroup will manage the routes and will operate 77 electric buses costing VND6.5 billion (USD280,550) each and having the capacity to carry 65–70 passengers. Vingroup is also planning to develop a one-hectare depot for repair services and for the overnight parking of buses at Vinhome Grand Park. Vingroup wants the bus routes to be subsidised, and HCMC DOT has recommended a rate of 44 percent based on the 10-year average of subsidies provided to public bus operators since 2009.

 

In April 2021, HCMC DOT approved the plans to deploy the 77 electric buses on five routes in the city. The buses will be deployed in collaboration with the Ministry of Finance, the Ministry of Transport, the Ministry of Planning and Investment, the Ministry of Science and Technology, the Ministry of Industry and Trade, and the Ministry of Natural Resources and Environment. In addition, plans have been approved for installing nine bus stations and for developing one new bus depot.

 

While initially Vingroup will operate the electric buses, in the future, operators will be selected through a bidder.

 

New transport operator

 

In July 2020, HCMC announced plans to invite bids for 45 bus routes with new criteria for service quality as it sought to revive the usage of public transport. The bidswill be managed by MCPT.The requirements are that operators should replace their buses every five years, operate the services punctually, and keep the vehicles clean. The 45 routes include both existing routes and new ones. The existing operators could lose their contracts if the city finds replacements for them in meeting the new criteria it has laid down.

 

Procurement of buses

 

As per HCMCDOT’s Investment Plan for Public Buses, only 428 out of 657 buses have been procured. The remaining buses are expected to be procured in 2020–2021 as per the plan.

 

Increased subsidy for operators

 

HCMC DOT has asked the People’s Committee to approve an additional subsidy of VNĐ161 billion (USD6.9 million) for public bus operators because bus ridership has fallen due to the COVID-19 pandemic.

 

CNG fuel supply 

 

Petro Vietnam Southern Gas JSC (PV Gas South) is the sole supplier of CNG-fuelled buses in Ho Chi Minh City. In 2019, the company announced that it plans to cut its CNG supply by 20–30 per cent. This is expected to jeopardise HCMC DOT’s plan of replacing all diesel buses with clean-fuel buses. The department has asked Petro Vietnam to make sure it does not curtail its CNG supply for Ho Chi Minh City buses.

 

The city has only four CNG refuelling outlets. Eleven outlets are in the planning stage.

 

Conclusion

 

For a city with a population of 9 million and one that generates one-fifth of Vietnam’s GDP, the existing public transport network in Ho Chi Minh City comprises only regular bus routes, which have been losing ridership to motorcycles and cars. As such, the public transport system currently meets only around 9 per cent of the demand in the city. The impetus for the deployment of clean-fuelled buses, the development of a BRT corridor, the launch of new bus routes, and the inauguration  of the first metro rail corridor in 2022 are expected to help the city to significantly increase its modal share of public transit.