Ho Chi Minh City's green bus ambitions face challenges
The HCMC Transport Department is currently soliciting feedback from relevant agencies on a plan to develop an electric or clean energy bus system, aiming to reduce environmental pollution and achieve net-zero emissions by 2050.
According to the first stage of the Draft Plan for Controlling Vehicle Emissions, by 2030, all buses will have run on electricity
According to the first stage of the Draft Plan for Controlling Vehicle Emissions, which involves transitioning public transport to electric or clean energy buses in HCMC, prepared by the municipal Department of Transport, the target is to have 3,317 buses serving public transport and 100 percent electric or clean energy vehicles by 2030.
Accordingly, subsidized bus routes using electricity, compressed natural gas (CNG), or diesel will continue to operate until the end of their contracted terms. Diesel buses will continue to operate until 2029. All buses will switch to electric power in 2030. New bus routes starting from 2025 must use electricity or clean energy.
The total cost of transitioning public transport buses from fossil fuels to electric power and investing in charging infrastructure from 2025 to 2030 is estimated at VND34 trillion (US$1.34 billion), averaging VND5.7 trillion ($224 million) per year.
Businesses are expected to contribute VND15.7 trillion ($618 million), including investment and replacement of vehicles (VND14.7 trillion - $579 million) and investment and operation of charging stations (VND940 billion - $39 million). By 2030, HCMC is expected to have 25 charging stations with 269 charging points. During this period, the city will open 72 new bus routes with 1,108 buses and 69 subsidized routes.
According to reference prices from Vinbus, large electric buses are priced at VND7.4 billion ($291,000)/vehicle, medium buses at VND5.7 billion ($224,300)/vehicle, and small buses at VND4 billion ($157,400)/vehicle.
HCMC will offer incentives to encourage the adoption of electric buses, including a fixed 3-percent interest rate on loans and a 5-percent interest rate subsidy for charging station investments. The government will cover the remaining interest costs and provide a maximum loan of 85 percent of the investment capital for up to 7 years. These measures aim to attract private investment and accelerate the city's transition to a greener transportation system.
While the transition to electric buses offers significant environmental benefits, the high investment costs pose a challenge for businesses and transport cooperatives. With each electric bus costing at least VND4 billion, cooperatives need to have at least VND1 billion in equity for investment and borrow the remaining amount from the bank with a subsidized interest rate for 7 years.
Director Phung Dang Hai of Quyet Thang Cooperative said that current bus operating costs are insufficient to cover loan interest and investment costs. Cooperatives have already faced difficulties in repaying loans from previous investments and cannot take on additional debt.
Director Nguyen Van Trieu of May 19 Transport Cooperative added that buses are specialized vehicles and are difficult to liquidate when their useful life ends. As such, cooperatives face significant risks when investing in electric buses.
CNG buses are a more cost-effective option compared to electric buses, both in terms of investment and subsidies. The HCMC Passenger Transport Association recommends extending the lifespan of CNG buses by 3-5 years to allow operators to complete loan repayments, considering their environmental benefits.
Saigon Transportation Engineering Corporation (SAMCO) reported that they are preparing to deliver over 100 CNG buses and believe that the goal of eliminating CNG buses after 2030 is inconsistent with the investment roadmap for non-subsidized CNG buses in the 2025-2029 period. Therefore, the unit proposes that CNG buses be allowed to operate until the end of their vehicle lifespan after 2030.
As the sole supplier of CNG for buses, Southern Gas Business Corp sent a document on September 17 to the HCMC Transport Department to provide feedback on the above plan. Accordingly, HCMC currently has 516 CNG buses but only three CNG refueling stations at An Suong bus station, Pho Quang parking lot, and Vietnam National University-HCM bus station, which are often overloaded and congested. The company has proposed that the city allow for the addition of four new refueling stations at the Western, Ga Intersection, District 8, and new Eastern bus stations.
Government regulations mandate a 20-year lifespan for buses. However, many CNG buses in HCMC are relatively new and could still operate beyond 2030. Forcing an immediate transition to electric buses could lead to significant waste and hinder business operations. To avoid this, it is proposed to phase out CNG buses by 2040, aligning with Hanoi's approach.
Source: Sai Gon Giai Phong News
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