Risks Associated with Overlapping Potholes, Potential Suspension of Electric Bus Services in Ho Chi Minh City

As part of a 24-month trial, the VinBus Eco-Transportation Services Company (VinBus) is set to implement 5 electric bus routes in Ho Chi Minh City. These routes will commence operations once the trial period begins.

The deployment of electric buses has resulted in a significant increase in the number of passengers. The D4 bus, for instance, has seen its passenger count more than double since its launch in March last year. Previously, it averaged about 14 passengers per trip. Additionally, this increase in passengers has led to a boost in ticket sales revenue. On average, each trip now brings in about 154,000 VND. However, the Department of Transport has pointed out that this revenue only covers less than 21% of the bus’s operating cost. In the first 9 months of this year, the D4 electric bus made 28,842 trips, carrying a total of 819,875 passengers.

At present, the D4 electric bus receives a subsidy of 44.1% from the Ho Chi Minh City government, covering part of the total operating cost. Based on this subsidy rate, each bus trip is subsidized with 309,800 VND, while the operating cost reaches 702,496 VND. In order to bridge the gap, each bus trip needs to carry 71 passengers, with an average fare of 392,696 VND. Therefore, with an average revenue of 154,000 VND per trip, each trip is currently losing about 239,000 VND.

As of the end of 2022, VinBus had incurred a loss of 16.1 billion VND. In the first 8 months of 2023, the loss amounted to 12.5 billion VND.

The Department of Transport has noted that the subsidy rate for electric buses is based on the 10-year average subsidy rate (2009-2019) for bus routes in the city. However, the current subsidy rate is lower than the system average, while electric buses have higher investment and operating costs compared to other types of buses.

To address this issue, VinBus has proposed an adjustment to the subsidy rate for electric bus routes, from the current 44.1% to 64.8%, which is similar to the subsidy rate applied to diesel routes in Ho Chi Minh City. Additionally, VinBus has requested the suspension of the D4 electric bus route at the end of 2023 due to financial losses.

Aside from the D4 route, the remaining four routes (VB01, VB02, VB03, and VB05) are not being operated according to the original plan. These routes are: Vinhomes Grand Park to Emart commercial center, Vinhomes Grand Park to Tan Son Nhat Airport, Vinhomes Grand Park to Saigon Bus Station, and Vinhomes Grand Park to the new Eastern Bus Station – National University urban area.

In recent times, VinBus has been making investments in depots with complete infrastructure. The company has also initiated the necessary procedures to construct a depot in Thu Duc City. However, the Ho Chi Minh City Department of Transport has emphasized the need to address legal procedures and conduct assessments before the project can proceed.

VinBus has submitted a report outlining its plan to launch the remaining routes after the subsidy rate has been adjusted and economic-technical norms and transport rates for electric buses have been issued. These 4 bus routes are expected to commence operations in May and June 2024.

To alleviate difficulties faced by businesses, the Ho Chi Minh City Department of Transport has proposed a subsidy rate of 64.8% for the 5 electric bus routes in 2023.

Currently, Ho Chi Minh City has over 2,100 buses operating on 129 routes. Out of these, 91 routes receive subsidies, with a fleet consisting of approximately 1,840 buses (15 electric buses, 496 CNG buses, 1,329 diesel buses). Apart from larger electric buses, the city has previously conducted trials with small electric buses with seating capacities under 15 in the central area, District 7, and Can Gio District. These buses primarily cater to tourists.

According to the city’s plan, by 2030, 20-25% of the buses operating in Ho Chi Minh City will be powered by electricity. The rest of the fleet will transition to clean fuels such as CNG and LNP.

TH (Tuoitrethudo)