The Asian Development Bank (ADB) and European Investment Bank (EIB) have pledged around US$700mn in debt to a line on Ho Chi Minh City’s metro network.

The ADB has made an initial commitment of US$500mn, with the EIB committing €150mn (around US$206mn). The pair will now conduct feasibility studies into the project, which would see the construction of line five, which would link Saigon Bridge in Binh Thanh district to Bay Hien intersection in Tan Binh district.

Confusingly, this will be the third metro line in Ho Chi Minh City and upon completion, the three are expected to carry about 526,000 passengers a day.

Robert Valkovic, principal transport specialist at the ADB in Hanoi, tells GTR that the construction should start in 2015, should the due diligence go according to plan.

The Spanish government has also made a commitment to contribute to the project finance, to the tune of €200mn as part of its overseas development assistance (ODA financing).

However, there is some evidence to suggest that Spain will hope to reap some economic benefit from its involvement. Since the inception of the entire metro network, Spanish consultants have been involved. In 2009, Ardanuy Ingenieria was awarded a feasibility study contract for line four at a cost of US$1.2bn, while in the same year, Idom Ingenieria Consultoria won a contract to conduct feasibility studies for line five and six at a cost of US$1.7bn.

The overall network cost is expected to top US$6bn and while Valkovic says the ADB would encourage the involvement of private finance, he views it as being unlikely.

He explains: “We encourage private investment – it does happen. But the problem is without an established metro line system there’s too much risk for the private sector.”

He goes on to explain that while forecasts on ridership are done as accurately as possible, a city with no metro history discourages the private sector, since a culture of rail ridership doesn’t exist.

That said, the need for better public transport in Ho Chi Minh City is clear. The population is almost at 8 million – four times the figure in 1975. The city is almost twice as densely-populated as London and congestion is a problem.

“Ho Chi Minh is now like Bangkok was 10 or 15 years ago,” says Valkovic. “It’s getting quite bad. Given the long periods of implementation, the line won’t be operating until 2020; it will definitely be needed by the time it’s operating.”

Over the past few years, a series of development banks and export credit agencies have released funding for the various lines on the metro. In 2008, the Japanese Bank for International Co-operation lent US$905mn in loans to line one. In 2011, KfW, the German Development Bank, pledged loans worth €240mn to various lines, which has been disbursed gradually ever since.