The Ministry of Transport is working on a project to upgrade National Highway 1A by 2016 and install 21 toll stations along its 1,700km length.
This has raised public concerns about toll charges to be imposed on users already smarting from rising petrol prices and continued inflation.
The Viet Nam News examines the issue.
Why are 21 toll stations being installed on National Highway 1A after upgrading it to four lanes by 2016? How can firms cope with the extra cost of transport?
Nguyen Hong Truong, Deputy Minister of Transport:
|Nguyen Hong Truong
Highway 1A has become seriously deteriorated by about 20,000-30,000 vehicles using it each day. It is overloaded, affecting safety and the flow of goods nationwide, which in turn impacts on the nation's socio-economic development.
As a result, the Government and the National Assembly have tasked the Ministry of Transport to mobilise investors to fund the upgrade under the BOT (Build-Operate-Transfer) system. 1,000km will be upgraded under the BOT system and 700km from the State budget.
The tolls collected will repay the investors. The upgrade cost is expected to be about VND120 trillion (US$5.8 billion), which the State cannot afford. We had to encourage the private sector to take part so it was inevitable that toll stations would have to be set up.
We need better roads which save time and are more cost effective and safer. BOT investors have about 20 years to collect the tolls and fees can only increase to 3.5 times the current level. The toll stations have to be at least 70km apart. The Ministry of Transport will also weigh the option of closing old toll stations upon completion of the expansion.
Nguyen Van Thanh, chairman of the Viet Nam Automobile Transportation Association:
|Nguyen Van Thanh
In terms of policy, we support the expansion plan. National Highway 1A is the lifeline of ground transportation nationwide and it is badly worn. Most sections have only two lanes, which increases the risk of accidents.
However, transport firms are worried about the plan. Allowing subcontractors to carry out works in separate parts of the highway at the same time will be like chopping it into pieces. If there's no supervision on the quality of investors (and subcontractors), it will be quite risky.
We are also worried about the high fees and the quality of the roads after being upgraded. In addition, when works are being carried out, how can we ensure traffic flow and order?
Tran Khac Vinh, director of Truong Son Transport and Commercial Ltd Co in Ha Noi:
We are worried about higher toll fees, which will put a greater burden on transport firms like mine, especially as fuel and labour cost are rising and demand is slowing.
Since the beginning of this year, when the Road Maintenance Fund became operational, transport firms looked forward to the Transport Ministry removing State toll stations to avoid overlapping with toll collections. However, until now, I see few stations removed.
So, besides paying toll fees, my company, with nine trucks, paid an additional VND27 million ($1,317) to the road maintenance fund for the first six months of this year, let alone the diesel price increase of over VND300 per litre two weeks ago, pushing our transport cost up about 3 per cent.
On part of National Highway 1A, from Ha Noi-Ninh Binh-Thanh Hoa, we were hit with increased toll fees. For example, the fees for the route from Ninh Binh to Thanh Hoa have doubled in the last few years.
|Tran Khac Vinh
A 3.5-tonne truck now has to pay VND30,000 and a 5-tonne truck VND50,000. Higher fees are imposed on the Ha Noi-Ninh Binh route: about VND100,000 one way for a 3.5-tonne truck.
We already have collected road maintenance fees and Highway 1A is basically the only option that runs the length of the country, leaving businesses and citizens no choice but to cope with rising fees. What are your thoughts on this?
Truong: Road maintenance fees are only used for maintaining the non-BOT sections. They are two separate sources. Depending on the economy situation, our ministry and the Finance Ministry will consider asking the Government to adjust the fees.
BOT obviously operates on the collection of tolls to get a return on investment. The country is in dire need of better roads so we need the support of businesses and citizens. If we wait for the State budget to afford VND120 billion then we can't finish the entire highway and until after 2020.
While the fees will be a bit higher, drivers will save time and therefore costs. For example, on the expressway Trung Luong-Sai Gon, the density level of traffic was reduced by 40 per cent when we started collecting fees.
After three months, the old road on National Highway 1A (without fees) was so jammed that all containers returned to the expressway.
Transport companies have to balance the cost of paying fees with saving time and operating their vehicles better. We believe that new BOT fees will not make it difficult for businesses.
Thanh: I believe that the Government has to intensify its supervision role. We cannot leave the roads entirely to investors and subcontractors.
We have already seen many BOT roads fail to meet deadlines and quality demands. Information related to the project, the investor, the timeline and the subcontractor must be open and transparent to all people and businesses.
We need a mechanism to make sure that subcontractors will not push the cost too high and increase fees unreasonably.
Vinh: As road users, our biggest concern is that we are being asked to pay high fees to use high quality roads but in fact the road quality is not as good as expected.
For example, to travel from Ha Noi to Nam Dinh, we have two options. First, travel by Phu Ly in Ha Nam Province to reach Nam Dinh along a crowded narrow road with a poor road surface and a toll fee of VND15,000 for a 3.5-tonne truck. And second, on the BOT-developed route, where the fee is double or triple, at a maximum 100kph.
If there is an alternative way, even a longer one, drivers prefer the alternative rather than the BOT road to reduce costs. Added fuel costs in such cases are not as high as toll fees.
Under regulations, there can be a toll station every 50-70km but for years we saw them reach a higher density. For example, from Ha Noi to Thai Binh (116km) there are three toll stations; from Ha Noi to Hai Phong (100km) two stations; from Ha Noi to Quang Ninh (150km) four stations.
From Ha Noi to HCM City, 14 stations, including four or five BOT toll stations, which impose fees twice to three times those of State toll stations.
Investors are allowed to collect fees at the maximum rate of 3.5 times higher than current fees. Do you think this level is too high?
Truong: We have taken into account BOT projects in neighbouring countries and the rate is not too high. The higher fee will not start until 2016 and not all stations will apply the maximum.
In the future, when we build the north-south express highway, tolls on National Highway 1A will be phased out and we will only collect tolls on the express highway.
Thanh: The quality has to match the higher fees. Information must be transparent. When we introduced the Road Maintenance Fund, the calculation was based on the entire ground transport system. Therefore it's clear that fees are overlapping.
We have to find a meeting point among investors, people and transport firms. While we complain about high fees, investors say they need that level to get their return on investment. The government says we will have better roads because of the higher fees. But what if that's not the case? We need to make it happen.
Another point is that putting in so many toll stations will affect the speed of the vehicles and traveling time.
Vinh: When transport firms have to pay more fees they will pass the cost on to customers, which is not good under current economic conditions where people are living with the pressure of inflation.
Government should have measures to harmonise the benefits to both investors and road users. For example, the time for investors to have their capital returned should be longer, so that fees can be lower.
Moreover, the effective use of the road maintenance fund is crucial to improving road quality, which is a key to reducing transport cost. — VNS