Government invests in 12 more projects along North-South Expressway

November 22, 2021 - 08:57

The Government proposed another 12 projects covering 729km of road on the North-South Express, according to the Ministry of Transport.


Construction of Mai Sơn-Highway section 45 on the North-South Expressway. Photo

HÀ NỘI ­— The Government proposed another 12 projects covering 729km of road on the North-South Express, according to the Ministry of Transport.

Last Tuesday, the Government submitted the National Assembly a pre-feasibility study of the 12 projects.

All 12 projects were proposed to be implemented in the form of public investment.

After that, the government will collect fees or franchise fee collection to recover capital.

Previously, the ministry proposed the public-private partnership (PPP) investment form for four out of the 12 projects.

The 12 projects would capitalise a total investment of VNĐ146,990 billion (US$6.49 billion), of which the construction costs are VNĐ95,837 billion ($4.23 billion), site clearance and resettlement are VNĐ19,097 billion ($843.5 million), project management, and consulting fees of VNĐ12,015 billion ($530.8 million), and provision expense at VNĐ20,041 billion ($885.2 million).

The 12 projects include Bãi Vọt - Hàm Nghi, Hàm Nghi - Vũng Áng (in Hà Tĩnh Province) Vũng Áng - Bùng, Bùng - Vạn Ninh và Vạn Ninh - Cam Lộ (in Hà Tĩnh, Quảng Bình and Quảng Trị provinces), Quảng Ngãi - Hoài Nhơn, Hoài Nhơn - Quy Nhơn, Quy Nhơn - Chí Thạnh (in Quảng Ngãi, Bình Định and Phú Yên provinces), Chí Thạnh - Vân Phong và Vân Phong - Nha Trang (in Phú Yên and Khánh Hòa provinces), Cần Thơ - Hậu Giang, Hậu Giang - Cà Mau (in Cần Thơ, Hậu Giang, Kiên Giang, Bạc Liêu and Cà Mau provinces).

The Government also set out a two-year roadmap to prepare for investment, site clearance and resettlement, to start the projects in mid-2023 and have them completed by 2025.

Regarding the reasons for not investing in four projects in the PPP form, the Government said that the actual implementation of PPP projects in recent years encountered many difficulties and problems.

From 2017 to 2020, the Government carried out 11 projects on the North-South Express, of which eight were PPP investments and three were public investments.

However, due to the outbreak of the COVID-19 pandemic, banks spent a large amount of credit capital to support businesses and people, so they could no longer prioritise credit for medium and long-term loans anymore.

So, five PPP-invested projects of road sections of Mai Sơn – Highway 45, Vĩnh Hảo - Phan Thiết, Phan Thiết - Dầu Giây, Highway 45 - Nghi Sơn and Nghi Sơn - Diễn Châu were converted for public investment.

The three PPP-invested projects of Diễn Châu - Bãi Vọt, Nha Trang - Cam Lâm and Cam Lâm - Vĩnh Hảo were assessed to be financially efficient, but there was still difficulty in mobilising capital.

It was expected that the total amount of credit loans from banks of the three projects was about VNĐ6,500 billion ($287.5 million) out of VNĐ9,000 billion ($398.1 million) of loan demand.

According to the Government's assessment, expressway projects had a large total investment and a long capital recovery thanks to taxes on tolls.

During the implementation of the contracts, the projects’ revenue might be reduced due to the impact of many factors, so investors and credit institutions consider expressway projects to be an unattractive investment field with many potential risks.

Additionally, PPP highway projects had not yet attracted investors with financial potential, so capital mobilisation depends on only banks.

The Government had guided the ministry to consider investment plans for all projects under the PPP form. However, in the current context, the probability of success is not very high.

In the event of failure, investment must be sought from different avenues, to ensure the schedule of completion by 2025 is met. — VNS