VEC looks to transfer toll privileges to raise capital

May, 13/2017 - 05:00

Việt Nam Expressway Corporation (VEC) has proposed a plan to the Transport Ministry to transfer the right for exploitation Cầu Giẽ-Ninh Bình Expressway project, at a cost of VNĐ9.1 trillion (US$402.12 million) during a period of 30 years.  

Cầu Giẽ-Ninh Bình Expressway. – VNA/VNS Photo Huy Hùng
Viet Nam News

HÀ NỘI – Việt Nam Expressway Corporation (VEC) has proposed a plan to the Ministry of Transport to transfer Cầu Giẽ-Ninh Bình Expressway toll-collection privileges at a cost of VNĐ9.1 trillion (US$402.12 million) over a period of 30 years.  

The move aims to secure funds to invest in other road projects amid difficulties to mobilise capital.

VEC set a goal of constructing 1,000km of highway by 2020. It invested in six highway projects with a total length of 583km. To reach the goal , VEC must mobilise more investment capital to build another 420km of highway.

As public debt rises, however, VEC admits it is a tough task.

A VEC leader said the Government and the Transport Ministry had a policy to transfer toll-collection rights at finished projects for those aiming to raise capital.

VEC deemed it an effective method to mobilise money from non-State sources and reduce the pressure of public debt increases.

Therefore, the method of transfer the right to exploit the expressway projects managed by VEC, was suitable and necessary, the official said. The Cầu Giẽ - Ninh Binh Expressway project is the first part of that plan.     

VEC proposed the Ministry of Transport and the Government assign it the task of negotiating and selecting a qualified strategic investor.

The selected investor will set up an enterprise responsible for operating and collecting tolls on the Cầu Giẽ-Ninh Bình Expressway. The VEC will also use a part of the money gained from the transfer to contribute capital in the enterprise.

According to the VEC proposal, the VEC will contribute 29 per cent, while the selected strategic investor will provide 71 per cent of total project capital. The expected return on equity ratio is about 12-14 per cent.

VEC also plans to use the money received from the transfer to invest in two expressway projects to connect Ninh Bình Province to Nghi Sơn District in Thanh Hóa, which are part of projected North-South Expressway. The capital needed for these two projects is estimated to be at about VNĐ6.1 trillion ($268.78 million).

Some foreign investors, including France’s VINCI company, are reportedly interested in gaining the right to collect tolls in Cầu Giẽ - Ninh Bình Expressway.

The 50-km highway, which cost about VNĐ8.9 trillion, came into operation in June, 2012. In the first quarter of this year, it served about 3.3 million vehicles will an average toll fee of VNĐ1.500 per kilometre. – VNS