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  • News
  • News in Vietnam
  • 22 November 2021

The Government proposes to invest in an additional 729 km of North-South Expressway

In addition to 11 ongoing North-South expressway projects, the Government proposes to build another 12 projects with a total length of 729 km with budget capital.

On November 16, a representative of the Ministry of Transport said that the Government had submitted report No. 519 to the National Assembly for a pre-feasibility report of the North-South East Expressway project (period 2021-2025) with 12 projects ingredient.

All 12 projects are proposed to be implemented in the form of public investment. After that, the State will collect fees or franchise fees to recover capital. This is a new point compared to the proposal of the Ministry of Transport a few days ago, choosing four projects out of 12 projects to invest in the form of public-private partnership (PPP).

12 North-South expressway projects with a length of 729 km, a total investment of about 146,990 billion VND, including construction costs of 95,837 billion VND; site clearance and resettlement cost of 19,097 billion VND; project management, consulting cost of 12,015 billion VND; provision expense is 20,041 billion dongs.

The Government also set a roadmap for the next two years to prepare for investment, site clearance, and resettlement to start projects in mid-2023, which will be completed in 2025.

Regarding the reasons for not investing in 4 projects in the form of PPP, the report to the Government stated that the actual implementation of socialization projects in recent years encountered many difficulties and problems.

In the 2017-2020 period, the Government will implement 11 component projects on the North-South Expressway, of which 8 are PPP projects, and 3 are public investment projects. The outbreak of the Covid-19 pandemic caused banks to spend a large amount of credit capital to support businesses and people, so they did not prioritize credit capital for medium and long-term loans. There are five component projects, namely Mai Son – National Highway 45, Vinh Hao – Phan Thiet, Phan Thiet – Dau Giay, Highway 45 – Nghi Son, and Nghi Son – Dien Chau, had to convert from PPP to public investment.

In addition, 3 PPP projects have bid to select investors, namely Dien Chau – Bai Vot, Nha Trang – Cam Lam, and Cam Lam – Vinh Hao credit mobilization. It is expected that the total amount of credit loans from banks of the three projects will be about 6,500 billion  VND out of 9,000 billion VND of loan demand (approximately 72%).

According to the Government’s assessment, expressway projects have a significant total investment, a long payback period, while the primary source of revenue is to recover capital from toll collection on vehicles. In the course of contract performance, the project’s income may be reduced due to the impact of many factors, so investors and credit institutions consider this to be an unattractive investment field with many potential risks.

Also, PPP expressway projects have not yet attracted investors with financial potential. Capital mobilization depends on banks.

The Government also said that it had directed the study of investment plans for all projects under the PPP method. However, in the current context, the probability of success will not be high. In case of failure, the investment firm must be changed, which will be behind schedule, failing to meet the basic requirements of completing the entire route by 2025.

12 North-South expressway projects with a length of 729 km, including Bai Vot – Ham Nghi, Ham Nghi – Vung Ang (belonging to Ha Tinh), Vung Ang – Bung, Bung – Van Ninh, and Van Ninh – Cam Lo (belonging to Ha Tinh and Quang Ninh). Binh, Quang Tri), Quang Ngai – Hoai Nhon, Hoai Nhon – Quy Nhon, Quy Nhon – Chi Thanh (belonging to Quang Ngai, Binh Dinh, Phu Yen), Chi Thanh – Van Phong and Van Phong – Nha Trang (belonging to Phu Yen, Khanh Hoa), Can Tho – Hau Giang, Hau Giang – Ca Mau (running through Can Tho’s provinces and cities, Can Tho, Hau Giang, Kien Giang, Bac Lieu, Ca Mau).

Currently, the North-South Expressway to the East from Huu Nghi border gate to Ca Mau has been put into operation for 478 km, is being invested in 829 km (11 projects), the remaining 729 km (divided into 12 projects).

(Source: VnExpress)