Funds for 3 PPP projects on the North-South Expressway face difficulties

Three investment component projects in the form of PPP under the East North-South Expressway project are having difficulty negotiating capital with banks.

This content is stated in the report the Government has just sent to the National Assembly on the implementation of Resolution 52, the investment policy in the project to build a number of sections of the North-South expressway in the East in the period 2017-2020.

According to the report, in March this year, the Ministry of Transport approved the adjustment of the feasibility study report with 2 component projects, National Highway 45 – Nghi Son and Nghi Son – Dien Chau projects from the form of PPP. using part of the budget capital to public investment using the whole budget capital. Thus, in 11 component projects of the North-South Expressway project, there are 3 component projects invested in the form of PPP, the remaining 8 projects are invested by public.

The total investment of 11 component projects after adjustment is VND 97,666 billion, down about VND 9,033 billion compared to before, mainly thanks to the reduction of investment capital in 3 investment projects under PPP after bidding.

Construction site of Cam Lo – La Son highway. Photo: Vo Thanh

By July, all three of these component projects had completed selecting investors, negotiating, negotiating and signing project contracts with investors and project enterprises. The capital has been reduced after the bidding, but currently, the capital mobilization in 2 component projects is invested in the form of public – private partnership (PPP) including Dien Chau – Bai Vot, Nha Trang – Cam Lam and Cam Lam sections – Vinh Hao is facing difficulties even though investors are actively negotiating with banks for financial arrangements.

The main problem raised was that the bank proposed to apply the revenue sharing clause in Article 82 of the Law on Investment in the form of a public-private partnership (PPP). The PPP Law takes effect from January 1, 2021, so the time for negotiating and signing credit contracts in accordance with this law is prolonged. Therefore, in addition to finding capital from banks, investors are mobilizing from other sources, such as issuing corporate bonds, increasing equity…

Also according to the report, in addition to the 3 component projects in the form of PPP that are still facing capital problems, currently 8 public investment component projects of the North – South expressway project have started construction and are under construction for about 25 years. % amount of work. Disbursed capital for these 8 component projects by the end of August reached 79% of the plan, over 26,171 billion VND.

In addition to capital difficulties, The outbreak of the fourth epidemic and prolonged social distancing in the southern provinces also caused component projects of the North-South expressway project to be behind schedule. Mobilizing human resources, equipment, organizing construction at the site of contractors facing difficulties; Some projects had to stop construction because officials and workers infected with Covid-19 had to be isolated.

Not to mention, the price of some major construction materials has increased sharply, especially the sudden increase in the price of construction steel, which has caused many financial difficulties for construction contractors.

Site clearance at component projects of the North-South Expressway is also “congested” when there are still nearly 10.5 km of un-handovered. Three-quarters of the component projects across 11 provinces and cities have problems with the source of road embankment materials… According to calculations, the component projects lack about 23 million m3 of road embankment materials, of which 15.8 million m3 in unlicensed mines and 7.2 million m3 in licensed mines but not yet cleared for mine site, the transportation distance is too far, so additional permits are required land mines.

According to the Government, expressway projects generally have large scale and total investment. Actual implementation shows that, the time to prepare and complete investment procedures in accordance with the law to start the project (approval of investment policy, approval of investment project, approval of technical design, etc.) , cost estimation, tendering for contractor selection, compensation for site clearance…) takes at least 3 years, 2-3 years is required for construction to meet the project’s technical requirements.

Thus, with the current requirements of regulatory procedures and project implementation progress, most expressway projects are unlikely to be completed in a medium term.

To achieve the goal of completing the East North-South Expressway by 2025, the Government has assigned the Ministry of Transport to coordinate with the Ministry of Justice, relevant ministries and agencies to review, evaluate and propose mechanisms and policies to remove difficulties and speed up implementation. The Ministry of Transport is required to report to the Government for submission to the National Assembly for consideration and promulgation of a Resolution on pilot implementation.

The East North-South Expressway from Hanoi to Can Tho is 1,799 km long, of which 654 km passes through 13 provinces and cities, belonging to 11 projects under construction. After completing 11 projects, along with more than 300 km of highways that have been exploited, the North-South expressway will have more than 1,000 km, meeting transportation needs, overcoming congestion and accidents on the highway. 1. To connect the entire North-South Expressway, the transport sector will invest the remaining 659 km by 2025.

Mr. Minh


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