Both the investor and Hai Phong City are affected.
People in Hai Phong City, especially those in the localities where the coastal road project passes through, including Do Son District, Kien Thuy District and Tien Lang District, are concerned that the project has been "shelved" for many months, affecting their lives, activities and traffic in the area.
Regarding this issue, according to information from the Department of Planning and Investment of Hai Phong City, there are 2 parallel projects being implemented on the Hai Phong coastal road. That is the coastal road project invested with BOT capital (Coastal road project) of nearly 3,800 billion VND. The second project is the expansion of the coastal road using the city budget.
The Hai Phong – Thai Binh coastal road project invested with BOT capital has been “shelved” for many months due to the difference in loan interest rates (Photo: Thai Phan).
In particular, the coastal road project invested with BOT capital was implemented since 2018. Up to now, 6 years have passed, the investor has not completed it and has stopped implementation for many months. The amount of work completed before the project was suspended was about 70%.
The reason for the project's suspension stems from the impact of the Covid-19 pandemic, lack of sand for filling, and increased labor costs...
The main reason is the difference in loan interest rates. According to regulations, the loan interest rate in the project contract is 5-6%, while the investor borrows from commercial banks at up to 11-12%.
The above difference resulted in an amount of nearly 1,900 billion VND that was not included in the total investment, forcing the investor to stop implementing the project due to exceeding the balance capacity.
"The enterprise has sent a document requesting the People's Committee of Hai Phong City that if the loan interest rate is not adjusted, the BOT contract for the project will be terminated," said a representative of the Department of Planning and Investment of Hai Phong City.
While the coastal road project invested with BOT capital is "shelved" waiting for loan interest rate adjustment, the coastal road expansion project using Hai Phong city budget capital is also forced to be temporarily suspended.
Insufficient legal basis to adjust loan interest rates
According to Mr. Nguyen Ngoc Tu - Director of the Department of Planning and Investment of Hai Phong City, in the past, the People's Committee of Hai Phong City has repeatedly sent documents requesting the Prime Minister, ministries and central agencies to consider and remove difficulties related to the difference in loan interest rates of investors. In addition, the leaders of the City Party Committee and People's Committee of Hai Phong City have worked twice with the Ministry of Finance.
However, due to the provisions of the Law on Investment in the form of public-private partnership and Decree No. 28/2021/ND-CP dated March 26, 2021, contracts signed before the effective date of the PPP Law and Decree No. 28/2021/ND-CP shall continue to be implemented according to the signed contract.
Due to insufficient legal basis to adjust interest rates for investors, central ministries and branches have instructed the People's Committee of Hai Phong City to continue implementing the project based on the project contract.
The Hai Phong – Thai Binh coastal road project invested with BOT capital has been “shelved” for many months, affecting the lives of local people and traffic (Photo: Thai Phan).
To solve this problem, the Department of Planning and Investment of Hai Phong City coordinated with relevant departments and branches to advise and propose to the City People's Committee to terminate the BOT contract and call on other capable investors to continue implementing the coastal road project.
In addition, it is possible to consider using Hai Phong City's budget to continue investing in the project.
“According to the above directions, it is expected that by the second quarter of 2026, the construction of the coastal road project can be implemented and by the third quarter of 2027, both coastal road projects will be completed with BOT capital and the expansion of this route will be with Hai Phong City budget,” Mr. Nguyen Ngoc Tu - Director of the Department of Planning and Investment of Hai Phong City, Nguyen Ngoc Tu, informed.
The coastal road project using BOT capital has a total length of nearly 30 km. The section through Hai Phong City is nearly 21 km long and nearly 9 km through Thai Binh province. The total initial investment of the project is more than 3,400 billion VND, later increased to nearly 3,800 billion VND. Of which, 720 billion VND is state capital for site clearance, the rest is from the investor and borrowed capital.
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