Ministry of Transport points out 5 advantages when assigning VEC to invest in expanding Ho Chi Minh City expressway

The Ministry of Transport pointed out 5 advantages if Vietnam Expressway Corporation (VEC) is assigned to invest in expanding the Ho Chi Minh City - Long Thanh Expressway.

Avoid having to deal with conflicts of interest

The Ministry of Transport has just sent a report to the Government Standing Committee on the investment plan for the project to expand the Ho Chi Minh City - Long Thanh expressway section.

Ho Chi Minh City - Long Thanh Expressway (Photo: Ta Hai).

Agreeing with the opinion of the State Capital Management Committee at Enterprises (Capital Management Committee) that VEC is capable of being the investor and managing and operating the Ho Chi Minh City - Long Thanh Expressway, the Ministry of Transport believes that, compared to public investment and investment under the PPP method, VEC being assigned to invest in the project will have 5 advantages.

Firstly, it is to promote the role and resources of state-owned enterprises, in line with the goal of forming VEC, synchronizing the operation and exploitation of expressways, which is a premise for VEC to invest in expanding expressways managed by VEC.

Second, in accordance with the ownership situation of this route's assets of VEC in the coming time (currently carrying out procedures to transfer this asset to VEC through the form of charter capital increase);

Third, there is no need to use public investment capital, reducing pressure on the state budget.

Fourth is shorter execution time.

Finally, the option of assigning VEC to implement will not have to deal with conflicts of interest between VEC and the new entity (in the case of investment under the PPP method).

"Using capital from state-owned enterprises such as VEC for investment is one of three forms of investment in transport infrastructure today, similar to the investment in airport infrastructure by Vietnam Air Traffic Management Corporation and Vietnam Airports Corporation," the report stated.

Increasing traffic density poses an urgent need to expand the Ho Chi Minh City - Long Thanh expressway (Photo: Ta Hai).

Speed ​​up procedures for requesting charter capital increase, ensuring conditions for commercial loans

To ensure resources for implementation when assigning VEC to carry out the Ho Chi Minh City - Long Thanh Expressway expansion project, in Report No. 1734/BC-UBQLV dated August 7, 2024, the Capital Management Committee proposed that competent authorities consider and allow the postponement and deferment of principal repayment (nearly VND 4,000 billion that the Ministry of Finance has paid in bonds to VEC) and interest related to the project bonds that the Ministry of Finance has paid in bonds from the period 2022 - 2026 to the period 2031 - 2034.

Commenting on this issue, according to the Ministry of Transport, VEC is currently dedicating all available resources (more than VND9,400 billion) to completing the Ben Luc - Long Thanh project. Therefore, for VEC to have equity capital to implement the Ho Chi Minh City - Long Thanh expressway expansion project, the only solution left is as proposed by the Capital Management Committee.

"According to the provisions of Decree No. 92/2018/ND-CP of the Government on Management and Use of Debt Repayment Accumulation Fund; Decree No. 91/2018/ND-CP of the Government on granting and managing Government guarantees, the Prime Minister has the authority to consider debt forgiveness based on the report of the Minister of Finance.

The Ministry of Transport supports VEC's proposal. However, VEC needs to further study the plan to repay the principal and delay the interest payment. In particular, clarify the interest payments in each phase to propose a plan to submit to the competent authority for decision," the Ministry of Transport suggested.

Regarding the capacity to mobilize commercial loans, on October 17, 2024, the Capital Management Committee submitted to the Government a plan to supplement charter capital for VEC in the 2024-2026 period of VND 38,251 billion. The Government Office is seeking opinions from relevant ministries and branches.

To ensure conditions for VEC to borrow commercial capital, the Ministry of Transport requested relevant agencies to speed up the reporting procedure to the Government for consideration and submission to the National Assembly for decision on the investment policy to supplement VEC's charter capital. This is one of the conditions for the Prime Minister to approve the project investment policy.

The Ministry of Transport also noted that in case VEC is not qualified to carry out project investment, according to the draft revised Law on Public Investment being considered and approved by the National Assembly at the 8th session of the 15th National Assembly (expected to take effect from January 1, 2025), the Prime Minister can balance the medium-term public investment capital for the period 2026 - 2030 to assign to state-owned enterprises (VEC) to invest in the form of public investment.

According to the proposed plan, the project to expand the Ho Chi Minh City - Long Thanh expressway section has a total length of nearly 22km.

In which, the section from the Ho Chi Minh City Ring Road 2 intersection (Km 4+000) to the Ho Chi Minh City Ring Road 3 intersection (Km 8+770) will be expanded to 8 lanes according to the plan.

The section from the Ho Chi Minh City Ring Road 3 intersection (Km 8+770) to the Bien Hoa - Vung Tau expressway intersection (Km 25+920) will be expanded to 10 lanes according to the plan.

The preliminary total investment of the project is about 14,955 billion VND (including interest during construction, excluding site clearance costs). Of which, equity is 5,555 billion VND (37%), commercial loan is 9,400 billion VND (63%).

VEC will mobilize 100% of capital to implement the project investment and organize exploitation and toll collection to recover capital. Central budget/local budget (HCMC, Dong Nai) will be used to carry out site clearance and separate into independent projects in the form of public investment.

If approved by competent authorities, the project will be prepared for investment from 2024 - 2025, and investment will be implemented from 2025 to 2027.

Source: https://www.baogiaothong.vn/bo-gtvt-neu-5-uu-diem-khi-giao-vec-dau-tu-mo-rong-cao-toc-tphcm-long-thanh-192241127155352804.htm