Proposal to clarify many contents of adjustment of Dong Dang - Tra Linh Expressway Project
The People's Committee of Cao Bang province was requested to review and complete the pre-feasibility study report of the adjusted PPP project to invest in the construction of the Dong Dang - Tra Linh expressway before submitting it to the Prime Minister for consideration and approval.
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| Perspective of Dong Dang - Tra Linh highway. |
The Interdisciplinary Appraisal Council has just issued Report No. 5707/BC – HDTĐLN on the results of the appraisal of the adjusted Pre-Feasibility Study Report of the Investment Project to build the Dong Dang (Lang Son) – Tra Linh (Cao Bang) Expressway under the PPP method.
Accordingly, the Interdisciplinary Appraisal Council requested the People's Committee of Cao Bang province to complete the Pre-Feasibility Study Report of the adjusted Project according to the opinion of the Interdisciplinary Appraisal Council to ensure sufficient conditions for submission to the Prime Minister for consideration and approval of adjustment of the Project investment policy.
It is known that one of the most notable contents in Report No. 5707 is that the Interdisciplinary Appraisal Council believes that the adjustment of the Project's investment policy is consistent with the provisions of Clause 1, Article 18 of the PPP Law.
Previously, in Resolution No. 106/2023/QH15 dated November 28, 2023 of the National Assembly on piloting a number of specific policies on investment in road construction, the National Assembly allowed the PPP project to invest in the construction of the Dong Dang - Tra Linh expressway with the proportion of state capital participating in the total project investment not exceeding 70%.
In Document No. 3448/TTr-UBND dated December 13, 2023 of the People's Committee of Cao Bang province, it is stated that based on Resolution No. 106 and on the basis of calculating the financial plan as well as ensuring maximum savings of State budget capital and proposing that the State budget capital participating in the Project is about 9,800 billion VND (accounting for 68.76% of the total investment of the Project).
In addition, accepting the opinions of the Interdisciplinary Appraisal Council, Submission No. 1106/TTr-UBND dated May 13, 2024 of the People's Committee of Cao Bang province affirmed that according to Clause 1, Article 18 of the PPP Law, the Project needs to adjust the investment policy as a basis for implementing the next steps.
However, according to the Inter-sectoral Appraisal Council, the Pre-Feasibility Study Report of the Project adjusted after explanation attached to the Submission No. 1106/TTr-UBND of the Cao Bang Provincial People's Committee has not clearly explained the commitment to adjust the Project investment policy when the State budget capital participation is higher, will it affect the re-selection of the Investor or not? "The Cao Bang Provincial People's Committee needs to clarify the conformity of the negotiation and contract contents between the Parties to ensure efficiency, transparency, avoid loss, waste, and negativity; factors related to the difficulty that the Investor has in mobilizing loans to implement the Project after winning the bid", the Inter-sectoral Appraisal Council recommended.
In addition, because the People's Committee of Cao Bang province issued Decision No. 1629/QD-UBND dated November 27, 2023 approving the results of investor selection, but the investor encountered difficulties in raising capital after winning the bid, the Interdisciplinary Appraisal Council requested the People's Committee of Cao Bang province to review and carefully evaluate the investor's capacity in project implementation and the ability to mobilize capital sources to implement the project.
According to the Inter-sectoral Appraisal Council, the Project is proposed to increase the State capital participation and reduce the Investor's loan capital while the average loan interest rate on the market tends to decrease compared to the time when the Cao Bang Provincial People's Committee approved the Project in Decision No. 1199/QD-UBND dated September 15, 2023. At the same time, the Cao Bang Provincial People's Committee referred to a number of BOT projects that are not similar in scale and investment time as representatives to determine the return on equity of the Project is not appropriate.
Therefore, the Inter-sectoral Appraisal Council recommends that the People's Committee of Cao Bang province review the calculation bases, refer to BOT projects with similar scale, investment time, and reasonable loan interest rates on the market according to regulations to determine the investor's profit targets and appropriate loan interest rates.
Another noteworthy recommendation is that the proportion of State capital participating in the Project is very large compared to other PPP projects to support the feasibility of the Project. The interdisciplinary appraisal council recommends that the People's Committee of Cao Bang province review and evaluate the necessity of proposing the application of a revenue reduction sharing mechanism to reduce the pressure of sharing risks of the State budget for the Project.
Previously, the People's Committee of Cao Bang province had submitted documents No. 3448/TTr - UBND, 1106/TTr -UBND requesting to adjust the investment policy of the PPP project to invest in the construction of the Dong Dang - Tra Linh expressway with 4 adjusted contents.
Firstly, the State budget capital for the Project is adjusted to VND 9,800 billion, accounting for 69.38% of the total investment (an increase of VND 3,220 billion from the budget); BOT capital is VND 4,325 billion, accounting for 30.62% (a decrease of VND 2,269 billion) compared to Decision No. 20/QD-TTg dated January 16, 2023 of the Prime Minister on adjusting the investment policy of the PPP Project to invest in the construction of the Dong Dang - Tra Linh Expressway.
Second, the total investment of the Phase 1 Project is adjusted to VND 14,125 billion, an increase of VND 951 billion (about 7.2%) compared to Decision No. 20/QD-TTg, but a decrease of VND 207 billion compared to Decision No. 1199/QD-UBND dated September 15, 2023 of the People's Committee of Cao Bang province.
Third, adjust the project implementation time, specifically phase 1 of the project is from 2020 to 2026, the operation time, toll collection and capital recovery is about 22 years and 5 months; phase 2: after 2026
Fourth, adjust the Project's financial plan, including reducing the road service fee from VND 2,100/vehicle/km to VND 2,000/vehicle/km (toll collection and capital recovery period is 22 years and 5 months), a reduction of 7 months compared to Decision No. 20/QD-TTg, a reduction of 2 years and 10 months compared to Decision No. 1199/QD-UBND dated September 15, 2023.
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