Proposal for Central Government to support 5,600 billion VND for Bac Giang Expressway

Proposal for Central Government to support 5,600 billion VND for Bac Giang - Lang Son expressway

This is a necessary expense to ensure the financial plan for the Bac Giang - Lang Son Expressway Construction Investment Project, combined with strengthening the National Highway 1 road surface under the BOT Contract form.

Toll station on Bac Giang - Lang Son highway.

According to information from the Investment Electronic Newspaper - Baodautu.vn , the People's Committee of Lang Son province has just sent Document No. 23/TTr - UBND to the Prime Minister requesting support from the central budget to ensure financial solutions and remove difficulties and obstacles at the BOT project to invest in the construction of the Bac Giang - Lang Son expressway, section Km45+100 - Km108+500, combined with strengthening the road surface of National Highway 1, section Km1+800 - Km106+500, Bac Giang province and Lang Son province.

In this submission, the People's Committee of Lang Son province proposed that the Prime Minister consider and agree to the policy of supporting from the central budget about 5,600 billion VND (not exceeding 50% of the audited and finalized value of the Project) to offset the cash flow deficit during the period of collecting tolls to recover capital, ensuring the financial plan and ensuring stable operation and exploitation of the BOT project to invest in the construction of the Bac Giang - Lang Son expressway, section Km45+100 - Km108+500, combined with strengthening the road surface of National Highway 1, section Km1+800 - Km106+500, Bac Giang province and Lang Son province.

The leader of Lang Son Provincial People's Committee said that the BOT project to invest in the construction of the Bac Giang - Lang Son expressway, section Km45+100 - Km108+500, combined with the reinforcement of National Highway 1, section Km1+800 - Km106+500, Bac Giang province and Lang Son province were approved by the Prime Minister in Decision No. 2167/TTg-KTN dated October 30, 2014.

On that basis, the Ministry of Transport approved the Project in Decision No. 1249/QD-BGTVT dated April 9, 2015. Lang Son Provincial People's Committee received the handover of rights and obligations of the competent State agency from the Ministry of Transport from May 25, 2018.

The project has a total investment of 12,188 billion VND, capital from the investor, capital mobilized from Vietinbank, without state budget support. Up to now, all works under the project have been completed, ensuring progress and quality, and have been accepted by the investor, competent authorities, and the State Inspection Council for Construction Works Acceptance.

According to the assessment of the People's Committee of Lang Son province, the project has contributed to solving traffic congestion on National Highway 1, creating favorable conditions and promoting socio-economic development in the Northeast region in general and the two provinces of Bac Giang and Lang Son in particular.

During the implementation and operation of the Project, there were some changes (reducing 1 toll station, exempting some toll collectors, traffic growth lower than initially forecasted, adding project scale...) affecting the financial plan of the Project. These difficulties and problems of the Project were pointed out by the State Audit in Notice No. 09/TB-KTNN2 dated January 16, 2020.

Specifically, according to the initial financial plan, the Project will collect tolls to recover capital at 2 stations on National Highway 1 (at Km 24+800 and Km93+160) and stations on the expressway, with the expected revenue of the Project being 93 billion VND/month.

During the implementation process, due to objective factors, the current toll revenue of the Project is only about 30 billion VND/month, reaching about 32% of the initial financial plan, leading to a deficit in the Project's capital repayment cash flow, not enough to pay the principal and interest incurred by the lending bank.

In addition, the Huu Nghi - Chi Lang border gate expressway project under the BOT form has not been completed to synchronously connect the route to Lang Son city and Huu Nghi border gate as planned; on the other hand, the impact of the COVID-19 pandemic and China's border trade policy on border gates have led to the growth rate of traffic and traffic distribution on the expressway not being as forecasted in the approved financial plan.

Lang Son Provincial People's Committee said that the above-mentioned problems have changed the input parameters of the Project and directly affected the ability to repay debts and operate the Project, similar to the difficulties and shortcomings in 8 projects as proposed by the Ministry of Transport.

Recently, the project enterprise has sent a document requesting the People's Committee of Lang Son province to consider supporting compensation from the state budget for the project to operate normally. However, the request for state budget support of about VND 5,600 billion, equivalent to about 49% of the total investment capital according to the estimated settlement value (about VND 11,356 billion), exceeds the local budget capacity.

On the other hand, the province is currently having to allocate about 2,500 billion VND of local budget capital to support the Huu Nghi - Chi Lang border gate expressway project. The above difficulties and problems have directly affected the ability to repay debts, socio-economic efficiency, and prolonged the toll collection period.

The People's Committee of Lang Son province assessed that the Bac Giang - Lang Son Expressway Project connecting with the Dong Dang (Lang Son province) - Tra Linh (Cao Bang province) Expressway Construction Investment Project under the PPP form, which is being implemented, has important significance for the socio-economic development of Lang Son province in particular and the whole country in general.

“Therefore, considering options to support investors to ensure the feasibility of the financial plan for the BOT project to invest in the construction of the Bac Giang - Lang Son expressway, section Km45+100 - Km108+500, combined with strengthening the National Highway 1 section Km1+800 - Km106+500, Bac Giang province and Lang Son province under the form of BOT contract”, the leader of Lang Son Provincial People's Committee assessed.

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