Prerequisites for the expansion of the Ho Chi Minh City - Long Thanh Expressway
The postponement of principal and interest payments related to the bonds that the Ministry of Finance has paid off is considered a prerequisite for VEC to be able to take on the role of investor in expanding the 22km Ho Chi Minh City - Long Thanh expressway section.
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| Ho Chi Minh City - Long Thanh - Dau Giay Expressway. |
VEC has enough strength to "carry" the project
This is the consistent viewpoint of the State Capital Management Committee at Enterprises - the governing body of the Vietnam Expressway Corporation (VEC) in Official Dispatch No. 2013/UBQLV-CNHT recently sent to the Ministry of Transport (MOT) regarding the plan to expand the Ho Chi Minh City - Long Thanh Expressway section of the Ho Chi Minh City - Long Thanh - Dau Giay Expressway Project.
At the end of August 2024, in Notice No. 4000/TB-VPCP, Deputy Prime Minister Tran Hong Ha assigned the State Capital Management Committee at Enterprises to report on the operation model and capacity of VEC, the implementation of the pre-feasibility study report, and the project investment financial plan in case VEC is assigned to implement.
The Deputy Prime Minister assigned the Ministry of Finance to report on the handling of the increase in VEC's charter capital; the legal basis, authority to freeze and postpone the payment of principal and interest related to the bonds that the Ministry of Finance has paid off on behalf of VEC. The Ministry of Transport shall preside over and coordinate with the State Capital Management Committee at Enterprises to report on the legal basis and practical basis to propose assigning VEC to implement the Project investment; propose other investment options (if any) in case VEC is not qualified to implement.
“The above agencies shall submit reports to the Ministry of Transport before September 5, 2024 for synthesis and preparation of reports to the Government Standing Committee. After receiving the report from the Ministry of Transport, the Government Office shall submit to the Prime Minister permission to convene a meeting of the Government Standing Committee to consider and decide on the expansion of the Ho Chi Minh City - Long Thanh Expressway,” Notice No. 4000/TB-VPCP stated.
It is known that in Official Dispatch No. 2013/UBQLV-CNHT, the State Capital Management Committee at Enterprises continued to affirm that VEC has enough experience and capacity to be assigned as the investor, ensuring the progress of the Ho Chi Minh City - Long Thanh Expressway Expansion Investment Project. "The option of VEC implementing the Project investment in the form of mobilizing equity capital and other legally mobilized capital sources is the most practical and feasible option," Mr. Nguyen Ngoc Canh, Vice Chairman of the State Capital Management Committee at Enterprises assessed.
Specifically, in addition to not using public investment capital, reducing pressure on the task of spending the state budget, if VEC - the unit currently responsible for managing, exploiting, operating, maintaining and collecting tolls on the entire Ho Chi Minh City - Long Thanh - Dau Giay expressway - is assigned to invest in expanding the Ho Chi Minh City - Long Thanh section, it will not create a conflict of interest between the old investor and the new investor.
Regarding VEC's financial capacity, the direct superior of this enterprise said that in the last 3 years, VEC's financial situation has had many positive changes, ensuring efficiency, preserving and developing state capital in production and business activities. Specifically, VEC's total revenue in the last 3 years reached VND 20,556.76 billion, pre-tax profit VND 3,469.73 billion, and paid to the state budget VND 2,015.10 billion. VEC did not incur any overdue debts and effectively managed accumulated cash flow.
Currently, at the Ben Luc - Long Thanh Expressway Project, VEC must balance VND 7,547.57 billion to replace public investment capital to implement the remaining items and is expected to balance an additional VND 1,855.1 billion. "The task of balancing VND 9,402.67 billion in equity capital to implement the Ben Luc - Long Thanh Expressway Project is the main reason why VEC cannot ensure equity capital to implement the Ho Chi Minh City - Long Thanh section expansion investment project," said Mr. Canh.
Equity bottleneck
Regarding the financial investment plan for the Project in case VEC is assigned to implement, the representative of the State Capital Management Committee at enterprises said that the total investment of the Ho Chi Minh City - Long Thanh section expansion investment project is 14,955.03 billion VND (including loan interest during construction), of which equity is 5,555.03 billion VND (37%), commercial loan is 9,400 billion VND (63%).
Because the Ben Luc - Long Thanh Expressway Project occupies almost all of the owner's equity room, in order to ensure the ability to mobilize owner's equity to invest in the Ho Chi Minh City - Long Thanh section expansion investment project, VEC proposed to freeze and postpone the payment of principal and interest related to the bonds that the Ministry of Finance has advanced to repay.
Specifically, VEC proposed that the competent authority allow the postponement and postponement of principal and interest payments related to the bonds paid by the Ministry of Finance from the 2022-2026 period to the 2031-2034 period, including the amount of VND 3,988.76 billion and corresponding interest incurred in the 2024-2026 period; interest incurred on the principal and interest of the bonds paid by the Ministry of Finance in the 2012-2023 period.
“In case the Prime Minister approves the postponement and postponement of principal and interest payments related to the bonds that the Ministry of Finance has paid off, the cumulative after-tax cash flow of the five expressway projects invested by VEC will always be positive (the lowest positive level in 2026 is 669 billion VND). VEC has enough strength to arrange about 5,555 billion VND to invest in expanding the Project according to the proposed plan,” the leader of the State Capital Management Committee at Enterprises informed.
Currently, the Joint Stock Commercial Bank for Foreign Trade of Vietnam has committed to arranging credit for loan needs on the basis that VEC fully meets Vietcombank's credit conditions and legal regulations.
In case the Prime Minister does not approve the deferral and postponement of principal and interest payments related to the bonds that the Ministry of Finance has paid off, if it takes on the expansion of the Ho Chi Minh City - Long Thanh Expressway, the cumulative post-tax cash flow of the five projects in the 2026-2033 period will be negative, with the largest negative amount being VND 6,241 billion in 2029.
“In addition to not being able to ensure the ability to repay the loan on time as committed, VEC could not mobilize equity capital to participate in the Ho Chi Minh City - Long Thanh section expansion investment project,” VEC leaders analyzed.
Section Km4+00 - Km8+770: expanded from 4 lanes to 8 lanes;
Section Km8+770 - Km25+920): expanded from 4 lanes to 10 lanes. Long Thanh Bridge invests in building a new bridge unit with the same scale as the current bridge.
Investment preparation from March 2024 to February 2025; investment implementation from March 2025 to December 2027.
Payback period: 28 years.
Source: https://baodautu.vn/dieu-kien-tien-quyet-cho-viec-mo-rong-cao-toc-tphcm---long-thanh-d224537.html
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