Dual solution for credit capital for Huu Nghi - Chi Lang expressway
Credit capital for the Huu Nghi – Chi Lang Expressway BOT Project can only be approved by a dual solution: increasing the state capital participation rate to 70% and completely resolving the problems at the Bac Giang – Lang Son Expressway Project.
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| Construction of Huu Nghi - Chi Lang border gate expressway project. |
Huu Nghi - Chi Lang Expressway Joint Stock Company has just sent a document to the Provincial Party Committee and functional agencies of Lang Son province reporting difficulties and problems in arranging credit for the Huu Nghi - Chi Lang border gate expressway project.
Solving difficulties for 2 projects
This document was once again issued by the project enterprise after the Huu Nghi - Chi Lang border gate expressway project had a project contract signed in April 2024, but after 6 months, credit capital has not been arranged.
Accordingly, the project enterprise requested the Lang Son Provincial Party Committee to direct the Lang Son Provincial People's Committee to issue a document to continue reporting to the Prime Minister to propose adjusting the increase in the proportion of state budget capital supporting the Huu Nghi - Chi Lang border gate expressway project to 70% of the total investment so that the bank has a basis to finance the project (similar to the Dong Dang - Tra Linh expressway project, also passing through areas with difficult and extremely difficult socio-economic conditions, approved by the National Assembly in Resolution No. 106/2023/QH15 dated November 28, 2023).
The National Assembly Delegation of Lang Son Province soon organized a connection between the National Assembly Delegation of Bac Giang Province and the investors, thereby proposing that the National Assembly take measures to remove obstacles and support the central budget capital of VND 4,600 billion that has been determined by the state audit for the Bac Giang - Lang Son Expressway BOT Project and increase the proportion of state budget capital for the Huu Nghi - Chi Lang Border Gate Expressway Project to 70% of the total investment to ensure credit arrangement.
In addition, the National Assembly delegation of Lang Son province proposed that the National Assembly amend the PPP Law to create a legal corridor to remove difficulties for projects facing actual revenue much lower than the signed financial plan.
Accordingly, for projects that have been put into operation and have suffered a serious decline in revenue due to objective reasons (not due to the investor's fault), applying solutions according to contract regulations but still not feasible, the competent authority with the authority to decide on investment policies shall decide on additional state capital to participate in support to continue implementing the contract, at a maximum of 70% of the total investment capital of the project according to the audited and settled value.
A representative of Deo Ca Group (the leading investor consortium) said that for the Huu Nghi - Chi Lang border gate expressway project, Tien Phong Commercial Joint Stock Bank (TPBank) has committed to providing credit capital of VND 2,500 billion and has issued a contract performance guarantee for the project.
“Currently, the appraisal work to provide credit capital for the project is underway. However, whether TPBank will lend to the project or not is a question that has not yet been specifically answered,” said a representative of the project investor consortium.
According to Huu Nghi – Chi Lang Expressway Joint Stock Company, one of the main reasons why the credit loan plan for the Huu Nghi – Chi Lang border gate expressway project is facing difficulties comes from a project that Deo Ca Group had previously tried to “rescue”: the Bac Giang – Lang Son expressway BOT project, a BOT project without any support from the State budget.
The investor representative said that after 5 years of operation, up to now, the existing problems regarding the allocation of state budget capital to support the Bac Giang - Lang Son Expressway BOT Project as committed by previous leaders of the province have not been properly addressed, the bank that provided the capital has stopped disbursing, and the confidence of pioneering investors has gradually been lost.
According to the provisions of the BOT contract, the Bac Giang - Lang Son Expressway BOT Project is allowed to collect tolls to recover capital at 2 stations on National Highway 1 (at Km24+800, Km93+160) and stations along the expressway. In reality, during the operation process, toll revenue only reached 39% compared to the initial financial plan, not enough to pay the principal and interest incurred to the bank providing credit for the project.
To deal with objective difficulties that are not the responsibility of investors and project enterprises, in the recent past, the People's Committee of Lang Son province has repeatedly reported to the Government to request additional state budget capital of VND 4,600 billion to support the project (accounting for 37.75% of the total investment, less than the 50% stipulated in the PPP Law), but has not yet been resolved by competent authorities.
Warming up the PPP market
It is known that in the document No. 46/2024/CV-TPB.TLG dated October 25, 2024 sent to the People's Committee of Lang Son province, TPBank also proposed to promptly resolve the difficulties and problems of the Bac Giang - Lang Son Expressway BOT Project.
According to the bank representative, some problems and difficulties in the Bac Giang - Lang Son Expressway BOT Project were reported to the Prime Minister by the People's Committee of Lang Son province since March 2024.
However, this issue has not been thoroughly resolved, leading to the risk of the project having to stop operating, affecting the synchronous connectivity, as well as the financial plan and credit plan of the Huu Nghi - Chi Lang border gate expressway project. At the same time, this affects the reputation and financial capacity of the investors of the Bac Giang - Lang Son expressway project, which is also the investor of the Huu Nghi - Chi Lang border gate expressway project that TPBank is appraising for credit.
Therefore, TPBank recommends that the People's Committee of Lang Son province continue to report to the Prime Minister and the National Assembly to promptly resolve the difficulties and problems of the Bac Giang - Lang Son Expressway BOT Project.
According to the Department of Planning and Investment of Lang Son, the shortcomings of the Bac Giang - Lang Son Expressway BOT Project are consistent with the actual implementation.
These difficulties and problems have directly affected the debt repayment capacity, socio-economic efficiency, and extended the toll collection period of the project. In addition, they have significantly affected the psychology of credit institutions participating in investing in capital for the Huu Nghi - Chi Lang border gate expressway project.
According to Associate Professor Dr. Tran Chung, Chairman of the Vietnam Association of Road Transport Construction Investors (VARSI), delays in handling problems in PPP projects not only cause difficulties in progress, but also make it more difficult for investors to complete documents when there are changes in policies.
He emphasized that it was a huge waste of time, "cooling" the desire to contribute and losing valuable opportunities for investors to contribute to the country's development.
To resolve this situation, Associate Professor Dr. Tran Chung said that it is necessary to set out sanctions and clearly define responsibilities for each relevant agency and individual. This is to shorten the time to handle problems, as well as ensure the progress of project implementation.
If the above solutions are implemented, the PPP market will have the opportunity to be "warmed up" again, especially in the road transport sector, when future state resources need to be focused on large projects such as the North-South high-speed railway.
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