Many important financial parameters related to the Sa Pa Airport Construction Investment Project need to be improved to help this project "escape stagnation" after a long time of not finding investors.
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| Perspective of Sa Pa Airport. |
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The Ministry of Planning and Investment - the standing agency of the Inter-sectoral Appraisal Council, has just issued Notice No. 72/TB - BKHĐT on the conclusion of the meeting of the Inter-sectoral Appraisal Council, appraising the Pre-Feasibility Study Report adjusting the Sa Pa Airport Construction Investment Project under the PPP method.
The meeting of the Interdisciplinary Appraisal Council took place on August 30, after Lao Cai Provincial People's Committee sent Document No. 49/Tr-UBND dated April 1, 2024 to the Ministry of Planning and Investment, requesting appraisal and adjustment of the Pre-Feasibility Study Report of the Sa Pa Airport Construction Investment Project and Explanation Document No. 4285/UBND - XD dated August 7, 2024.
In Notice No. 72, the Ministry of Planning and Investment assigned the Department of Infrastructure and Urban Development, based on the documents of the Pre-Feasibility Study Report to adjust the Project, which was supplemented and explained by the People's Committee of Lao Cai province, to urgently complete the draft Appraisal Result Report and send it to the members of the Interdisciplinary Appraisal Council for voting.
The Sa Pa Airport Construction Investment Project was approved by the Prime Minister in Decision No. 1773/QD-TTg dated October 21, 2021, with a total investment of VND 6,948 billion. However, after nearly 4 years of approval, this project has not yet selected an investor to be able to implement construction. The failure to find an investor is one of the reasons why the Lao Cai Provincial People's Committee had to request an adjustment to the Project's investment policy.
However, according to Notice No. 72, there are still 13 issues/groups of issues in the Pre-Feasibility Study Report adjusting the Sa Pa Airport Construction Investment Project under the PPP method that the Interdisciplinary Appraisal Council has requested the Lao Cai Provincial People's Committee, in the role of a competent state agency, to receive and clarify.
In particular, the content that the Inter-sectoral Appraisal Council continues to request the People's Committee of Lao Cai province to clarify is why the competent state agency failed to select an investor for the PPP Project to Invest in the Construction of Sa Pa Airport.
Specifically, the Inter-sectoral Appraisal Council requested the Lao Cai Provincial People's Committee to summarize and draw experience from the fact that after 2 bidding invitations, the Project still had no participating investors in order to have a solution if similar cases arise during the investor selection process; at the same time, survey more investors interested in the Project.
Lao Cai Provincial People's Committee was also asked to analyze more deeply the relationship between increasing the state capital ratio and the lack of investors participating in bidding, while investment in aviation projects has a very special nature.
“In addition, the Ministry of Transport is currently preparing a Project on Socialization of the Aviation Industry to submit to competent authorities. Therefore, the Lao Cai Provincial People's Committee is requested to continue to coordinate with the Ministry of Transport to clarify the necessary conditions, ensuring feasibility in attracting investment capital for the project,” Notice No. 72 stated.
Previously, in July 2024, the Interdisciplinary Appraisal Council also requested the Lao Cai Provincial People's Committee to direct units to clarify the main reasons for not being able to select an investor. In addition to the reason that the proportion of state capital participating in the Project is still low, there may be a number of other reasons such as: the expected price frame, fees, investment guarantee mechanism, and revenue sharing mechanism are not attractive, proposing comprehensive adjustments to the contents to ensure the feasibility of the Project.
According to the Interdisciplinary Appraisal Council, when surveying investors' interest, there were 2 interested investors: Fansipan Sa Pa Cable Car Tourism Service Company Limited (under Sun Group Corporation) and T&T Group Joint Stock Company, but after 2 times of issuing bidding documents, no unit submitted bidding documents.
In the explanatory document No. 4285, Lao Cai Provincial People's Committee said that investing in airport infrastructure requires a huge amount of capital, while the capital recovery period is long, so many investors are still hesitant, especially due to the impact of the Covid-19 pandemic, as well as difficulties in the real estate sector, so after 2 invitations to bid, the Project had no investors participating.
According to the representative of the competent state agency, in Submission No. 49 and the explanatory document, Lao Cai Provincial People's Committee proposed to adjust a number of criteria on "experience in implementing similar projects and experience in operating and trading infrastructure works and systems to provide public products and services: the number of projects in the field of airport infrastructure investment in which investors participate as equity investors or main contractors, partners" in the Bidding Documents in the direction of adjusting to minimize the requirements so that many contractors and investors can participate in order to increase competitiveness and attract investors to participate in the Project.
“In addition, the proposal to increase state capital from 39.29% to 49.71% of the total investment will also contribute to improving the financial plan of the Project,” said Mr. Nguyen Trong Hai, Vice Chairman of Lao Cai Provincial People's Committee.
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Financial plan confusion
One content that still causes many concerns for the Interdisciplinary Appraisal Council when appraising the adjusted Pre-Feasibility Study Report of the Sa Pa Airport Construction Investment PPP Project is the efficiency of project investment.
In Notice No. 72, the Inter-sectoral Appraisal Council requested the People's Committee of Lao Cai province to review input factors, including the price and fee framework of the Project, to ensure feasibility due to the very long payback period (43 years, 11 months), making it difficult to attract capital from commercial banks.
Regarding the forecast of transportation demand and financial indicators of the Project, since the Interdisciplinary Appraisal Council did not hire a consultant to review, the Lao Cai Provincial People's Committee needs to continue to direct the review of survey results and calculations, forecasting the number of passengers/year, ensuring that the calculations are scientific, honest, and objective; on that basis, take responsibility for the accuracy of the data of the adjusted Pre-Feasibility Study Report.
In Official Dispatch No. 5322/BKHĐT – PTHTĐT sent to Lao Cai Provincial People's Committee in August 2024, the Interdisciplinary Appraisal Council assessed and forecasted the transportation demand of the Project as not having enough convincing basis.
Specifically, competent state agencies have not investigated, surveyed, analyzed, and evaluated the number of passengers arriving and departing from different planned flight routes, leading to an inability to forecast the number of passengers arriving and departing from Sa Pa Airport; there is no convenience when the airport is located about 80 km from the center of Sa Pa town, diverging with highways and railways connecting Lao Cai province with other localities.
In addition, in this area there is also Lai Chau Airport according to the National Airport and Airport Planning to 2030, with a capacity of 500,000 passengers/year, and 1.5 million passengers/year by 2050 (level 3C). After the Hoang Lien Pass tunnel project, expected to be completed in 2026, Lai Chau Airport will share passenger traffic with Sa Pa Airport.
The Interdisciplinary Appraisal Council also believes that the method of forecasting growth in demand for civil aviation transport used by consultants in the Project Adjustment Pre-Feasibility Study Report is a method of expert judgment, not calculated on the basis of scientific grounds.
Not to mention that, although the financial indicators in the adjusted Pre-Feasibility Study Report of the Sa Pa Airport Construction Investment Project have been improved, they are generally ineffective and not really sustainable due to many potential risks affecting the financial plan such as loan interest rates and changes in the preliminary total investment.
Because the project requires a large loan of about 3,000 billion VND, accounting for 85% of the investor's capital, there is a high level of risk. In case of a decrease in output and a 5% increase in costs, the project is no longer financially feasible. Meanwhile, these are two very sensitive indicators, which often occur with airport infrastructure projects.
According to the explanation of Lao Cai Provincial People's Committee, airport investment projects have the common characteristics of very large investment capital and long payback periods (Van Don Airport is 46 years; Quang Tri Airport is 47 years, 4 months). Normally, in the first years when revenue is still low, the cash flow is not enough to pay off the principal debt.
In fact, through surveys of some transport projects invested in the form of BOT, in the first years of operation, investors of these projects must find compensation solutions from other sources of their own capital, such as the case of the project connecting the Noi Bai - Lao Cai expressway to Sa Pa, the Van Don airport project...
“This is the biggest obstacle to mobilizing credit capital. Lao Cai Provincial People's Committee has directed departments and branches to continue researching and planning sources of mobilized capital (credit loans, corporate bond issuance, etc.) and working with the Vietnam Development Bank (VDB) to research and calculate the State's investment credit plan to increase interest in the Project, attract investors and credit institutions,” informed the leader of Lao Cai Provincial People's Committee.
Source: https://baodautu.vn/lam-ro-tham-so-tai-chinh-du-an-cang-hang-khong-sa-pa-d224782.html
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