Examining the appraisal results of the PPP project of Dinh Khao bridge worth 2,846 billion VND
The investment project to build Dinh Khao bridge connecting Vinh Long and Ben Tre provinces under the PPP method, has a length of 4.3 km, of which the main bridge across Co Chien river is 1.54 km long.
The Inter-sectoral Appraisal Council has just issued Report No. 7402/BC - HDTDLN to the People's Committee of Vinh Long province on the appraisal results of the Pre-Feasibility Study Report of the Investment Project to build Dinh Khao Bridge connecting Vinh Long and Ben Tre provinces under the PPP method.
This project is being implemented in Mang Thit district, Vinh Long province and Cho Lach district, Ben Tre province.
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According to the proposal of Vinh Long Provincial People's Committee, the project has a total length of about 4.3 km, a scale of a grade III road, a design speed of 80 km/h; the route and bridges on the route (including Cai Cao bridge over the Co Chien river branch on the Ben Tre side) have a road surface width of 12 m (2 lanes), the completion stage is 20.5 m wide (4 lanes), the site clearance is completed once; Dinh Khao bridge over the Co Chien river has a length of 1.54 km, completed on a scale of 4 lanes, 17.5 m wide (4 lanes).
The preliminary total investment of the Project excluding interest is 2,846 billion VND; including interest is 2,971 billion VND, of which the State capital in the PPP project is 1,452 billion VND (equivalent to 48.9% of the total investment).
In Report No. 7402, the Inter-sectoral Appraisal Council stated that 12/13 Council members agreed to approve (accounting for 92%), of which 6/13 members agreed to approve without any other opinions (accounting for 46%); 6/13 members agreed to approve with comments to complete the draft (accounting for 46%); 1/13 members did not vote but only gave written comments on the draft appraisal report (accounting for 8%).
“Based on the provisions of Point d, Clause 3, Article 10 of Decree No. 35/2021/ND-CP dated March 29, 2029 of the Government, the number of members voting in writing was 12/13, accounting for more than 2/3 of the number of members, and was qualified to approve the Report on the appraisal results of the Project's pre-feasibility study report,” Report No. 7402 said.
Among the comments contributing to the completion of the Pre-Feasibility Study Report, it is noteworthy that some members of the Interdisciplinary Appraisal Council requested the People's Committee of Vinh Long province to clarify whether or not to continue maintaining the operation of the existing Dinh Khao ferry after the Dinh Khao structure is completed and put into operation because the Project is not part of National Highway 57 according to the Road Network Planning for the period 2021-2030 with a vision to 2050.
According to a survey by a consultant reported on May 30, 2024, the actual number of passengers and vehicles passing through Dinh Khao ferry in 2022 and 2023 will grow by an average of about 9% per year.
According to the calculation results, the average growth rate is forecasted as follows: from 2025-2030 about 5.7%/year; from 2030-2035 up to about 20%/year; from 2035-2050 there is a tendency to slow down to about 2.5%/year.
The project dossier, after being sent to the Inter-sectoral Appraisal Council for appraisal, has many changes in the data on traffic forecast, financial plan, and project payback period. The change in these data after only a short period of time shows that the reliability of the forecasting work is still low.
In addition, traffic volume is forecast to grow strongly in the period 2030-2035 (about 20%) and decrease in the following period (about 2.5%). These contents greatly affect the selection of investment scale and calculation of project financial plan.
Because the Project appraisal consultant was not used, the Interdisciplinary Appraisal Council requested the People's Committee of Vinh Long province to clarify the basis for traffic forecast, carefully evaluate input factors to determine the investment scale, calculate the project's financial plan, and have solutions to handle risks in case of adverse fluctuations (increase in total investment, revenue not reaching forecast...).
According to the Pre-Feasibility Study Report, the revenue to pay back capital and recover equity for the project is the revenue from collecting vehicle fees through the toll station minus operating costs and related taxes. Use the revenue to pay back capital and recover equity at the same time according to the rate of capital mobilization for construction investment.
The results of the preliminary financial indicators of the Project are as follows: Net present value (NPV) is about 2.44 billion VND (>0); Internal rate of return (IRR) is about 9.85%; Benefit-cost ratio (B/C) is about 1.01 (>1); Weighted average cost of capital (WACC) is about 9.67%. The above results show that the financial feasibility of the Project is low.
Therefore, the Council proposed that the People's Committee of Vinh Long province direct the Project preparation unit to review expenses, supplement the calculation of the sensitivity of financial indicators due to changes in total investment, operating costs, revenue, and project contract period to clarify the financial feasibility of the project as prescribed in Point d, Clause 8, Article 4 of Decree No. 28/2021/ND-CP as a basis for submission to competent authorities for consideration and decision.
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