More suggestions to help revive the Bao Loc City bypass route

The investor of the Bao Loc City bypass project under the National Highway 20 Restoration and Renovation Construction Investment Project has just received important suggestions to soon revive this section of the route that has been under construction for many years.

Bao Loc City bypass is under construction.

Find a permanent solution

The Ministry of Planning and Investment has just issued Official Dispatch No. 754/BKHĐT - PTHTĐT to the Ministry of Transport (MOT) regarding the handling of difficulties regarding the Bao Loc City bypass route, the Investment Project for the construction of the restoration and renovation of National Highway 20, section Km0 - Km123+105.17 in the territory of Dong Nai and Lam Dong provinces under the form of a build-transfer (BT) contract.

The Bao Loc City bypass (Lam Dong) is 15.5 km long, an item added to the Investment Project for the construction of the National Highway 20 restoration project, section Km0 - Km123+105.17, which was approved by the Prime Minister in 2017. The Ministry of Transport approved the addition to the project contract with a total investment of about 760 billion VND.

According to the original Contract No. 12/HD.BT.BGTVT signed with the investor in January 2014, the total investment of the Project is 5,264.634 billion VND, of which the investor's equity is 601.463 billion VND and the foreign loan capital guaranteed by the Government is 250 million USD with loan contract insurance from the capital sponsor, the Multilateral Insurance Organization MIGA of the World Bank Group (WB). The total payment value of the Project is provisionally determined to be 8,795.38 billion VND.

To promote investment efficiency, based on the proposal of the locality and the investor, after balancing the remaining capital of the Project, the Ministry of Transport reported and received approval from the Prime Minister for the policy of adding investment in the Dau Giay intersection and the Bao Loc City bypass to the Project.

According to Mr. Nguyen Tao (National Assembly delegate of Lam Dong province), the Bao Loc bypass is a vital route that started construction in 2017, transporting millions of tons of alumina to ports in the Southeast, transporting millions of tourists from the Southeast to Lam Dong and solving many traffic jams.

Implementing the policy approved by the Prime Minister, the Ministry of Transport approved the Project adjustment, negotiated and signed the contract appendix with the project investor/enterprise in March 2018 in accordance with legal regulations.

With the addition of the above 2 items, the total investment of the Project after adjustment is 5,160.852 billion VND (including the construction cost of Dau Giay intersection of about 324 billion VND and the bypass of Bao Loc city of about 806 billion VND).

The total payment value, including interest, fees, other costs, etc., is provisionally determined to be VND 9,456.356 billion, with VAT refund of VND 361.869 billion in the Project's financial plan according to the conclusion of the Government Inspectorate.

In fact, the investor has completed the upgrade of National Highway 20 and completed the construction of Dau Giay intersection.

For the Bao Loc City bypass, the investor started construction of this item in February 2017. By November 2018, the Bao Loc City People's Committee had completed site clearance and handed over clean land to the investor. By October 2020, the project was forced to temporarily stop construction due to lack of capital when it had only reached 70% of the volume.

In Official Dispatch No. 13906/BGTVT - CĐCTVN sent to the Government leaders in early December 2023, the Ministry of Transport said that according to the financial plan approved in 2018, the investment project to construct the restoration and renovation of National Highway 20, section Km0 - Km123 + 105.17, was supplemented with VAT refund source to repay foreign loans with a value of about 361.93 billion VND.

However, according to the guidance of the Ministry of Finance, the investment project to construct and restore National Highway 20, section Km0 - Km123+105.17, is not eligible for VAT refund.

On the other hand, in 2018, the state budget did not have time to allocate capital to repay foreign loans, so the project investor/enterprise used the project's capital to repay the debt in advance. For the above reasons, the capital used for investment in construction and site clearance to serve the construction of the Bao Loc City bypass was in short supply compared to the approved financial plan.

“Due to the local approved land clearance budget increasing by about 61.5 billion VND and the non-refundable VAT of about 361.869 billion VND, the Project is short of funds and cannot complete the Bao Loc City bypass route as required,” informed the leader of the Ministry of Transport.

In addition to causing investment waste due to not being put into operation as planned, after the Bao Loc City bypass project stopped construction from October 7, 2020 until now, the work of organizing and managing the protection of the project has not been carried out by relevant units; there have been many construction projects violating the road safety corridor, re-encroaching on cleared areas, digging up reinforced positive slopes causing damage to the top ditch...

In Official Dispatch No. 754, the representative of the Ministry of Planning and Investment stated that due to lack of funds, the Project could not complete the Bao Loc City bypass route as required.

Therefore, it is necessary for the Ministry of Transport to study and propose solutions to completely resolve the problems and continue to invest in completing the Bao Loc City bypass project to ensure traffic safety.

Clarify capital allocation plan

In Official Dispatch No. 13906, the Ministry of Transport said that it has reviewed, researched, and evaluated a number of feasible options to resolve the problems of the Bao Loc City bypass route.

In which, option 1 is to use the capital source that Lam Dong Provincial People's Committee has committed to the Project (Lam Dong Provincial People's Committee has committed to allocate the remaining capital from the provincial budget for implementation). Option 2 is to continue investing in the Bao Loc City bypass route using the state budget.

For option 3, the Ministry of Transport proposed to stop investing in the Bao Loc City bypass project under the BT contract form, and establish a new project for the remaining projects to invest using public investment capital (about 352.12 billion VND).

At the same time, while waiting for the organization to establish a new project, hand over the original status to the Vietnam Road Administration for management and maintenance, the annual maintenance fund will be researched and proposed by the Vietnam Road Administration to the Ministry for consideration according to regulations.

Mr. Nguyen Duy Lam, Deputy Minister of Transport, worked with Lam Dong Provincial People's Committee on the handling plan and agreed to implement plan 3 as the most feasible plan. This plan was also agreed to be implemented by the project investor/enterprise.

Regarding the above proposal, the Ministry of Planning and Investment requested the Ministry of Transport to clarify legal issues that need to be reported to the National Assembly to request a special mechanism for options 1 and 2; the suitability of the proposed option (option 3) with the BT Contract signed with the investor, clarify the impact of stopping investment on the remaining part of the Bao Loc City bypass route in the form of BT on the original project's Loan Contract with MIGA which is still valid until 2029 and supplement the donor's opinion on the proposed option.

The Ministry of Transport also needs to coordinate with the Ministry of Finance to review costs related to loan repayment, and at the same time synthesize the Ministry of Finance's opinions on the content of foreign loans with government guarantees, to avoid negative impacts on the national credit rating.

In addition, the Ministry of Transport also needs to clearly define the legal basis when proposing to use the surplus capital of the initial Project to add more items, leading to an adjustment of the total investment of the Project, including the investment value of the two items and the additional payment value, as well as the proposal of option 3, the ability to balance and arrange capital to invest in the remaining items of the Bao Loc City bypass when separated into a new project.

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