Clearing 'bottlenecks' so businesses can confidently invest in transport PPP projects

At the seminar “Transportation enterprises with the cause of developing transport infrastructure and international integration” organized by Giao thong Newspaper on the afternoon of October 11, representatives of enterprises and state management agencies shared difficulties, obstacles and policies to open up investment capital flows in the form of public-private partnership (PPP) for transport enterprises to develop strongly and sustainably.

Contractor of the Dien Chau-Bai Vot Expressway Project under the PPP model. (Photo: Viet Hung/Vietnam+)

Not sharing risks with investors

As a company participating in 3 BOT projects (Phap Van-Cau Gie Expressway, Bach Dang Bridge, Ha Long-Van Don Expressway), Mr. Pham Van Khoi, General Director of Phuong Thanh Transport Investment and Construction Joint Stock Company, expressed his opinion that mobilizing private capital for infrastructure is very difficult. Therefore, it is necessary to open up PPP capital sources and socialize investment.

Mr. Khoi also shared that in the 2011-2015 and 2015-2020 periods, transportation projects mobilized PPP capital well, but could not mobilize it due to legal basis.

Explaining this, Mr. Khoi said that the PPP Law is relatively complete, but implementation on the part of investors is often "inferior" to that of state management agencies.

He gave an example of the provisions on contract adjustment and price adjustment in the PPP Law, but they are not implemented and if they are to be implemented, they must be requested through many levels.

“Investors spend money, but sometimes the State management agency thinks that the management is like a contractor. PPP projects are also State money, enterprises need more management rights to speed up the project. That is proven by the Phap Van-Cau Gie expressway project, Phuong Thanh Company only completed it in 24-33 months, while if the project was done according to public investment, no project would take less than 4-5 years.

The company offers many technological solutions and construction techniques to ensure quality and overall efficiency for the business and society," said Mr. Khoi.

Quoting the Prime Minister: " The success of a business is the success of the country" , Mr. Khoi affirmed that businesses that make a profit of 1 dong will use that money to invest in other domestic transportation projects, helping the country develop.

Mr. Pham Van Khoi, General Director of Phuong Thanh Transport Investment and Construction Joint Stock Company, gave his opinion at the discussion. (Photo: Viet Hung/Vietnam+)

Another difficulty in attracting PPP capital was also pointed out by the General Director of Phuong Thanh Company, which is that in addition to the potential of investors spending 15-30% of equity capital, the remaining 70-85% is borrowed from banks or credit institutions.

“However, the bank loan source will not bear the risk that the investor has to bear, this is very difficult. The bank is very wary of investors, so they need to calculate the source of debt repayment before they lend. Therefore, the consulting and design agency needs to 'run close' to the financial plan, the fee collection period fluctuates around 15-20 years, if it is too long, the bank will also... wave goodbye ", Mr. Khoi pointed out the reality.

According to Major General Nguyen Huu Ngoc, General Director of Truong Son Construction Corporation, in recent times, the Party, State and National Assembly have paid attention to infrastructure investment, which is an opportunity and room for transportation enterprises. For expressway projects, the Ministry of Transport has allocated from 2,000 to 10,000 billion VND/project for enterprises to increase their internal resources and have a financial dossier to go further and be able to bid internationally.

“Truong Son is a state-owned enterprise but currently it must operate according to the mechanisms of a private enterprise, must follow private models because otherwise it will be eliminated from the game.

Currently, Truong Son is participating in expressway bidding packages with a capital of 25,000 billion VND and 10,000 billion VND for the Long Thanh International Airport Project. To do so, we must identify people as the core, innovate management, and increase investment in equipment...," said Major General Ngoc.

In order for domestic enterprises to mature and reach international standards, Mr. Ngoc said that it is necessary to unite, share and participate in building stronger enterprises; build a set of standards because recently some projects have made losses; soon issue a new set of unit prices; have legal corridors; link construction and installation enterprises to compete with international units.

Will consider research to adjust

Sharing and sympathizing with businesses' concerns, according to Mr. Le Kim Thanh, Director of the Vietnam Expressway Administration, BOT traffic projects always require large investment capital, and construction enterprises depend heavily on loans from banks and credit institutions.

When the project does not have enough revenue, Mr. Thanh acknowledged that banks are concerned that PPP projects will be risky and have tightened long-term credit, which directly affects investors' capital. On the other hand, we have organized traffic planning and parallel roads, which has led to traffic flow distribution, reduced revenue and made it unattractive to PPP traffic investors.

To resolve these difficulties, Mr. Thanh said that the Ministry of Transport is directing and the Expressway Department is submitting to the Prime Minister to handle BOP traffic projects and create confidence for investors to attract resources to invest in the projects.

“The PPP Law was born and took effect from January 1, 2021, but its implementation is still not timely and has a big impact. According to Article 82 of the PPP Law, if a business collects a capital recovery fee exceeding 132%, it must share 50% with the State, but if the business's revenue drops below 50%, it must go through many levels and mobilize resources to make up for that revenue shortfall.

Therefore, the Ministry of Planning and Investment will accept the opinions and adjust the PPP Law to suit the reality of Vietnam," said the Director of the Vietnam Expressway Administration.

Deputy Minister of Transport Le Dinh Tho pledged that the ministry will consider and research solutions to attract PPP investment capital for transport. (Photo: Viet Hung/Vietnam+)

To complete the PPP transport project quickly, Mr. Pham Van Khoi, General Director of Phuong Thanh Company, said that investors applied creativity and experience learned from abroad but could not apply them in Vietnam.

For example, when there is a transport project, the State only needs to give the assignment and the investor will calculate the road level, design and bid by himself. After that, the investor will hand over to the State the correct standards and the State should not participate too deeply because this will eliminate the creativity of the contractor.

Emphasizing the recommendations on limitations and backlogs in mechanisms and policies raised by businesses, with the responsibility as a management agency, Deputy Minister of Transport Le Dinh Tho pledged that the ministry will review and research to find solutions.

“Currently, the Ministry of Transport is drafting and advising the Government to submit to the National Assembly a draft Law on Roads, including a chapter on expressways. We request that businesses who are actually implementing it focus on research to make comments. The Ministry will consider and accept them to complete it appropriately ,” Deputy Minister Tho added.

(Source: vietnamplus)

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