Resubmission of the HCMC – Moc Bai Expressway PPP Project worth VND 19,617 billion
This is the second submission requesting approval of the investment policy for the Ho Chi Minh City - Moc Bai Expressway Construction Project (Phase 1) under the PPP method within the past month.
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The Ho Chi Minh City People's Committee has just issued Document No. 3447/TTr - UBND requesting the Prime Minister to approve the investment policy for the Ho Chi Minh City - Moc Bai Expressway Construction Investment Project (Phase 1) under the PPP method, BOT contract type.
Qualified for submission and approval
Mr. Phan Van Mai, Chairman of the Ho Chi Minh City People's Committee, said that the Project's Pre-Feasibility Study Report and related documents have been explained, clarified, and completed according to the appraisal results of the Interdisciplinary Appraisal Council in Appraisal Report No. 2286/BC-HDTĐLN dated March 27, 2024; ensuring sufficient conditions for submission to the Prime Minister for consideration and decision on the Project investment policy according to regulations.
This report replaces Report No. 3080/TTr-UBND dated June 4, 2024 with similar content of Ho Chi Minh City People's Committee.
According to the proposal of the Ho Chi Minh City People's Committee, the project's starting point intersects with Ho Chi Minh City Ring Road 3 in Cu Chi District, Ho Chi Minh City; the end point connects to National Highway 22 (at Km53+850) in Ben Cau District, Tay Ninh Province.
The total length of the project route is about 51 km, of which the section through Ho Chi Minh City is about 24.7 km and the section through Tay Ninh province is about 26.3 km.
According to the Road Network Planning for the period 2021 - 2030, with a vision to 2050, the Ho Chi Minh City - Moc Bai Expressway has a scale of 6 expressway lanes, but in phase 1 of the Project, the route has a scale of 4 expressway lanes, a roadbed width of 25.5m; land clearance is carried out at one time according to the scale of 6 expressway lanes for the entire route.
The route starts from Ho Chi Minh City Ring Road 3, the expressway route runs almost parallel to the Trans-Asia Highway (National Highway 22) and is about 2 km to 4 km to the right of National Highway 22 in the direction of the route (to the North).
The section through Ho Chi Minh City to Provincial Road 8, the route turns right to avoid Dong Du Military Zone (the route is > 650m from K75 ammunition depot) then turns left at about Km16+000, the route runs parallel to the planned railway and passes through Tay Ninh province.
In Tay Ninh province, the route goes straight to Go Dau area (Km38+700); here it turns left at an angle of about 370 to intersect with National Highway 22B at about Km41+000, then the route continues to turn left at an angle of about 600, crosses the Vam Co River and intersects with National Highway 22 at Km53+850.
Rest stops on the route (located on both sides of the route), expected to be in Trang Bang town, Tay Ninh province. In the highway construction project, only the location and cost of site clearance are planned. Construction costs and operating costs of the service stations will be invested in the form of socialization.
Preliminary land use demand of the Project is about 409.3ha; preliminary total number of affected households is about 566 households. The clearance scope of the Ho Chi Minh City - Moc Bai Expressway Construction Investment Project (phase 1) will be carried out at once according to the scale of 6 expressway lanes.
The total preliminary investment of the Project is 19,617 billion VND, including: construction and equipment costs of 9,273 billion VND; project management costs, investment consulting costs, other costs (including project preparation costs of about 45 billion VND) of 695 billion VND; costs of compensation for site clearance, support, resettlement and relocation of technical infrastructure (including contingency costs) of 6,774 billion VND; contingency costs for construction volume, equipment and price inflation of 1,594 billion VND; interest during construction is 1,281 billion VND.
In this Project, the State capital participation is 9,674 billion VND, accounting for 49.31% of the total investment; the capital of investors and PPP project enterprises is 9,943 billion VND (including 12.45 billion VND of project preparation costs according to Clause 1, Article 73 of the PPP Law, pre-arranged from the City Budget and will be reimbursed by the selected investor), accounting for 50.69% of the total investment of the Project.
Clarifying the risk sharing mechanism
According to calculations, the Project Component 1 (BOT) has a net present value (NPV) of about 157.98 billion VND (>0); the average internal rate of return (IRR) of the Project is about 11.08%; the average benefit-cost ratio (B/C) of the Project is about 1.013 (>1); payback period: expected 14 years 10 months; Project contract term: expected 16 years 9 months. 
The Ho Chi Minh City People's Committee proposed that competent authorities allow the application of a mechanism for sharing increased and decreased revenue for the Ho Chi Minh City - Moc Bai Expressway Construction Investment Project according to the provisions of Article 82 of the PPP Law during the business and operation of the project.
Specifically, when actual revenue is higher than 125% of the revenue level in the financial plan in the PPP project contract, the investor and PPP project enterprise will share with the State 50% of the difference between actual revenue and 125% of the revenue level in the financial plan.
The sharing of increased revenue is applied after adjusting prices, fees for public products and services, adjusting the term of PPP project contracts according to the provisions of Articles 50, 51 and 65 of the PPP Law and the State Audit performs an audit of increased revenue.
When actual revenue is lower than 75% of the revenue in the financial plan in the PPP project contract, the State will share with the investor and PPP project enterprise 50% of the difference between the 75% revenue in the financial plan and the actual revenue.
The sharing of reduced revenue is applied when the following conditions are met: planning, policies, and related laws change, causing a reduction in revenue; measures have been fully implemented to adjust prices, fees for public products and services, and adjust the term of the PPP project contract according to the provisions of Articles 50, 51, and 65 of the PPP Law but have not yet ensured a minimum revenue level of 75%; the State Audit has audited the reduced revenue.
The capital expected to be used to pay for the reduced revenue for the Ho Chi Minh City - Moc Bai Expressway Construction Investment Project is mobilized from the Central Budget reserve.
Also in Document No. 3447, the Ho Chi Minh City People's Committee continued to propose dividing the Ho Chi Minh City - Moc Bai Expressway Construction Investment Project into 4 component projects.
Component project 1: investment in construction of Ho Chi Minh City - Moc Bai expressway (phase 1) under the PPP method (BOT contract); total investment of 10,421 billion VND (investor capital is 9,943 billion VND, accounting for 95.41%; State budget capital is 478 billion VND, accounting for 4.59%); Ho Chi Minh City People's Committee is the competent authority to implement.
Component project 2: investment in construction of residential access roads, overpasses across the highway; total investment: 2,422 billion VND; investment under the public investment method; Ho Chi Minh City People's Committee is the managing agency.
Component project 3: compensation, support, resettlement of Ho Chi Minh City - Moc Bai expressway section through Ho Chi Minh City; total investment is 5,270 billion VND; investment under the public investment method; Ho Chi Minh City People's Committee is the managing agency.
Component project 4: compensation, support, resettlement of Ho Chi Minh City - Moc Bai expressway section through Tay Ninh province; total investment is 1,504 billion VND; investment under the public investment method; Tay Ninh Provincial People's Committee is the managing agency.
Regarding implementation, the Ho Chi Minh City People's Committee will publish a notice inviting investors to survey their interest in Component Project 1; preside over and coordinate with relevant agencies to organize the preparation of Feasibility Study Reports for Component Project 1, Component Project 2 and Component Project 3; carry out procedures for appraisal and approval of component projects; and organize the implementation of the Project in accordance with current regulations.
Tay Ninh Provincial People's Committee will organize the preparation of the Feasibility Study Report for Component Project 4; implement the procedures for appraisal and approval of Component Project 4 according to current regulations.
It is known that the Ho Chi Minh City - Moc Bai expressway, when completed, will fundamentally solve the following problems: - Sharing traffic volume on National Highway 22, increasing competitiveness by reducing time and increasing the capacity of transporting goods and passengers to and from Ho Chi Minh City; reducing the risk of traffic insecurity; increasing tourism attraction in the region, reducing environmental pollution.
In addition, when completed, the Ho Chi Minh City – Moc Bai expressway will connect the Ho Chi Minh City Ring Roads (Ring Road 3 and Ring Road 4) with Tay Ninh Province 5 and continue the Go Dau – Xa Mat expressway in the future, promoting the advantages of the expressways to develop the economy – society, ensure national security and defense; develop land funds on both sides of the route and surrounding areas, creating resources for investment and development.
In addition, the investment in the Ho Chi Minh City - Moc Bai expressway will contribute to completing the road network in the 2021 - 2030 period, with a vision to 2050, approved by the Prime Minister in September 2021.
Currently, National Highway 22 (the Trans-Asia Highway) is the only national highway connecting Ho Chi Minh City with Moc Bai international border gate - Tay Ninh province, an international gateway connecting with countries in the ASEAN region. Surveys in recent years show that the two-way trade demand from Ho Chi Minh City and Tay Ninh province is increasing rapidly, leading to frequent congestion, affecting the flow of goods and travel, increasing traffic accidents because National Highway 22 is overloaded, many intersections at the same level... this will hinder socio-economic development not only for the localities where the Project route passes through in particular but also for the Southeast region in general. 
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