Why is it difficult to invest in Quy Nhon Expressway PPP?

Based on the results of efficiency analysis, it is proposed that the Quy Nhon - Pleiku expressway use public investment capital instead of investment under the public-private partnership (PPP) method.

Invest in 4 complete lanes according to planning

The Ministry of Transport has just reported to the Government on the investment plan for the construction of the Quy Nhon - Pleiku expressway through the two provinces of Gia Lai and Binh Dinh.

According to the proposed roadmap, the Quy Nhon - Pleiku expressway will be invested in, completed and put into operation in the 2026-2030 period (Illustration photo).

According to the proposed plan, the project is invested with a total length of about 123km. Of which, the length through Binh Dinh province is about 37km, the section through Gia Lai province is nearly 86km long.

The investment scale is completed according to the approved planning with a scale of 4 lanes, a roadbed width of 24.75m, and a design speed of 100km/h. Particularly, the sections through the An Khe tunnel and Mang Yang tunnel with difficult terrain are being studied with a scale of 4 lanes and a design speed of 80km/h.

It is forecasted that by 2030, the total transport demand on the corridor connecting Gia Lai with Binh Dinh will average about 13,000 - 15,000 converted vehicles/day and night. Meanwhile, the existing National Highway 19 can only meet about 11,000 - 12,800 converted vehicles/day and night.

Therefore, the early formation of the Quy Nhon - Pleiku expressway with high speed, safety and large traffic capacity is very necessary, as a premise and driving force to exploit the potential and inherent advantages of the Central Highlands region, expand development space, promote and take advantage of the advantages of the Binh Dinh seaport system in particular and the South Central Coast region in general.

On the route, it is planned to invest in building 2 tunnels: An Khe Tunnel (about 2km long) and Mang Yang Tunnel (about 3km long).

The total preliminary investment of the project is about 36,594 billion VND. Of which, the cost of site clearance is about 3,700 billion VND; the cost of construction and equipment is about 26,800 billion VND; the cost of investment consultancy, project management, and other costs is more than 2,000 billion VND; the contingency cost is about 4,000 billion VND.

With a route length of about 123km, a scale of 4 lanes completed according to the plan, the project's investment capital (excluding site clearance costs) is about 267 billion VND/km.

"Compared to the investment rate announced by the Ministry of Construction in Decision No. 816 dated August 22, 2024, the project's investment rate is about 80 billion VND/km higher.

The reason is that the project has a large proportion of bridge and tunnel works, especially the two tunnel works with a total length of about 5km with an investment cost of about 4,800 billion VND and the bridge works before An Khe and Mang Yang tunnels with a total length of about 8km (expected to have a pillar height greater than 50m) with an investment cost of about 6,200 billion VND", the report stated.

PPP investment plan is difficult to implement

Regarding the mobilization of project investment resources, the Ministry of Transport said that, in response to practical requirements, investment necessity and legal regulations, the Ministry of Transport has coordinated with the People's Committees of Gia Lai and Binh Dinh provinces to carefully and thoroughly research the project investment form under the PPP method.

Accordingly, the scenario of the maximum state support capital level of 50% of the total investment according to the provisions of the PPP Law, the project does not ensure financial efficiency according to regulations.

With the scenario of site clearance work being separated into an independent component project using public investment capital (about VND 3,733 billion) and a PPP component project (about VND 32,861 billion), the State capital ratio is applied at no more than 70% of the total preliminary investment according to the revised PPP Law, the State capital needed to participate in support to ensure the feasibility of the financial plan of the PPP component project is about VND 23,673 billion, the time to collect fees to recover the project's capital is about 25.1 years.

The total state support capital for the project (including site clearance costs) is about VND 27,406 billion, accounting for about 75% of the total preliminary investment.

In order for the PPP component project to be financially efficient and have a payback period of about 21 years, 18 years and 16 years, the state capital needed to support the PPP project is about VND 24,929 - 27,565 billion (accounting for 74 - 82.5% of the total preliminary PPP project amount); The total state support capital participating in the project (including site clearance costs) is about VND 28,662 - 31,298 billion (accounting for about 78.3 - 85.5% of the total preliminary project investment amount).

"This level of support capital is very large, not effective when investing under the PPP method and the policy of State capital plays the role of "seed capital" to attract socialized capital sources to participate in infrastructure investment.

Similar to the Khanh Hoa - Buon Ma Thuot Expressway Project, the proposal by localities to stop researching investment under the PPP method and switch to public investment is well-founded," the Ministry of Transport stated.

According to the Ministry of Transport, the People's Committees of Gia Lai and Binh Dinh provinces have proposed investing in the project using central budget capital because provincial budgets are limited and it is difficult to balance and arrange participation.

However, in the period of 2026-2030, the Ministry of Transport will implement a number of projects with very large investment scales such as: High-speed railway project on the North-South axis, Lao Cai - Hanoi - Hai Phong railway project...

"To ensure the ability to balance capital sources, reduce pressure on the central budget, and at the same time increase the responsibility of localities that are direct beneficiaries of project investment, the Ministry of Transport requests the People's Committees of Gia Lai and Binh Dinh provinces to consider and balance local budget capital sources for the 2026-2030 period to jointly invest in the project, in accordance with the provisions of amendments and supplements to the new State Budget Law passed by the 15th National Assembly.

The project's investment capital balance will be specifically studied in the project's pre-feasibility study report preparation step," the report stated.

Source: https://www.baogiaothong.vn/vi-sao-kho-dau-tu-ppp-cao-toc-quy-nhon-pleiku-192241226165347148.htm