New projects facing barriers due to long-standing problems from previous projects is an existing reality that has caused the interest of private resources in transport PPP projects to gradually cool down.
Difficulty in mobilizing credit for ongoing projects
In early October 2023, good news came to the Dong Dang - Tra Linh expressway project when Vietnam Prosperity Joint Stock Commercial Bank (VPBank) signed a credit contract, committing to lend the project enterprise VND 2,300 billion to implement the investment.
Construction of Huu Nghi - Chi Lang Expressway.
This activity was implemented after the Dong Dang - Tra Linh project was one of two projects that the National Assembly allowed the State capital participation ratio to exceed 50% of the total investment (not exceeding 70%) in Resolution No. 106/2023/QH15 dated November 28, 2023.
Previously, the mobilization of credit capital for the key highway project through Cao Bang and Lang Son provinces seemed to have reached a dead end. Most banks were concerned about the feasibility and revenue efficiency of the project when the proportion of State capital participating in the project was only about 46% of the total investment.
Although the PPP transport project is expected to increase connectivity and unleash development potential for the northeastern provinces, the Huu Nghi - Chi Lang expressway project is struggling with capital flow bottlenecks to accelerate.
A representative of Deo Ca Group (the leading investor consortium) said that at the Huu Nghi - Chi Lang project, Tien Phong Commercial Joint Stock Bank (TPBank) has committed to providing credit capital of VND 2,500 billion and has issued a contract performance guarantee for the project.
Currently, the appraisal work to provide credit capital for the project is underway. However, "whether the bank will lend to the project or not is a question that has not yet been determined with a specific answer" - said the representative of the investor consortium.
Bac Giang - Lang Son Expressway.
Difficulty in the project itself to rescue
Sadly, one of the main reasons why the credit loan plan of the Huu Nghi - Chi Lang project encountered difficulties came from the previous project that Deo Ca Group had tried to "rescue" despite knowing that the legal procedures were complicated, the revenue was determined to be low, and there was no State capital participation - the Bac Giang - Lang Son expressway.
It must be said that if the Bac Giang - Lang Son expressway is not implemented, there is no basis for the Dong Dang - Tra Linh expressway, because there will be no solution to shorten the length of the route, thereby reducing the total investment from 47,000 billion to 23,000 billion VND.
If so, the dream of the ethnic minorities in Cao Bang province about a highway connecting their revolutionary homeland with the capital may still remain "on paper".
The investor representative said that after 5 years of operation, the existing problems in allocating state budget capital to support the Bac Giang - Lang Son expressway project as committed by the previous provincial leaders have not been properly addressed. The bank that provided the capital has stopped disbursing.
According to the provisions of the BOT contract, the project is allowed to collect tolls to recover capital at 2 stations on National Highway 1 (at Km24+800, Km93+160) and stations on the expressway. During operation, toll revenue only reached 39% of the initial financial plan, not enough to pay the principal and interest incurred to the bank providing credit for the project.
As of October 2024, the outstanding principal debt is VND 8,357 billion, the unpaid restructured interest debt is about VND 2,900 billion, the construction phase contractor debt is about VND 400 billion for construction and installation and VND 21 billion for site clearance costs. The capital contributed by investors that cannot be recovered is VND 1,780 billion, the unpaid investor profit is more than VND 1,000 billion.
"It is worth mentioning that the above difficulties are not due to the investor's fault. The reason is that the project had to reduce 1 toll station on National Highway 1 (toll station Km24+900), leading to a decrease in revenue during the toll collection period (a decrease of nearly 5,500 billion VND according to the financial plan), affecting the diversion ratio between National Highway 1 and the expressway, reducing traffic on the expressway.
In addition, the increase in toll prices according to the BOT contract schedule was not implemented, causing a loss of VND 171 billion. The policy of exempting and reducing toll prices for about 5,000 vehicles within a 10 km radius around the Km93+160 toll station caused a decrease in revenue of VND 72 billion in the period 2018 - 2024.
The Huu Nghi - Chi Lang project has not yet completed the synchronous connection to Lang Son city and Huu Nghi border gate to promote increased traffic volume, the impact of the Covid-19 epidemic, trade policies also disrupted supply chains, traffic volume decreased significantly compared to forecasts...", the investor representative informed.
Agreeing that the shortcomings of the Bac Giang - Lang Son expressway project are consistent with the actual implementation, directly affecting the debt repayment capacity, socio-economic efficiency, and extending the toll collection period of the project, the Department of Planning and Investment of Lang Son province reported to the People's Committee of Lang Son province to continue to make recommendations to the Central agencies and the National Assembly Delegation of the province, proposing that competent authorities take measures to remove legal barriers and support the central budget of 4,600 billion VND for the Bac Giang - Lang Son expressway project.
According to this representative, through many reports from investors and project enterprises, the People's Committee of Lang Son province reported to the Government to request additional State budget capital of VND 4,600 billion to support the project (accounting for 37.75% of the total investment, less than the 50% stipulated in the PPP Law) but has not yet been resolved by competent authorities.
In Document No. 46/2024/CV-TPB.TLG dated October 25, 2024, TPBank also proposed to promptly resolve the difficulties and problems of the Bac Giang - Lang Son expressway project.
Many banks, including TPBank, are gradually losing confidence as PPP transport projects are stuck, not due to the investor's fault, but have not been thoroughly resolved.
To overcome current difficulties, the Huu Nghi - Chi Lang Expressway Project has sent a document requesting the Lang Son Provincial Party Committee to direct the Lang Son Provincial People's Committee to report to the Prime Minister to direct relevant agencies to completely resolve the existing problems of the Bac Giang - Lang Son Expressway project.
DNDA proposed that the National Assembly Delegation of Lang Son province organize a connection between the National Assembly Delegation of Bac Giang province and investors, recommending that the National Assembly take measures to remove obstacles, support the central budget capital of 4,600 billion VND as determined by the state audit for the Bac Giang - Lang Son project and increase the proportion of state budget capital in the Huu Nghi - Chi Lang project.
"When the project encountered difficulties, the investor accepted to mobilize resources, work, and overcome difficulties, bringing the project to the finish line, creating momentum for socio-economic development. When encountering shortcomings in institutional policies, the investor really hoped for the cooperation of the locality and management agencies," said the representative of DNDA.
Assoc. Prof. Dr. Tran Chung, Chairman of Vietnam Association of Road Traffic Construction Investors.
Fair both benefits and responsibilities
According to Associate Professor Dr. Tran Chung, Chairman of the Vietnam Association of Road Transport Construction Investors (Varsi), delays in handling problems in PPP projects not only cause difficulties in progress but also make it more difficult for investors to complete documents when there are changes in policies.
"This is a waste of time, "cooling" the desire to contribute and losing valuable opportunities for investors to contribute to the country's development.
The Dong Dang - Tra Linh Expressway project is a typical example. The time from the pre-feasibility study to the project commencement took up to 6 years. Meanwhile, the implementation time was only about 3 years.
"Every year a project is behind schedule is another year of wasted development opportunities for the country," Associate Professor Dr. Tran Chung commented.
According to experts, there is currently a situation where guiding decrees come with appendices and overlapping procedures, making the project implementation process, participating entities, especially investors, not as favorable as expected.
To resolve this situation, Associate Professor Dr. Tran Chung said that it is necessary to set out sanctions and clearly define responsibilities for each relevant agency and individual. This is to shorten the time to handle problems, as well as ensure the progress of project implementation.
If the above solutions are implemented, the PPP market will have the opportunity to be "warmed up" again, especially in the road transport sector, when future State resources need to be focused on large projects such as the North-South high-speed railway.
Source: https://www.baogiaothong.vn/vuong-mac-keo-dai-nha-dau-tu-dan-nguoi-lanh-voi-du-an-ppp-giao-thong-192241122161049655.htm
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