Financial requirements keep domestic firms out of expressway project

The Ministry of Transport’s strict financial requirements for the North-South expressway project may push local investors out of the project.

Financial requirements keep domestic firms out of expressway project

The Ben Luc-Long Thanh Expressway, part of the North-South Expressway, is under construction. Domestic enterprises may find it hard to get involved in the project

According to the project’s approved feasibility study, international tenders will be held for eight components of the cross-country expressway.

A representative of the Public-Private Partnership Department, under the Ministry of Transport, said that the ministry will assess candidates’ capabilities and experience in executing similar projects. Enterprises will be put on the shortlist if they meet at least 60% of the requirements.

Financial capacity will account for 60% of the requirements, while experience and proposed methods for executing the project will make up 30% and 10% of the requirements, respectively.

If multiple companies team up to participate in the tenders, the consortium’s financial capacity will be the total capacity of the members.

According to regulations in the Law on Bidding and the Government’s Decree 20/NQ-CP, firms must have equity equal to at least 20% of the project’s investment and must have executed projects with a total investment representing half the current project’s investment cost. Only a small number of domestic investors can meet these requirements.

 

Deputy Minister of Transport Nguyen Nhat said that international tenders would be held to select investors for the North-South expressway project in line with the Bidding Law, and all local and foreign companies participating in the tenders must meet the requirements.

According to Dr. Ngo Tri Long, an economic expert, strict requirements on capital capacity and the experience of investors help ensure the effectiveness of the project. Requirements cannot be relaxed to create opportunities for domestic firms.

Instead, they should cooperate to be able to get involved in the project, he said.

Further, requirements on the project’s progress and quality should be included, Long added.

The Ministry of Transport is preparing bidding documents to select investors for the North-South expressway project and will issue them this month, instead of last month as earlier planned.

The ministry will choose five eligible firms, and these firms must prepare their tender applications by January next year. The tender results are expected to be published in March 2020. SGT

 
 
 
 
 
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