VietNamNet Bridge – An international consortium led by an Indian company will on October 28 initial a contract to buy a 70% interest in the Hanoi-Hai Phong Expressway project that is underway, the first time the toll right to an expressway is sold to a foreign firm.

A view of HCMC-Long Thanh-Dau Giay Expressway

Minister of Transport Dinh La Thang told the Daily on October 27 that VIDIFI as the expressway project owner will clinch the deal in India on October 28 with Prime Minister Nguyen Tan Dung currently visiting India and his Indian counterpart Narendra Modi witnessing.

The international consortium, led by India-based IL&FS Transportation Networks Ltd., also comprises Strategic Alliance Holdings of the Philippines and Tung Shing Groups registered in British Virgin Islands.

The consortium showed keen interest in the project one year ago, and made the decision after taking prudent consideration.

Vietnam Development Bank (VDB), which holds a 90% stake in the expressway project, has decided to divest its capital, and the stake will be thus transferred to other investors, in particular this international consortium.

The two sides are expected to establish a joint-stock company to take over the project as well as all related rights and obligations, according to the minister.

Investors aim more

When established, project owner VIDIFI was capitalized at VND5 trillion, but apart from VDB that has paid in capital alongside Vietcombank contributing 1.97%, other stakeholders like Saigon Invest Group and Vinaconex have not fulfilled their financial obligations.

The project is 68.6% complete, and is scheduled for completion by the end of next year. However, some sections of the expressway stretching 105 kilometers will be opened to traffic late this year.

Seven years after laying the cornerstone for the project, the investor is now seeking approval from central authorities to revise the project’s total cost from the current VND25.56 trillion to over VND45.5 trillion. The capital increase is said to be due to changes in the design and higher costs of materials.

The international consortium buying the majority stake in the project will pour more capital to ensure that the expressway construction is completed as scheduled.

However, sources said investors in the consortium aim beyond the road project itself. It is because VIDIFI develops this expressway in the land-for-infrastructure format, specifically to obtain the rights to develop industrial parks and urban and commercial facilities.

More expressways await investors

The transfer of this expressway project to the Indian-led consortium is to be followed by similar deals for at least five other expressway projects developed by Vietnam Expressway Corporation (VEC).

The corporation said it would find buyers for five expressway projects in accordance with a decision by the Prime Minister.

The five are HCMC-Long Thanh-Dau Giay and Ben Luc-Long Thanh in the south, Cau Gie-Ninh Binh and Noi Bai-Lao Cai in the north, and Danang-Quang Ngai in the central region. Some of these expressways have been opened to traffic.

In a statement released on October 27, VEC confirmed this plan.

“Alongside the plan of equitizing the parent firm VEC, (we are) preparing schemes to set up joint-stock firms for operating each project, or to transfer the toll rights to call for investors’ participation,” VEC said.

This unprecedented move, if successful, will ease the pressure on the State budget for public investment, and help VEC recover capital quickly to develop other expressways that have been approved by the Government, the corporation explained in the statement.

These five expressways cost a combined VND125 trillion, with State capital accounting for 57%, while VEC mobilized VND54 trillion via project bonds and loans from the Asian Development Bank and the World Bank.

SGT/VNN