VietNamNet Bridge – The National Assembly (NA) Economic Committee has voiced concerns over the viability of a fund raising plan for the big-ticket Long Thanh airport project in Dong Nai Province.  

Minister of Transport Dinh La Thang on behalf of the Government presented a report on the project at the session of the NA in Hanoi on October 29. Thang insisted that the report is like a prefeasibility study for the project and that analyzing impacts of the airport on the nation’s public debt will be included in an investment plan for the project.

According to the Government, many nations in Southeast Asia have big international airports as transshipment hubs in the region and to fuel their economic growth, but Vietnam does not have a comparable airport.

On top of that, Tan Son Nhat International Airport in neighboring HCMC has been overloaded and its expansion will require a staggering US$9.1 billion, which is higher than the cost of a new airport, while Bien Hoa is now a military airport and moreover, it is dioxin-contaminated.

Therefore, the Ministry of Transport suggested building Long Thanh airport in three phases in the southern province of Dong Nai. The first phase will cost VND164.6 trillion (over US$7.8 billion), including VND84.6 trillion from the State budget, government bond sales and official development assistance (ODA) loans.

In Component 1A of the first phase, the airport is envisioned having a main terminal able to handle 17 million passengers a year from 2023, two runways for aircraft to take off and land, and auxiliary works.

Thang said some foreign companies have expressed interest in different components of the project under the public-partnership partnership (PPP) and build-operate-transfer formats.

The transport ministry pinned high hopes that the airport would be attractive to investors as its economic internal rate of return (EIRR) would be 22.1%, which is higher than the standard EIRR for public projects in Vietnam (10-12%).

Too little time to review

Nguyen Van Giau, chairman of the NA Economic Committee, said a project of national importance like Long Thanh airport should have sent to the agency for scrutiny at least 60 days ahead of a meeting of the legislative body as regulated. But the Government did this job only 20 days before the opening of the eighth session in Hanoi.

“The NA and its deputies have too little time to look into the project,” Giau said.

He noted that the project has many issues to examine; for instance, the Government proposed a plan to take back 5,000 hectares at a time for the first phase of the project while the Land Law states that land must be withdrawn in accordance throughout the development process of a project.

Moreover, the prefeasibility study was drawn up based on the development zoning plan for the transport sector, a land use plan for 2011-2015 and Dong Nai Province’s zoning plan for land use until 2020 approved in 2012. However, the law was amended last year and the question is what land prices are applied to compensation to avoid site clearance and compensation costs to be pushed higher than projections.

Giau repeated many unanswered questions that the report, albeit already approved by the State Appraisal Council on the prefeasibility study of the project, does not clarify why Tan Son Nhat airport should not be expanded or Bien Hoa Military Airport should not be upgraded and the competitiveness of Long Thanh compared to other regional transshipment airports.     

The committee said the Government report is just about finances for the first phase while the total investment cost of the three-phase project would amount to US$18.7 billion.

Giau questioned the feasibility of using the State budget and loans to finance Long Thanh airport while huge public debts have emerged as an issue to be solved.

Giau said the investor of the project must have the Government’s guarantees if it wants to borrow from international financial institutions. Therefore, Giau called for the investor to consider the PPP investment form.

The NA Economic Committee noted the economic efficiency of the airport project should be calculated based on different factors rather than additional benefits only.

If the EIRR is 22.1% as calculated by the Government, the committee urged the investor to attract funds from enterprises in the non-State sector to reduce the State capital contribution and pressure on the nation’s public debts. The Government was asked to find ways to channel commercial loans into the project.

The committee proposed the NA consider the priority order of major infrastructure projects. “We should consider whether to invest in Long Thanh airport, a modern north-south railway system or waterways,” Giau said.

Dong Nai ready for Long Thanh airport

While the Long Thanh airport project is on the table of the NA, the government of Dong Nai Province has zoned two residential areas covering a total of 562 hectares in Long Thanh District for households affected by the project.

The province’s chairman Dinh Quoc Thai said the Loc An-Binh Son residential area is estimated to cost some VND2.5 trillion and consist of 4,900 land lots for townhouses and adjoining gardens, and over 2,000 apartments for around 28,000 residents.

The Binh Son resident area is envisaged covering 280 hectares in Binh Son Commune and comprise of 5,300 land lots.

Tran Van Vinh, vice chairman of Dong Nai Province, said 3,000 out of the 5,000 hectares to be cleared for the airport belong to more than 4,540 households and 1,800 hectares is of organizations.

SGT