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Gov't has backup plans for North-South Expressway if no investors found: minister

The Government has prepared a backup plan to fund the North-South Expressway (NSE) amid fears that private investors might not be financially capable of carrying out the mega project, the transport minister has said.

Gov't has backup plans for North-South Expressway if no investors found: minister hinh anh 1

Illustrative image (Source: VNA)

MinisterNguyen Van The told Dau Tu (Investment) newspaper on December 27 that hedid not rule out the worst-case scenario in which no investors made it throughthe preliminary bidding round. 

If that was the case, the ministry would immediately report to the Prime Ministerand work with the National Assembly’s Standing Committee (NASC) to decide onthe next move, The said.

“Wewill either carry on with the bidding to select the investors under the PPP (Public-Private Partnership) which will consequently result in a project delay,or ask the NASC to allow us to use the State budget for investment and earnback the money by selling the tolling rights to corporations,” he said.

“Anothersolution planned by the Ministry of Transport is to issue Government bonds orproject bonds to carry out the projects if we can’t find the investors.”

“Thisis a fundamental project of the country so we’re paying extra attention to thestructure quality. The whole project must be completed in line with requiredprocedures and ensured of the quality”.

Thepreliminary bidding rounds for eight sub-projects of the NSE project closedlast month with a total 32 investors and investor partnerships applying. Theproject management boards (PMUs) are scrutinising the capabilities of thepotential investors.

Accordingto Dau Tu, several PMUs had asked to extend the deadline by 15 days – themaximum amount of time permitted by the Law on Bidding.

“Apart from trying to clarify some issues regarding the financial funding agreement, the bidding team has to be extra cautious and carefully assesses the applications due to the special status of the projects,” an official of a PMUs aid on condition of anonymity.

Despite the deadline extension, the ministry will be able to stick to schedule and announce the results of the preliminary bidding in February 2020, said Deputy Transport Minister Nguyen Nhat.

Thesecond and final round of bidding will open the same month to select and thenannounce the final winners in late July, he said.

“If everything goes smoothly, all work to pick the investors can be wrapped up by the end of August 2020,” Nhat added.

Eight sub-projects of the NSE are expected to cost 118.7 trillion VND (5.1 billionUSD), of which 55 trillion VND will be funded by the State while another 63.7trillion VND will be mobilised from investors.

How Vietnamese investors will be able to guarantee such a large amount of money hasbeen the biggest concern so far, especially when outstanding loans of domestic banks are already very high.

Accordingto a State Bank official speaking anonymously, transport projects under the Build-Operate-Transfer (BOT) and Build-Transfer (BT) models over the last few years usually required a large investment which led to a high demand for bank loans, but the payback period was very long.

Thatput pressure on banks trying to balance their credit, he said.

“Sofar the total amount of outstanding loans and credit agreements for BOT and BT projects already touches the banking credit limit for the sector,” he said.

“If banks can’t raise their authorised capital, it will be very difficult to facilitate funding for eight PPP sub-projects of the NSE.” /.VNA


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