A BOT toll booths in the Mekong Delta city of Can Tho. (Photo: VNA) According to the central bank, commercial banks have longconsidered BOT projects as high-risk and often unwilling to jump in. In areport to the National Assembly (NA), the SBV said as of September 30, 22financial institutes agreed to extend credit to transport BOT projects, whosetotal outstanding balance has reached over 92.3 trillion VND (3.8 billion USD).
Meanwhile, the bank said the ratio of non-performing loanshas been a cause for concern with non-performing loans of the transport sectoraccounting for 3.83% of the total. As much as 26.52% of the loanswere put on a special watch list by the bank.
The SBV said the main reason behind the high percentage ofnon-performing loans was a lack of financial capacity by most investors. Inaddition, many BOT projects have reported a decline in revenue in comparison toprojected revenue in the initial business plan as they struggled with recentregulation changes in toll collection policy and disputes with localcommunities.
As a result, investors have voiced their concerns over financialchallenges and losses. A recent report by the Ministry of Transport said asmany as eight BOT projects were having difficulties generating revenue,including the Western Bypass of Thanh Hoa City, the construction of the Binh LoiRailway Bridge, the construction of the Thai Nguyen-Cho Moi Road, and theupgrade of National Highway 3, the section of the Ho Chi Minh Road through theCentral Highlands, and the renovation of National Highway 91 in southern Can Thocity.
According to the central bank, the total credit outstanding forthe above-mentioned projects has reached over 15.85 trillion VND.
Representatives from commercial banks said revenue generated byBOT projects have often failed to meet the banks' expectation as many have beenexperiencing issues in collecting toll and reduced revenue fromcompetition.
"Without a source of stable revenue, investors cannot pay offprincipal and interest on time, which will put them on a no-loans list, denyingthem access to new capital. Meanwhile, banks must also set aside provision forthe at-risk loans, heavily hindering their own business operations," saida bank representative.
During an NA's session, NA deputy Nguyen Dai Thang from northern HungYen province suggested investors start diversifying their funding sources,including looking into the international financial market. He also urged thecentral bank to provide additional support to investors in seeking outcapital.
Speaking to NA deputies, SBV Governor Nguyen Thi Hong said as mostdomestic financial institutes prefer short-term loans, finding long-term loansin such large quantities, as often required by transportation projects, willlikely be challenging.
On the other hand, industry experts said some banks may haveclassified their non-performing loan prematurely as the life cycle fortransportation BOT projects have just been extended from 20 years to 25 years.They said it's unreasonable to judge projects by looking at their generatedrevenue in the first few years of operation./.
VNA
