Illustrative image (Source: VNA)
Hanoi (VNS/VNA) — The Government has prepared a backup plan to fund theNorth-South Expressway (NSE) amid fears that private investors might not befinancially capable of carrying out the mega project, the transport ministerhas said.
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.
Ifthat 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.
“Apartfrom trying to clarify some issues regarding the financial funding agreement,the bidding team has to be extra cautious and carefully assesses theapplications due to the special status of the projects,” an official of a PMUsaid on condition of anonymity.
Despitethe deadline extension, the ministry will be able to stick to schedule andannounce the results of the preliminary bidding in February 2020, said Deputy TransportMinister 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.
“Ifeverything goes smoothly, all work to pick the investors can be wrapped up bythe end of August 2020,” Nhat added.
Eightsub-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.
HowVietnamese investors will be able to guarantee such a large amount of money hasbeen the biggest concern so far, especially when outstanding loans of domesticbanks are already very high.
Accordingto a State Bank official speaking anonymously, transport projects under theBuild-Operate-Transfer (BOT) and Build-Transfer (BT) models over the last fewyears usually required a large investment which led to a high demand for bankloans, 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 BTprojects already touches the banking credit limit for the sector,” he said.
“Ifbanks can’t raise their authorised capital, it will be very difficult tofacilitate funding for eight PPP sub-projects of the NSE.” /.
