A fresh investment plan has been proposed for the construction of a road system connecting Hanoi to Hoa Binh province under the build-operate-transfer model, Vietnam Investment Review reports.

A proposal from the Ministry of Transport (MoT) just submitted to the Prime Minister outlines a Hoa Lac-Hoa Binh route built over 30km starting from an ethnic culture and tourism village in Hanoi’s Son Tay town and linking up to National Highway 6 next to Hoa Binh city.

It also includes expanding Highway 6’s 33km Xuan Mai-Hoa Binh section by two lanes.

Consulting unit estimates show the cost for the route, which will be later upgraded into a highway, at around 2.138 trillion VND (102 million USD), of which 566 billion VND (27 million USD) will go into site clearance.

Improving the 33km of Highway 6, including sections through crowded residential quarters, was estimated at around 341 billion VND (16.2 million USD).

“We are seeking the Prime Minister’s approval to combine Highway 6’s 33km upgrade with the construction of the Hoa Lac-Hoa Binh route,” said Deputy Minister of Transport Nguyen Hong Truong.

This will put total project costs at around 3.129 trillion VND (149 million USD).

The project is considered urgent because Highway 6 is the only road linking the northwestern region to Hanoi and is quickly deteriorating.

Estimates show that to meet increasing transport demand by 2017, the highway needs to be upgraded and expanded. It faces a particularly great challenge as the expansion will infringe on the properties of numerous residents.

Since budget capital is not readily available for the project and it is hard to access ODA, the MoT is proposing the project be conducted under the build-operate-transfer (BOT) model with all funding provided by the investor.

The investor will be granted the right to place two toll stations on Highway 6 and collections could begin immediately after the upgrade slated for 2015.

One station will be set up on the Hoa Lac-Hoa Binh route with collections starting when it opens, hopefully, in 2017.

Considering the toll price, the MoT proposed the Government apply a fee similar to that of National Highway 1’s BOT projects, where the fare exceeded the MoT’s cap by 3.5 times.

With these conditions, investment can be retrieved within 29 years.

Under the new plan, the road system connecting Hanoi and Hoa Binh will have four lanes, similar in scope to the Hoa Lac-Hoa Binh highway project that developer Hanoi Import Export JSC (Geleximco) withdrew from in August 2013.

After the project’s investment spiked to 18 trillion VND (857 million USD), Geleximco sent a document to the Prime Minister asking they be allowed to stop their involvement as they would not be able to retrieve their investment.

According to a MoT source, other local investors have since showed interest in the project, even Geleximco has renewed interest after changes to the project’s plan and model.

“This is actually a solution for both the MoT and investors when it comes to the successful upgrade of this important road system,” said a transport expert.-VNA