Means of transport on Ha Noi-Hai Phong expressway (Photo: Vietnam+) Hanoi (VNA) - The North-South Expressway project will tighten financial capacity for participating investors. This will lead to the possibility that domestic investors will face difficulties in mobilizing capital.
Meanwhile, the prerequisite for winning foreign investors’ trust - the Government's minimum revenue guarantee and foreign currency guarantee mechanism - has not been established in the applications for prequalification.
Deleting investors with weak financial capacity
According to the Transport Ministry’s report, 11 projects of the North-South expressway grand project have finished selection of consultants for technical design and estimation, including 8 PPP ones. The Ministry also asked prior to May 10, project management board needs to issue bidding documents for qualification for eight PPP projects
The Ministry also planned to complete the prequalification selection in August 2019, the bidding procedures planned to start in October 2019 and complete in March 2020.
According to Deputy Minister of Transport Nguyen Nhat, the selection of investors must apply the form of open international bidding in two stages of prequalification and bidding. In particular, the prequalification stage (conducted on the basis of the approved feasibility study report) will assess the capacity and experience to select up to 5 eligible investors and have the highest review score to enter the bidding round.
The bidding phase (performed on the basis of the results of the technical design steps and cost estimates under Resolution No. 20/NQ-CP) will select an investor with the best technical score and bidding package price for project implementation.
“Experience in implementing PPP projects in recent years shows that financial capacity of investors is very important and acts as a decisive factor for successful project implementation. The bidding for investors to implement the project must ensure honesty, objectivity, fairness, any participating domestic or foreign investors must meet the requirements without exception," the Deputy Minister emphasized.
Investor still unknown
Regarding investors’ ability, Deputy Minister Nhat said that domestic investors meeting the minimum criteria prescribed by the law on bidding and the Government's Resolution No. 20/NQ-CP (such as equity guarantees of at least 20% of total investment capital ; having implementing projects with a total investment capital of at least equal to 50% of the total investment capital of the project under consideration...) is very limited, so it will have to cooperate with other domestic and foreign investors to ensure competence and experience as required.
For foreign investors, the leader of the Ministry of Transport said that the Government should also assess in the context that Vietnam's credit rating is not high, the legal corridor and the current conditions do not allow the Government. provide guarantees such as required by foreign investors and banks. It hasn’t been affirmed that the bidding for selecting foreign investors will be successful.
“From reality, it is highly dependent on the market for successful implementation of PPP projects (level of risk, attractiveness of the project, profit in other fields, ability to provide long-term credit, stability level of national policies, ...). In order to accurately assess the participating ability of domestic or international investors, it is necessary to go through the prequalification stage to have enough grounds for evaluation " the Ministry of Transport said.
North-South expressway with strict requirements of financial capacity and conditions will be unknown to foreign and domestic investors (Photo: Vietnam+) Recently, some foreign investors (such as Pacific Group, CGGC Group of China; Mitsubishi Corporation of Japan; Hyundai Group, the Republic of Korea Lotte; Acciona Group of Spain) ...) are interested and learn about information on the North-South Expressway project, the Ministry of Transport as well as a number of experts all said that if the State agency does not have a tight management mechanism, it will not be able to control the slow construction and added capital ...
Even worse, the State management agencies will have to compensate for unforeseen risks such as delayed land clearance, delayed allocation of State capital ... whether investors are from China or whatever country.
Emphasizing the issue that the State authorities should identify risks and develop a reasonable risk allocation mechanism for the parties in accordance with the law of Vietnam, at present, the Ministry of Transport has mobilized international transaction consultants (under the support of ADB and the World Bank) to provide legal advice on the preparation of prequalification documents, bidding documents, draft contracts and assistance in the selection of investors./.
| Box: The North-South Expressway Project 2017-2020 period, approved by the National Assembly in Resolution 52/2017, is 654km in length. The project has a total investment of 118,716 billion VND, including 55,000 billion VND of State capital and 63,716 billion VND of non-budget mobilized capital. The project is divided into 11 component projects, including 3 public investment projects including Cao Bo-Mai Son, Cam Lo-La Son, My Thuan Bridge 2. There are 8 investment projects in the form of PPP and BOT, namely Mai Son-National Highway 45, National Highway 45-Nghi Son, Nghi Son-Dien Chau, Dien Chau-Bai Vot, Nha Trang-Cam Lam, Cam Lam-Vinh Hao, Vinh Hao-Phan Thiet and Phan Thiet-Dau Giay. |
