Public-funded model proposed for sub-projects of North-South Expressway

The National Assembly will decide on the transformation of the investment model for three sub-projects of the North-South Expressway from private-public partnership to public-funded form (Photo: VietnamPlus)

Hanoi (VNA) – Right after the National Assembly Standing Committee agreed to submit to the NA for consideration a proposal to transform the investment model for three sub-projects of the North-South Expressway from private-public partnership (PPP) to public-funded form, experts said the method may be more suitable and effective.

Waiting for capital from banks

Accordingly, among eight sub-projects of the North-South Expressway initially planned for the PPP model, three will be transformed to the public-funded form, including two urgent sub-projects (running from Mai Son to National Highway 45 and from Phan Thiet to Dau Giay) and one sub-project having no investors entering the short-list (section running from Vinh Hao to Phan Thiet).

The remaining component projects will continue to be invested in the PPP model.

Minister of Transport Nguyen Van The said the transformation of investment model of several sub-projects of the North-South Expressway must ensure the principle: selecting sub-projects having no investors joining the bidding (Vinh Hao-Phan Thiet) and urgent, important sub-projects which have investors but are unlikely to mobilise capital.

Agreeing with the proposal, Vice Chairman of the Board of Directors of Deoca Group Tran Van The said if all of the eight sub-projects are transformed to the public-funded model, the selection of PPP investors via bidding will be cancelled, causing losses to the investors.

Options for transforming investment models

The Government has proposed to the National Assembly three options for transforming investment models at sub-projects of the Eastern North-South Expressway for consideration.

In all three options raised, three out of 11 sub-projects which were already decided to be public-funded following the National Assembly’s Resolution No 52/2017 dated November 22, 2017 were proposed to continue to be public-funded.

Those included expressway projects running from Cao Bo (Nam Dinh province) to Bai Vot (Ha Tinh), from Cam Lo (Quang Tri) to La Son (Thua Thien-Hue) and from Nha Trang (Khanh Hoa) to Dau Giay (Dong Nai) and Cau My Thuan 2 (Tien Giang and Vinh Long).

The transformation of investment models was proposed for the remaining eight sub-projects which were previously planned to be implemented following the public-private partnership (PPP) model.

In the first option, all of these eight sub-projects were proposed to transform to public-funded.

Speeding up disbursement of public investment was identified as one of the key solutions to accelerate post-pandemic economic growth. The North-South Expressway was a prioritised infrastructure project to speed up disbursement of public investment and create a driver for growth.

In this option, the Ministry of Transport estimated that total capital worth nearly 99.5 trillion VND (4.3 billion USD) would be needed. The State budget already allocated 55 trillion VND for the Eastern North-South Expressway project under Resolution No 52/2017 and the Government proposed to add the rest in the 2021-25 public investment plan.

In the second option, five out of eight sub-projects would be transformed from PPP to public-funded, including four pressing projects running from Mai Son to National Highway 45 (63km), from National Highway 45 to Nghi Son (43km), from Nghi Son to Dien Chau (50km) and Phan Thiet – Dau Giay (99km) and one project from Vinh Hao to Phan Thiet which had not attracted the interest of any investors.

The other three, including Dien Chau – Bai Vot, Nha Trang – Cam Lam and Cam Lam – Vinh Hao, which already attracted several investors, would continue to be implemented following PPP.

In the second option, the total investment was estimated at 100.25 trillion VND, 88 trillion VND of which would be funded by the State (55 trillion VND already allocated and a sum worth VNĐ33 trillion needed). A sum worth more than 12 trillion VND must be raised from private investment.

Vehicles run on a section of the North-South Expressway (Photo: VietnamPlus)

In the final option, three were proposed to transform investment models, including projects from Mai Son to National Highway No 45, from Phan Thiet  to Dau Giay and from Vinh Hao to Phan Thiet.

The total investment capital was estimated at 100.8 trillion VND, of which 78.4 VND would come from the State budget.

On May 14, the Government proposed to the National Assembly that all sub-projects of the Eastern North-South Expressway would be transformed from PPP to public-funded to speed up the construction and create a driver for economic growth.

However, the National Assembly Standing Committee did not agree with the proposal, adding that the transformation should be for projects which could not attract PPP investors, those facing difficulties in raising capital and those in pressing need.

Bidding to select investors instead of direct appointment of contractors

Deputy Minister of Transport Nguyen Van Nhat said if the National Assembly approves the transformation of the three sub-projects of the North-South Expressway to public-funded model, the Ministry of Transport will stick to its opinion on carrying out open bidding to select investors instead of direct appointment of contractors.

The ministry will call for bids and select eligible investors within three months so that the first sub-project can be started in August 2020, he added./.