Over VND 124,000 billion invested in 9 component projects of North – South expressway

A Submittal on the pre-feasibility report on the investment project of the North-South expressway in the East in the period of 2021 – 2025 has been drafted by the Government and submitted to the National Assembly with proposal to approve the policy on continual investment to 9 over 12 component projects with an aim to connect the express route.

According to the submittal, the whole 12 component projects will need to be invested for a total length of about 729 km budgeting VND154,527 billion, of which, the State budget is approximately VND73,495 billion and other sources of VND 81,032 billion.

However, the Government emphasizes that in case the total 12 component projects have been invested at the same time, it will affect to other important expressway projects at national level like ring road 4 of Hanoi City, ring road 3 of Ho Chi Minh City, Chau Doc – Can Tho – Soc Trang area, etc.

Therefore, the Government proposed to invest to 9 over 12 projects of a total 552km long including: Hau Giang – Ca Mau, Can Tho – Hau Giang, Van Phong – Nha Trang, Chi Thanh – Van Phong, Quy Nhon – Chi Thanh, Hoai Nhon – Quy Nhon, Quang Ngai – Hoai Nhon and Van Ninh – Cam Lo.

For the rest of 3 components ones of Vung Ang – Bung, Bung – Van Ninh and Van Ninh – Cam Lo, it will be conducted the land acquisition and resettlement in the period of 2021 – 2025 and continued to investment in the period of 2026 – 2030.

The entire 9 component projects are invested in PPP form and BOT contract. A total investment cost is about VND 124,619 billion, of which the State budget consists of VND 61,628 billion and another VND 62,991 billion comes from private sector. The State budget is arranged via the implementation and reimbursement schedule.

Owner’s equity and investor’s capital is in accordance with the provisions of PPP law. The state’s capital contribution is not included in the financial plan to determine the capital recovery time of the project. The equity determined to be calculated in the financial plan is 15% and the remaining 85% of the total mobilized capital by investors.

Earlier in commenting on the project, a representative of the State Bank said that the investor’s equity of 15% of the total mobilized capital is relatively low, i.e. the project’s capital source heavily depends on the state budget and loans, hence it is difficult to attract credit capital.

In fact, 3 PPP investment projects of the North-South expressway phase 1 with a minimum equity ratio of 20% is considered hard to attract credit capital. Therefore, in order to boost the project’s feasibility and efficiency, it is required to increase the investor’s equity ratio.

In this regard, Ministry of Transport made it clear that the project applies the new mechanism of the PPP Law such as revenue sharing, capital mobilizing from banks and other legal credit sources like issuing corporate bonds and securities so it keeps attracting the capital.


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