North-South Expressway needs $5.23 billion investment capital

The National Assembly yesterday listened to the Government’s statement about the pre-feasibility report of North-South Expressway project which is estimated to cost VND118,716 billion (US$5.23 billion) in the phase of 2017-2020.
Minister of Transport Nguyen Van The reads the statement on the policy of building North-South Expressway at the meeting
Minister of Transport Nguyen Van The reads the statement on the policy of building North-South Expressway at the meeting

The project will comprise 11 sub-projects with the total length of 654 kilometers through 13 provinces and cities from 2017-2020.

Of these, Mai Son-Bai Vot stretch from Ninh Binh to Ha Tinh provinces and Nha Trang-Dau Giay stretch from Khanh Hoa to Dong Nai provinces will be built under Public Private Partnership (PPP) form, BOT (Build-Operate-Transfer) contract.

Cam Lo-La Son stretch from Quang Tri to Thua Thien-Hue provinces, My Thuan 2 bridge and Cao Bo-Mai Son stretch expansion from Nam Dinh to Binh Binh provinces will be constructed under public investment model.

Total investment capital is calculated to approximate VND118,716 billion. Of the number, the state will provide VND55 trillion for site clearance and construction assistance of PPP projects. About VND63,716 billion will be mobilized from investors.

About capital mobilization project, Resolution 26/2016 of the National Assembly arranges VND80 trillion for national important projects. The Government has proposed to allocate VND55 trilion for North South Expressway and the remaining amount of VN15 trillion for other urgent projects. The NA’s Economic Committee suggested the Government to clarify norms to choose projects using the VND15 trillion.

The committee also asked the Government to make clear capital allocation principle to ensure transparency in using the budget funds of VND40,845 billion for sub-projects.

According to the statement, mobilization of VND63,716 non-budget funds from foreign credit institutions will meet lot of difficulties because there are no guarantee providing mechanisms. So far, loans have mainly been got from domestic banks. Therefore, that should be carefully studied avoid implicit risks.

The Economic Committee proposed the Government to further make clear the matter and study risk sharing solutions to raise foreign funds, reduce pressure on public investment, complete investment restructuring targets and mobilize breakthrough resources to invest in traffic infrastructure.

The statement comprises toll level to reclaim investment capital. The Government determines the toll level of VND1,500 a kilometer a car at the time when the project opens to traffic and specific prices for each phase of the project to create a basic for calculation of state capital contribution part and the prices of bid packages to choose investors.

If policies are approved, the project will start construction in 2019.

Basing on updated site clearance and resettlement data  from relevant provinces and cities, the Government reported that the project will take about 3,736 hectares and affect 8,200 households. Over 2,000 households will be resettled.

The Economic Committee agreed with the project’s investment policy but noted that determining toll level for each phase of the project during 24 years is too long and unsuitable. That might limit the state’s regulation rights especially in case of price indicator fluctuations.