HANOI – Although the National Assembly Standing Committee has given its approval to switch three of the eight subprojects of the North-South Expressway from the public-private partnership (PPP) format into wholly State-invested, the remaining projects may fail to attract private investors.
Management units of the projects had expected to open a bidding for two sections, Nghi Son-Dien Chau and Dien Chau-Bai Vot, on Monday, but they were on tenterhooks as no bidding applications had been received.
Earlier, two or three investors took part in a bidding for three expressway sections, Dien Chau-Bai Vot, Nha Trang-Cam Lam and Cam Lam-Vinh Hao.
A consortium was selected after the first round for the Nghi Son-Dien Chau section, but they did not continue with the following procedures. Similarly, some well-known consortiums were also shortlisted for the Nghi Son-Highway 45 section but they discontinued the bidding process.
The National Assembly had approved the conversion of the investment format of three subprojects, Mai Son-National Highway 45, Phan Thiet-Dau Giay and Vinh Hao-Phan Thiet, whose first construction package kicked off on September 30. Meanwhile, Cao Bo-Mai Son and Cam Lo-La Son were approved for public investment.
Therefore, the remaining five PPP projects are still awaiting investors.
It is credit requirements that hindered investor consortiums and not the technical difficulties of the projects. In fact, local commercial banks are reluctant to disburse capital for these projects.
The five projects put up for bidding have a total investment of some VND39.5 trillion, in which the State budget will provide around 51% or over VND20 trillion, and investors will give 41%, or nearly VND20 trillion, with their equity making up some 20%.
Therefore, local banks are estimated to lend around VND15.5 trillion for the five projects, or VND3.1 trillion for each. This is a huge challenge for investors.
Lenders have shunned traffic PPP projects since the State Bank of Vietnam announced the total outstanding loan for 116 build-operate-transfer projects at around VND102 trillion at the end of 2019.
Some 59 of the 116 projects failed to secure a financial plan due to the lack of revenue, could not pay debts or did not have a guarantee mechanism. Some 43 projects are awaiting debt reclassification with a combined value of over VND66 trillion and 10 others might have their loans classified as bad debts worth nearly VND15 trillion.
If the five projects fail to attract bidders until October 25, the Ministry of Transport will report to the Government and the National Assembly Standing Committee for further instructions.
The Government might have to take over and turn them into State-invested projects.
By Lan Nhi