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Ho Chi Minh City
Wednesday, December 8, 2021

Govt wants public funding for all North-South expy subprojects

The Saigon Times

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HCMC – The Government on November 15 suggested that the National Assembly (NA) approve public funding for all 12 subprojects of the 729-kilometer North-South expressway project in the 2021-2025 period.

The Government’s proposal differed from that of the Ministry of Transport. Earlier, the ministry had proposed conducting four subprojects under the public-private partnership (PPP) and eight subprojects using public investment capital, Tuoi Tre Online newspaper reported.

The Government explained that if the four subprojects are funded by PPP investors, only VND17.3 trillion could be raised from the private sector, or some 12% of the total investment needed for the project. Meanwhile, when the State capital accounts for over half of the total investment amount, special policy must be adopted to allow the project to proceed.

If the PPP-financed subprojects are executed unsuccessfully, the completion time of the entire project would be extended by nine to 22 months.

In addition, under the Government’s socioeconomic recovery and development scheme, the acceleration of key national projects and the disbursement of public investment capital would be urgent tasks.

The Politburo has also sought resources to complete the North-South Expressway project at the earliest as it is critical.

The Government also suggested that the cities and provinces where the expressway will pass through take responsibility for executing the subprojects.

The entire expressway project would need some 5,500 hectares of land.

In the first phase, all 12 subprojects will have four lanes and allow for a designed speed of 80-120 kilometers an hour.

However, localities must clear the site for six-lane sections, except for those from Can Tho City to Ca Mau Province, with four lanes.

The investment for the project was estimated at nearly VND147 trillion, including VND139.6 trillion in the 2021-2025 period and VND7.35 trillion in the 2026-2030 period. As for the capital needed in the 2021-2025 period, VND47.2 trillion will be sourced from the State budget for the mid-term public investment plan and VND92.5 trillion from the capital for socioeconomic recovery and development.

The Government set a target to prepare and start work on the project this year and complete it by 2025.

The Government also proposed the NA assign the Government to decide the conversion of forest land for each subproject.

In September 2021, nine out of 12 subprojects were planned to be implemented under the PPP model. With this plan, the investment needed for the project would be more than VND124.6 trillion, with 49.45% being the State capital for the mid-term investment plan in the 2021-2025 period and 50.55% sourced from the private sector.

However, under the project’s prefeasibility study that the Ministry of Transport has submitted to the Government, the number of subprojects to be developed under the PPP formula was cut from nine to four. The remaining eight subprojects will use public investment.

With this plan, the estimated investment for the project increased to VND148.5 trillion, with 88% from the State budget and 12% from the private sector.

According to the ministry, investors with a strong financial capacity and interest in PPP road projects have been mobilized for previous BOT projects in the 2017-2020 period, so it is hard to call on them for more investment.

From its experience in executing PPP subprojects of the North-South expressway project in the 2017-2020 period, the Ministry of Transport also suggested the Government propose the NA allow the proportion of the State budget in PPP subprojects to be capped at 54%-65% of the total cost of each subproject.

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