BOT plan pushed for highway

The ministry (MoT) said that it took six months to make a decision to select Nexco Central Company instead of Vietnam’s Hai Chau Group to upgrade Phap Van- Cau Gie highway. If Nexco Central Company gets a thumbs-up from government leaders, the Phap Van- Cau Gie project would be the first foreign-invested  highway project in Vietnam.

Phap Van-Cau Gie highway runs from its crossroad with Hanoi’s ring road No.3 in Phap Van to the Cau Gie-Ninh Binh Expressway in Ha Nam province.

According to the proposal, the current 30-kilometre stretch will be upgraded into an expressway with four lanes, designed for speeds of 60-100 kilometres per hour. Under BOT terms, the total investment capital is VND1.5 trillion ($71.4 million) and the construction is expected to finish within one year.

The MoT cited two reasons for choosing Nexco Central. Specifically, if Nexco Central became investor, the project would have high feasiblity due to  borrowed capital with low interest from the Japan International Cooperation Agency, along with  an investment procedure that would only take three months to complete.

Moreover, the MoT explained that the ability of domestic contractors to invest in a highway project was weak in terms of financial and management experience, while management, operation and maintenance were strong points for  foreign contractors such as Nexco Central.

Nexco Central, however,  is also seeking profit 23 per cent higher than other existing highway projects.

Le Manh Hung, Deputy Minister of MoT said: “The ministry is now asking the government to instruct related bodies to negotiate with Nexco Central with the aim to reduce the profit rate required by the investor”.  

Hung added that though Phap Van- Cau Gie highway project had a small scale, if the foreign-invested highway project was deployed successfully, it would encourage other foreign investors, including more Japanese, to invest in developing Vietnam’s transport infrastructure.

In early 2011, Nexco Central submitted to the MoT the proposal for upgrading the Phap Van-Cau Gie expressway, together with Vietnam Expressway Investment Development Corp (VEC).

As planned, the construction was supposed to be started in 2011 and put into operation after three years of construction.

According to the proposal, two sides would set up a joint venture to upgrade the highway under public-private-partnership model. However, the ambition was not successful because VEC was too busy with other huge highway projects.

Founded in 2005, Nexco Central is Japan state-owned  company. So far, the company has managed 1,746 kilometres highway and built 430 kilometres in Japan.