Developer of Hanoi-Haiphong Expressway loses $110,000 a day

Hanoi-Haiphong Expressway was put into operation in December 2015

Vietnam Infrastructure Development and Finance Investment JSC (VIDIFI) has just submitted its report to the Ministry of Transport (MoT) on the 2017 business results of the Hanoi-Haiphong Expressway project.

Accordingly, the revenue from the seven tolls booths on Hanoi-Haiphong Expressway in 2017 hit only VND1.258 trillion ($55.42 million), equivalent to VND3.4 billion ($150,000) per day. Meanwhile, the revenue of two tolls booths on National Route 5 running nearly parallel to th Hanoi-Haiphong Expressway reached VND832.9 billion ($36.7 million) in 2017.

The total revenue of the entire project was VND2.091 trillion ($92.12 million), equivalent to VND5.7 billion ($251,100) per day, excluding the costs that VIDIFI spent to operate the nine tolls booths and maintain the two roads.

Meanwhile, in the recommendation submitted to the prime minister before his 2017 conference with enterprises, VIDIFI claimed to have to pay VND8 billion ($352,500) of interest a day.

Thereby, this project has been making negative VND2.5 billion ($110,132) in profit a day, equivalent to VND900 billion ($40 million) per year. Interest payments capture 94 per cent of the total costs, VIDIFI confirmed.

The Hanoi-Haiphong Expressway, which is considered the most modern expressway in Vietnam, has six lanes with the maximum speed of 120km per hour. Its length is 105km, passing through the four cities and provinces of Hanoi, Hung Yen, Hai Duong, and Haiphong with the total investment of approximately VND45.6 trillion ($2 billion). Most of this came from loans at the interest rate of 10.5-11.4 per cent for 30 years.

VIDIFI plans to repay around $17.7 million in 2016-2020 and $213.6 million in 2021-2044 to KEXIM Bank. From its $100 million debt to the German Development Bank (KfW), VIDIFI has returned over $46 million in 2013-2017, and intends to repay $29.2 million in 2018-2020. Therefore, VIDIFI has to repay $75 million by 2020, and $24.7 million between 2021 and 2023.

Unless the state provides a bailout or incentive policies as proposed in Decision No.746/QD-TTg dated May 29, 2015 on the structure of capital sources for the Hanoi-Haiphong Expressway project, VIDIFI's financial solutions on exploiting the land on the two sides of the expressway will be unsuccessful and this company will face bankruptcy.

VIDIFI was established in 2007 with the charter capital of VND5 trillion ($222 million) by Vietnam Development Bank (VDB), Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB), and Vietnam Construction and Import Export Corporation (Vinaconex).