Finance hits top gear for tunnel

At least four international banks are planning to give the kiss of life to construct the 3.9 kilometre Deo Ca tunnel. The work to nail down an important section in Vietnam’s largest road tunnel project will be done under build-operate-transfer (BOT) form.

Deo Ca Investment Joint Stock Company (DCIC) management board chairman Nghiem Sy Minh said: “Last week, France’s Credit Agricole Corporate and Investment Bank worked with three international banks namely BNP Paribas, Sumitomo Mitsui Banking Corporation and ANZ to arrange a syndicated loan of $500 million for the BOT package for the Deo Ca tunnel project”.

Previously, in November last year, Credit Agricole signed an agreement with DCIC to arrange $500 million for the Deo Ca tunnel project. Deo Ca - Vietnam’s largest road tunnel project, has total investment capital of $750 million, will see a tunnel crossing Deo Ca on National Highway 1 which passes south-central Phu Yen and Khanh Hoa province covering 13.4km. The construction of the project includes 3.9km Deo Ca tunnel under the BOT form and an 9km access road, bridge and 500 metres Co Ma tunnel under the build-transfer form.

“Construction of the Deo Ca project is expected to start in September, 2012 and it is scheduled to complete within four years,” said Minh. Also last week, Vietinbank signed with DCIC an agreement to supply capital for site clearance and resettlement which was previously planned to be financed by the state budget.  

“At present, DCIC is seeking foreign contractors for developing the Deo Ca project,” Minh said, adding that US’ Goldman Sachs Bank and Mega Insurance Group had already completed field study to make preparations of a syndicated loan of $250 million for the access road, bridge and Co Ma tunnel under the BT form.

Previously, DCIC and the Ministry of Transport (MoT) signed BOT and BT contracts with a valid period of 28 years for the Deo Ca project. Accordingly, DCIC will get the right for exclusive advertising and trade in services and infrastructure alongside the route The Vietnamese  government approved underwrite for DCIC to source a commercial loan package worth around $800 million for developing the Deo Ca project.

Additionally, DCIC will take over Ban Thach and Ninh An toll stations on National Highway 1 to supplement their capital sources. The MoT in early 2012 rubber-stamped the project with a VND15.6 trillion ($750 million) price tag. In which, building the Deo Ca tunnel under the BOT form will cost VND10.55 trillion ($507 million) and building an access road, bridge and Co Ma tunnel under the BT form needs VND4.51 trillion ($216.7 million) and state’s counterpart capital of VND539 billion ($193 million) for site clearance.