Key highway project seeking new investors

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Notably, Deputy Prime Minister Hoang Trung Hai, as well as other officials green lighted the withdrawal of Hanoi Export Import Joint Stock Company (Geleximco) from the Hoa Lac-Hoa Binh expressway.

Hai also agreed to a proposal submitted by the Ministry of Transport (MoT) and Ministry of Planning and Investment (MPI) to change the project’s investment model to make it more feasible and source official development assistance (ODA).

Hoa Binh People’s Committee was reported to soon enact a decision cancelling Geleximco’s investment certificate.

Geleximco will not be upset with the decision, as they previously appealed to the prime minister to withdraw from the project and hand it over to the MoT and/or the localities along the expressway’s route.

Geleximco’s appeal was based on it being unable to sufficiently recoup its investment after completing construction.

Part of the project included Geleximco receiving land from Hoa Binh to build two new urban areas and a 36-hole golf course.

A similar deal was struck with Hanoi which turned over land also for a new urban area.

The developer reestimated the total cost to be around $857 million, of this investment for the Hanoi section alone was $362 million more than initial figure.

“As the investment cost rose significantly and the property market at current is nearly frozen, it is impossible for us to reach the project deadline,” said Geleximco general director Vu Van Tien.

According to the transport ministry, over three years the developer put $17 million into the project with nearly all, $2 million in construction and $12.4 in land acquisition, into the Hoa Binh side.

“Hoa Binh authorities will work with the developer to aid them in recovering their investment in the province,” said the provincial People’s Committee Chairman Tran Dang Ninh.

To keep the project moving after the developer’s exit, the MoT is working with authorities from both provinces, Hanoi and Hoa Binh, to source capital for a change in investment models. They prefer public-private-partnership (PPP).

 “The Asian Development Bank is interested in the project and will put it up for consideration in the October appraisal round,” revealed a source from the MoT’s Project Management Unit 2, assigned by the ministry to promote the project.

 “Geleximco is also interested in reentering the project if it is changed to the PPP model and had a suitable capital structure,” added the source.