Ministry to accelerate North-South Expressway project

The Ministry of Transport plans to speed up the implementation of the North-South expressway project in 2019, said Minister of Transport Nguyen Van The. (Photo: vietnamfinance.vn)

He said the ministry had approved a feasibility study of 11 sub-projects of the North-South expressway project since October last year and is in the process of selecting consultation firms.

The ministry will manage to disburse half of 14 trillion VND (601 million USD) raised from bond issuance this year for land clearance work and finish acquisition of all required lands by next year, The said.

The Ministry of Transport (MoT) had opened bidding for the Cao Bo-Mai Son and Cam Lo-Son La stretches. The contractors would be chosen in the second quarter of this year. Work on the two sections would begin soon so the projects would be completed in 2021.

The selection of contractors for My Thuan 2 Bridge project would finish in October this year and the project would be completed in 2022.

The ministry would begin the bidding process from the private sector in September and October, The said.

The MoT wants to finish the selection of investors this year so that work can begin next year and in 2021, he said, adding that information on the bidding process would be updated regularly.

Investment in the project for the period 2017-2020 was approved by the National Assembly. The total cost of eleven sub-projects of the North-South expressway project with the length of 654 kilometres is 118 trillion VND (5.06 billion USD).

Three will be financed by the State and eight will be implemented through public-private partnerships (PPP). However, challenges remain attracting investors, experts said.

The ministry has said it took the regulated loan interest rate of 7.72 percent as a basic rate for the feasibility study and setting bidding dossiers. But in reality, the loan interest rate in the market stood at 10.5-11 percent per year.

In a report to the National Assembly last October, The admitted this was creating difficulties for investors. If the Ministry of Finance could amend regulations and increase the ceiling to 10.5 percent, it would help attract investment.

According to Nguyen Quang Toan, former dean of Road Faculty of the University of Transport and Communications, the Ministry of Transport cannot use the interest rate of 7.7 percent per year to set up a feasibility study for the project, but it must be made relevant to reality and the market interest rate.

If the loan interest rate for the PPP projects remains unchanged, the Government must adjust the policy to attract investor, he said.

For example, banks lends BOT projects with the interest rate of 7.7 percent but if they suffer losses, the State should compensate them basing on the real interest rate, Toan added.