PPP projects promoted

A series of major infrastructure projects are preparing for public-private-partnership offerings Photo: Le Toan

A consortium consisting of Fecon-Cienco 1-Conteccons is the latest investor to show interest in the Ninh Binh-Bai Vot highway project, one of the five major infrastructure projects under the PPP model.

The World Bank is assisting the Ministry of Transport (MoT) to update the project’s proposal. According to the WB, there are several changes compared to the initial proposal.

One major change was that instead of building a six lane route for the 193 kilometre section from Ninh Binh to Bai Vot, the first phase will consist of four lanes and the WB has proposed building the 66km section from Cao Bo to Nghi Son first.

The estimated total investment for the project is set at $1.067 billion with $467 million of state capital, representing 44 per cent, investor equity $156 million, 15 per cent, and commercial loans of $444 million, 41 per cent.

The capital structure is viewed as suitable to the capacity of local investors.

The project will also apply build-fund-operate-maintenance (BFOM), new to Vietnam, through which the investor is paid based on service quality.

According to Deputy Minister of Transport Truong Tan Vien, the MoT has proposed some additions to the BFOM such as state capital surpassing 30 per cent and payment based on service quality of toll collection.

If the proposals get the go-ahead from the prime minister, WB consultants will complete the investment model by 2015 and investors will be selected in 2016.

Another project, a PPP pilot, is the $757 million Dau Giay-Phan Thiet expressway with the prequalifying stage to select the project’s second investor to be completed in January. If impediments such as disagreements over toll fees and adjustments of fees over time and parent company guarantees are tackled, construction could be kicked off in the third quarter of next year.

Another project, the Bien Hoa-Vung Tau expressway, has already reached the conclusion of its design phase.

According to Japan International Cooperation Agency (JICA) consultants, the four lane 37.6km section from Bien Hoa to Phu My and 9.2km section from Phu My to National Highway 51 is already set for the PPP model and will see the total investment fund of VND11.6 trillion ($556 million). Construction will be finalised before 2020 with state capital covering 35 per cent.

According to a study by developer CIPM Cuu Long, a VND16 trillion ($762 million), 33km section from Trung Luong to Cai Be of the southern Trung Luong-My Thuan expressway may also interest investors looking at the PPP model if the state guarantees 40 per cent of total investment and permits toll collections along the road, as well as along the Ho Chi Minh City-Trung Luong section.

CIPM Cuu Long said that apart from JICA and Posco E&C who took part in the investment study, other foreign investors have also shown interest in the project such as Moonary Group and Metro Pacific Toolways Corp.

The MoT will soon ink the project’s proposal to send up to the Ministry of Planning and Investment.