Tan Son Nhat expansion project draws in investors

April 02, 2017 | 08:00

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The project to expand T3 and T4 terminals of Tan Son Nhat International Airport has lured many big investors from all over the country.

Big names signing up for competition

Billionaire Johnathan Hanh Nguyen’s Imex Pan Pacific Group (IPP), which holds a chain of duty free shops at airports, was the latest name joining the competition to be an investor of the Tan Son Nhat expansion project.

In its proposal submitted to the Ministry of Transport (MoT) last week, IPP expressed the wish to team up with Airport Corporation of Vietnam (ACV) to construct the two terminals T3 and T4, according to the approved planning.

IPP has been a partner of ACV for many years. Besides being a major shareholder and strategic investor of Southern Airports Services Joint Stock Company (SASCO) and a service company in Tan Son Nhat International Airport, IPP also operates a chain of duty free shops in numerous domestic airports.

Since 2016, IPP has become directly involved in the aviation infrastructure sector by becoming the biggest shareholder of Cam Ranh International Terminal Joint Stock Company. This project aims to construct a new terminal, which would handle four to eight million passengers annually, with the total investment of VND3.735 trillion ($164 billion).

With strong financial ability and management experience in operating airports, IPP’s chairman Nguyen said that if the company’s proposal is approved by the MoT, they will work with ACV to implement and complete the T3 and T4 terminals within 18 months since the construction started.

“IPP and ACV will soon draft a plan and submit it to the ministry for approval to start the construction,” Nguyen Hanh said.

IPP has been paying avid attention to this project ever since it was put forward to gather opinion from related government agencies. However, IPP is not the only investor interested.

According to a source of VIR, at the beginning of March 2017, Atad Steel Structure Corporation, affiliated with Nam Viet A Construction Investment and Infrastructure Development Joint Stock Company, submitted a proposal to the MoT to be selected as the/an investor of the T3 and T4 terminals.

Earlier, Vietjet was the first one applying for the task in January 2017. The biggest private airline in Vietnam asked for the right to construct the T4 terminal, which would handle 10 million passengers annually, on the 21-hectare area next to the apron.

Besides the T4 terminal, Vietjet also asked for approval for the VND3.048 trillion ($133 million) project on aviation technology and servicing complex on a 30-hectare area of Tan Son Nhat International Airport. This complex would include a cargo terminal with a capacity of 300,000 tonnes per year, an aircraft repair and maintenance zone, and an airplane meal production area.

Opening up for the private sector

At the beginning of March 2017, Civil Aviation Authority of Vietnam (CAAV) submitted to MoT a detailed plan to adjust Tan Son Nhat International Airport.

According to the planning of civil aviation areas, the T3 and T4 terminals will each handle 10 million passengers annually, which will raise the airport’s designed capacity to 45-48 million passengers per annum.

This plan also included a proposal to construct a new technical service area, a hangar, and an apron in front of the hangar, located on a 30-hectare area of the airport. Moreover, CAAV suggested that the technical service area include an aircraft repair and maintenance area, warehouses, food processing area, and gathering area, among other functional facilities, and be located on the ten-hectare land plot in the southeast area of the airport.

For the traffic planning, 18E road and Hoang Hoa Tham Street, the linkages between Cong Hoa Street and the T4 and T3 terminals, will be expanded.

According to CAAV, Tan Son Nhat Airport currently has a total area of 574.44 hectares. However, by 2030, it will grow to reach 621.20 hectares (excluding military land plots). Of the total, CAAV will manage 435.48 hectares of airfields and 121.46 hectares of land plots. In addition, the areas co-managed by CAAV and the military will make up 17.5 hectares. There will be a 26.9-hectare area managed by the military, which is now temporarily managed by CAAV to use as the apron; and finally, the areas for the T3 and T4 terminals are 19.86 hectares.

The total investment for the project is VND13.500 trillion ($591 million), which was raised from many different sources, consisting of state capital for the constructions inside the airfields, and funding from private enterprises, organisations or individuals for other construction works.

“Due to the urgency of the project, which must be completed within two years, CAAV has asked for MoT’s permission to use special methods to raise capital from these private sources,” said Lai Xuan Thanh, head of CAAV.

Accordingly, ACV intends to spend its development fund in advance to start the construction and catch up with the schedule.

It will be reimbursed at a later time. MoT will report to the government about ACV’s reimbursement in the plan on additional public investments in 2016-2020 (adding the expenditure to the investment portfolio using state funding in 2016-2020), or allow ACV to retain the annual payments to the national budget of three airport authorities, which isabout VND190 billion ($8.3 million) in 2016, and dividends for the state (about VND150 billion ($6.6 million) in 2016).

At present, ACV has asked MoT to allow it to raise capital from the private sector by establishing a joint stock company with a maximum of 30 per cent state capital.