May 14, 2021 / 14:43

Transport ministry awards second North-South expressway sub-project under PPP

The public-private partnership (PPP) law, which became effective since early 2021, has created a legal framework for the implementation of large-scale infrastructure projects under such funding tool.

The sub-project section Dien Chau – Bai Vot, estimated at VND11.15 trillion (US$484.25 million) became the second one of the North-South expressway project awarded under the PPP.

 Overview of the contract signing ceremony. Photo: Phan Trang

The build-transfer-operate (BOT) contract signing ceremony took place on May 13 between the Ministry of Transport and local joint-venture of Hoa Hiep – CIENCO4 – Nui Hong Investment – Truong Son Investment – VINA2 Investment and Construction.

The Dien Chau – Bai Vot section is the second among three sub-projects under the North-South expressway that would be financed by PPP arrangement, including Dien Chau – Bai Vot, Nha Trang – Cam Lam, and Cam Lam – Vinh Hao.

Vice Minister of Transport Nguyen Nhat noted the PPP law, which became effective since early 2021, has created a legal framework for the implementation of large-scale infrastructure projects under such format.

Director of Public Private Partnership Department under the Ministry of Transport (MoT) Le Kim Thanh said these are the first projects in field of transportation infrastructure with contraction selection based on the national competitive bidding and using funding from state budget via the viability gap funding (VGF) mechanism to assess financial feasibility of the project.

“Clauses under the PPP law and related decrees are also used during the negotiation process,” Thanh noted.

 The Eastern North-South expressway project is of national priority for investment in the 2017 – 2020 period

According to Thanh, this contract signing would not only boost socio-economic development, but also realize the state’s vision by encouraging the participation of private companies in the process of transport infrastructure development during the 2021-2025 period amid state budget constraints.

The expressway Dien Chau – Bai Vot section has a total length of 50 kilometers and crosses two provinces of Nghe An (44.4 kilometers) and Ha Tinh (4.9 kilometers).

The project is designed to have four lanes and average speed of 80 kilometers per hour.

To finance the sub-project with an estimated investment capital of VND11.15 trillion (US$484.25 million), contractors would mobilize VND5.1 trillion (US$221.57 million) and state funds of VND6.06 trillion (US$263.3 million).

The contractor is expected to finish the construction in three years with a payback period of 16 years and six months.

The Eastern North-South expressway project, which is of national priority for investment in the 2017 – 2020 period, includes 11 sub-projects with a total length of 654 kilometers running through 13 provinces and cities.

Of the total, six sub-projects would be funded by the state budget and other five under the PPP format with a combined investment capital of VND100.81 trillion (US$4.32 billion), including VND78.46 trillion (US$3.36 billion) sourced from the State budget.

Last week, the sub-project section Nha Trang – Cam Lam became the first awarded under the PPP after such law was kicked off in January 1, 2021.

As of present, over 1,000 kilometers of expressway have been built throughout the country, while an addition of 900 kilometers are set to be completed by end-2021. 

In the 2021-2025 period, Vietnam targets to have at least 2,000 kilometers of expressways and by 2025, the figure would be 4,000 kilometers stretching from the northern province of Lang Son to the southernmost province of Ca Mau.

Including the Eastern North-South expressway, Vietnam would have four major trans-Vietnam highways, including National highway No.1, Ho Chi Minh highway, and coastal highway.