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May 07, 2021 / 06:08

First North-South expressway sub-project awarded under PPP format

This is the first project since the public-private partnership (PPP) law came into force last June.

The North-South expressway sub-project section Nha Trang – Cam Lam has become the first awarded under the PPP format after the parliament approved the law last June.

 The signing ceremony. Photo: Phan Trang

Director of Public Private Partnership Department under the Ministry of Transport (MoT) Le Kim Thanh made the remarks at the contract signing ceremony on May 6, with Son Hai Corporation as a build-transfer-operate (BOT) contractor following the completion of a national competitive bidding process.

With length of 50 kilometers, the Nha Trang – Cam Lam section 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 VND5.52 trillion (US$240 million), Son Hai Corporation would mobilize VND2.55 trillion (US$111 million), in which the contract’s own equity accounts for 20%, and state funds of VND2.96 trillion (US$128.7 million).

The contractor is expected to finish the construction by 2023 with a payback period of 16 years and four months.

“The project has addressed shortcomings from previous BOT projects by keeping open different options for users and the toll fares are calculated from the beginning to reduce risks for both investors and credit suppliers,” Thanh said.

 There would be no foreign contractor taking part in the North-South expressway project. Photo: Phan Tu

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 amid state budget constraints.

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. 

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.