Debt-ridden firm proposed for North-South Expressway construction

By Hoang Thang   June 6, 2020 | 06:10 pm PT
Debt-ridden firm proposed for North-South Expressway construction
A section of the Da Nang - Quang Ngai Expressway which will be connected to the North-South Expressway. Photo by VnExpress/Dac Thanh.
The Construction Ministry has proposed Song Da Corporation JSC as a building contractor for some sections of the North-South Expressway.

The ministry has proposed the construction firm, which is mired in debt amounting to around VND11.14 trillion ($477 million), following a government plan to change the investment form of some sections of the giant expressway project from public-private partnerships (PPP) to publicly funded ones.

The proposal comes even as Song Da Corporation JSC struggles financially. Its ratio of debt to equity is 2.8, close to three - the level subject to warning for financial risks.

The corporation is saddled with huge debts via its subsidiaries and affiliates including the Ha Long Cement Company, Viet Lao Power JSC, Nam Chien Hydropower Company, Xekaman 1 Power Company and Xekaman 3 Power Company.

The construction ministry said that the corporation should be chosen given its human resources, available equipment and experience in constructing large infrastructure projects.

The state-owned Song Da was equitized in 2018 following which the state still holds up to a 99.79 percent stake.

The Song Da Corp was established by the government in 1961 and has since been the main builder of major power plants in Vietnam, including the 2,400 MW Son La Hydropower Plant in Son La Province, the largest in Southeast Asia.

The North-South Expressway covers 2,109 kilometers, extending from the northern mountainous province of Lang Son, which borders China to the southernmost province of Ca Mau. Once completed, it will be the main traffic artery connecting either end of the country.

The eight sections are part of a total of 11 that will comprise the eastern cluster of the North-South Expressway, which is among the national top priority projects for upgrading Vietnam’s outdated infrastructure. Work on the three state-funded sections is already underway.

The eight sections are scheduled for completion by 2022.

Work to begin this year on three major transport projects.

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