Work stalls again on key southern Vietnam expressway

By Doan Loan   February 17, 2019 | 11:13 pm PT
Work stalls again on key southern Vietnam expressway
The Trung Luong-My Thuan expressway will connect to the existing HCMC-Trung Luong highway. Photo by VnExpress/Xuan Hoa.
A cash crunch, dispute over credit interest rates, and legal troubles have again delayed construction of the Trung Luong - My Thuan Expressway. 

Four years after construction began only 15 percent of the 51 km route between HCMC and Tien Giang Province has been completed, meaning it cannot be completed as scheduled in 2020. 

The Ministry of Transport has only approved an interest rate of 7.8 percent on loans from banks while the actual rate agreed between the parties is 10.8 percent. The lending banks have yet to disburse funds as a result and are awaiting a solution. 

Further, changes to regulations mean the project can no longer use VND3.9 trillion ($168.81 million) worth of toll collected on the nearby Ho Chi Minh City - Trung Luong Expressway. 

From January 1 this year public assets used to pay for build-operate-transfer (BOT) projects are subject to more stringent rules.

Financing banks recently stopped disbursement of money for the work pending replacement of an investor involved in criminal proceedings.

Trung Luong - My Thuan BOT JSC, the joint venture company that is building the expressway, has petitioned the government for support to get bank loans in place of the public funds it has lost.

The company has also asked for the project to be supervised directly by the Tien Giang People’s Committee so that local authorities could have a more hands-on role in resolving issues.

Deputy Minister of Transport Nguyen Nhat said new investors cannot come in to rescue the project since transfer of ownership is only possible when it is finished. 

The government has called a meeting with the ministry next week to discuss solutions, he said. 

The expressway is expected to cost VND9.67 trillion ($415.23 million), with a joint venture of six investors contributing 30 percent (VND2.8 trillion or $120.2 million) and the remaining coming from bank loans.

The work originally began in 2009, but suffered prolonged delays with investors unable to disburse their share of investment.

In October 2014 the project was freshly approved in BOT mode with additional funding coming from toll collected on the Ho Chi Minh-Trung Luong Expressway.

Work restarted in February 2015 but has again been delayed due to difficulties related to funding. 

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