Expressway work runs into financial roadblock

By Doan Loan   July 25, 2019 | 02:19 pm GMT+7
Expressway work runs into financial roadblock
A section of the under-construction Trung Luong-My Thuan Expressway. Photo by VnExpress/Hoang Nam.

Work on the long-delayed Trung Luong – My Thuan Expressway might stall again next month since its investor is cash-strapped.

A contractor for the expressway in southern Vietnam, which will link up with an existing expressway to connect Ho Chi Minh City with the Mekong Delta province of Tien Giang, stopped work on Tuesday and put up banners demanding to be paid.

Many contractors said at a meeting Wednesday they have not been paid for the last three months by the Trung Luong - My Thuan BOT JSC which is building the build-operate-transfer (BOT) project. The firms claimed they do not have money to pay their workers and suppliers.

Mai Manh Hong, CEO of the Trung Luong - My Thuan BOT JSC, said there were financial difficulties. The government has sought approval from the National Assembly to use VND2.1 trillion ($90.3 million) worth of public funds, but it has not been forthcoming, he said.

The company and banks have been unable to agree on loan terms, Hong said, explaining that while the latter require the company to invest 30 percent of the cost, the current norm for BOT projects is only 10-15 percent.

"Without money we might have to stop the work by the end of August."

However, Tien Giang authorities want the work to continue. Tran Van Dung, Deputy Chairman of the province, said the difficulties would be reported to Prime Minister Nguyen Xuan Phuc and financial support sought.

The Trung Luong – My Thuan Expressway is a key project in the south, linking HCMC with the Mekong Delta to meet transportation needs and foster socio-economic development.

Construction of the 51-kilometer expressway that will run through five districts in Tien Giang began in 2009 and was supposed to finish in 2013, but suffered delays as one investor after another pulled out.

In 2014 it was converted into a BOT project with supplemental funding from toll fees collected on the Ho Chi Minh-Trung Luong Expressway.

Construction restarted in February 2015, but the work again lagged behind schedule as financiers stopped funding after one of the investors was implicated in criminal proceedings.

The original investor, state-owned bank BIDV, withdrew from the project in 2012, and the project was transferred to the Ministry of Transport. Last March it was again transferred, this time to Tien Giang Province.

Its original cost was estimated at VND19 trillion ($817 million) but has reduced to VND9.67 ($415.23 million) with design changes.

The expressway is scheduled to open to traffic next year, but insiders are not sure the deadline can be met.

An illustration of the Truong Luong-My Thuan Expressway by VnExpress/Ta Lu.

An illustration of the Truong Luong-My Thuan Expressway by VnExpress/Ta Lu.

 
 
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