Investment mode change cuts North-South Expressway cost by millions

By Doan Loan   March 13, 2021 | 09:26 pm PT
By switching to public funding for building some sections of the North-South Expressway, the government has cut interest costs by hundreds of millions of dollars.

The Ministry of Transport has for instance approved a change to the cost of the 50-km Nghi Son – Dien Chau section between Thanh Hoa and Nghe An provinces. Its price tag under the earlier public-private partnership (PPP) model was VND8.38 trillion ($364.39 million), 30 percent of which was to be provided by the government. Now its estimated cost has been cut by VND1.09 trillion.

It is expected to be completed in 2023.

The cost of the 43-kilometer National Highway 45 – Nghi Son section in Thanh Hoa Province is down VND719 billion to VND5.64 trillion, according to the ministry’s Project Management Unit 2.

The two sections had failed to attract much interest when bids were invited in 2020. The Nghi Son – Dien Chau section did not get a single bid while the other received just one and from an unqualified bidder.

In 2020 the ministry switched to public funding for three other sections, Vinh Hao – Phan Thiet in the central province of Binh Thuan, Mai Son – National Highway 45 between Ninh Binh and Thanh Hoa provinces, and the Phan Thiet – Dau Giay section between Binh Thuan and Dong Nai.

Their cost has reduced by over VND3 trillion.

The ministry pointed out that the switch in funding mode would also speed up the work since there is no need to wait for private investors to mobilize funds.

A frequent problem is that banks are reluctant to lend to private firms for infrastructure projects since they need huge sums for a long period of time.

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