Politburo green-lights public funding for part of giant expressway project

By Hoang Thuy   June 7, 2020 | 04:24 pm GMT+7
Politburo green-lights public funding for part of giant expressway project
A section of the La Son - Tuy Loan Expressway connecting Da Nang City with Thua-Thien Hue Province which will be linked to the North-South Expressway. Photo by VnExpress/Vo Thanh.
The Politburo has voiced support for public funding of some sections of the North-South Expressway earlier planned to be awarded to private investors.

The main decision-making body of the Communist Party, in a recent statement, did not mention how many sections should be publicly funded, but the Standing Committee of the National Assembly has suggested three out of eight sections.

The Transport Ministry had earlier proposed to the National Assembly that all eight sections should be funded by the state’s coffers since private investors were having trouble getting bank credit.

But lawmakers said only three should be publicly funded in order to involve the private sector in infrastructure development. They are set to review the proposal on Monday.

The eight sections are part of a total of 11 to build the 653-kilometer eastern cluster of the North-South Expressway, a top priority project meant to upgrade the country’s creaking infrastructure. Work on the remaining three sections out of the 11 is underway using public funds.

The eastern cluster's projected total cost is VND102.5 trillion ($4.4 billion). This means, if land costs are excluded, a kilometer costs VND115 billion, or nearly $5 million, to build.

Pham Huu Son, CEO of Transport Engineering Design Inc. (TEDI), which came up with the cost projection, said this price tag is lower than the estimates made by some foreign consultancies of $6-8 million.

Last year the ministry had tried to find foreign investors for the eight projects in the form of public-private-partnerships (PPP), but very few got through the qualification round, which meant low competition.

It then decided that only domestic investors would be asked to bid to also "ensure national security and expand Vietnamese firms’ capability in infrastructure construction."

Many foreign companies, especially from Europe, Japan and the U.S., said the absence of government guarantees related to minimum returns and foreign exchange risks kept them away from large PPP transport infrastructure projects in Vietnam.

Work to begin this year on three major transport projects.

 
 
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