Experts want ACV as Long Thanh airport builder

At the ongoing National Assembly session many lawmakers have expressed concern about awarding the deal to the state-owned ACV saying its $4.8 billion cost for the first phase is well beyond the airport operator’s means.

But Dang Huy Dong, head of the Planning and Development Institute and former Deputy Minister of Planning and Investment, said the cost estimate is based on the pre-feasibility report, which includes many hypothetical values and has a margin for error of 10-15 percent.

After the feasibility study report is approved, the main developer would have to do geological surveys to accurately determine elements like the nature of the foundation, materials required and construction method following which a new estimate has to be made, he said.

Dong therefore suggested that lawmakers should not focus on numbers yet and instead hire an independent consultancy to assess the project as their concerns about "unverified" costs could delay the work and slow down infrastructural development.

Pham Van Toi, vice chairman of the Vietnam Association of Aviation Science and Technology, agreed with Dong saying by awarding the contract to ACV, Vietnam could avoid dependence on foreign technology.

The company has cash reserves of VND25 trillion ($1.07 billion) and could borrow the rest from banks without needing government guarantees, he said.

Legislators want the airport to be operational by 2025, and assigning ACV as the investor is the only option for meeting this deadline, Toi added.

Dong pointed out that ACV is the most capable of all local firms in airport infrastructure.

If the contract is to be awarded through a tender, applicants must have experience operating airports with at least 80 percent of Long Thanh Airport's designed capacity, and only ACV meets this requirement in Vietnam, he said.

No other firm could compete with ACV in terms of airport management either since it is the operator of the country’s major airports in Hanoi and HCMC, Dong argued.

"I support creating a fair competitive environment and developing the private sector, but the above points are the reality."

Assoc Prof Dr Nguyen Thien Tong, former head of the HCMC University of Technology's department of aviation engineering, said the total cost of the three-phase Long Thanh Airport project would be $16 billion, which is far beyond ACV's means, and it would have to borrow in the international market at an interest rate of around 6 percent.

This could pose a huge risk to ACV should the airport fail to perform as expected, he said.

"What happens if we build the first phase and then the cost of the subsequent phases doubles or triples? If we don't have the money for the subsequent phases, what then?" he added.  

Tong was also critical of the total area of the airport in relation to its capacity, saying there are many airports with the same capacity as Long Thanh’s but are much smaller than its proposed 5,000 hectares.

He pointed to Singapore's Changi Airport with a capacity of 85 million passengers a year and an area of 1,300 ha and Spain's Barcelona Airport which has a capacity of 85 million and an area of 1,533 ha.

With its planned capacity of 80-100 million passengers, Long Thanh would only need 1,300-2,300 ha, and a large amount of money could be saved by reducing its size, he said.

But Tong was also opposed to an international tender, saying very few developers would apply and most would be Chinese.

Dong agreed saying awarding it to a foreign developer could be a security risk and Vietnamese companies could hire foreign firms to meet international standards.

Based in southern Dong Nai Province, Long Thanh International Airport is expected to begin running at a capacity of 25 million passengers as soon as the first phase, and by 2030 its capacity could reach 85 million, according to the Ministry of Transport. 

The airport was approved by the National Assembly four years ago, but funding has remained a big question though construction of the first phase is set to start next year.

It will be built in three phases over three decades. The first phase is scheduled for completion in 2025, and the next two in 2030-35 and 2040-50.

It will take over the overflow from Tan Son Nhat International Airport, 40 kilometers away in Ho Chi Minh City which is operating far above its designed capacity.