North - South Expressway Project: Turning to public investment?

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The Eastern North-South expressway is a key national project, so ensuring national defenceand security is an important factor. Photo: ST

Appoint contractors

The project building sections on the Eastern North-South expressway in the 2017-2020 period was approved by the National Assembly in accordance with the investment policy in Resolution No.52/2017/QH14 including 11 component projects, of which three were invested from the State budget and eight were invested in the PPP form with a total investment of VND118,716 billion. The State invested VND55,000 billion to implement three component projects in the form of pure public investment, whilethe remaining eight component projects including Dien Chau–Bai Vot, Nghi Son –Dien Chau, Mai Son - Highway 45, Highway 45 - Nghi Son, Nha Trang - Cam Lam, Cam Lam –Vinh Hao, Vinh Hao–Phan Thiet, and Phan Thiet–Dau Giay with a total investment of VND63,716 billion will be invested usingthe public-private partnership (PPP) model.

However, according to the Government Office's announcement onsolutions to remove difficulties of the Covid-19 pandemic, the Government will propose to change the investment form of the eight North-South expressway projects and the My Thuan - Can Tho expressway project from PPP to public investment. If approved, instead of the three existing projects, 11 projects will be transferred from PPP to public investment to maximize use of capital, accelerate investment, put the project into use soon, thereby contributing to growth.

Previously, when making suggestions to change the investment form of some PPP North-South expressway projects to the Government, the Ministry of Planning and Investment said it was necessary to review in detail the eight PPP projects to change them all topublic investment, ensuring the most feasibility. Accordingly, these projects must be connected with the ongoing sections, be able to complete investment procedures early and accelerate ground clearance and construction progress; disburse all annual capital plan assigned in the period of 2018-2020 and carry out the transition forthe next stage, avoiding prolonging disbursement time for capital plans of projects that cannot be implemented and disbursed.

To accelerate the progress of these projects, the Ministry of Planning and Investment proposed the Ministry of Transport submit to competent authorities for consideration the contractor selection in the contractor appointment form. The appointment of contractors should be done according to the following principles: the designated enterprises must have the capability of finance, machinery, construction, human resources and experience in implementing similar projects to ensure the quality of work. The priority is given to construction enterprises under the Ministry of Defence.

In addition, it is necessary to review the total project investment after changing investment form, avoiding not overlapping with the entire site clearance fund. In the appointment of contractors, it is necessaryto save five% to seven% of the approved estimate of the designated bidding package; build a clear mechanism of rewards and penalties for selected contractors to accelerate progress of projects, using the above-mentioned savings to deduct a reward for contractors that are behind schedule.

Prioritise defence enterprises

In early March, the Ministry of Transport proposed two options to change the investment form of North-South expressway projects. Option one is to conduct public investment for the three urgent projects (Mai Son - Highway 45 section, 63 km long, Highway 45 - Nghi Son section, 43 km long and Phan Thiet–Dau Giay section, 99 km long) with a budget of more than VND29,490 billion. Option two is to change the eight expressway projects into public investment. After they are completed, they will be concessional to exploit and then the capital will be recovered to submit to the State budget. The Government will use VND29,490 billion to invest the three urgent projects first. The remaining five projects that need VND44,490 billion will be balanced in the capital plan for 2021-2025.

Evaluating the plan to change all eight component projects from PPP to public investment, economist Dang Dinh Dao said the transition to full public investment would solve two problems, which are capital and investors because right after prequalification, the PPP projects could not select many investors. Even when bidding was successful, the projects might be "broken" because investors have faced many difficulties in accessing credit from banks.

“The Eastern North-South Expressway is a national key project, so ensuring national defence and security is very important. This is also one of the reasons given by the Ministry of Transport when deciding to switch from international bidding to domestic bidding for the eight component investment projects in the form of BOT. Therefore, the fact that enterprises of the Ministry of Defence carry out bidding packages will be consistent with this factor. Although the implementation of all 11 component projects funded by the State budget will ensure the success of the North-South Expressway project, the pressure on the budget as well as the balance of allocating public investment is an issue. The capital balance will need to be done carefully," said Dao.