North-South Expressway: Revealing many domestic investors

	North-South Expressway project will avoid BOT mistakes
	Foreign investors interested in North-South Expressway project
	Removing the "bottleneck" of ground clearance for investors in the North-South expressway project

In the domestic prequalification dossier to select investors to implement some BOT sections of the North-South Expressway in the period 2017-2020, some criteria and conditions for domestic investors have been "loosened". Photo: ST

"Loosening" conditions

One of the questions that many people ask is how the process from issuing prequalification documents to the completion of bidding work will be done and how long it will take.

According to the Ministry of Transport, the issuance of invitations for prequalification of domestic investors to implement eight PPP projects was implemented in October. In favorable cases, bidding for investors can be completed in November 2020. During the implementation process, the Ministry of Transport will request the units to propose solutions to minimize the time within the permitted law to accelerate investor selection so that bidding can be completed at the end of August 2020.

Notably, in the domestic prequalification dossier to select investors to implement some BOT sections of the North-South Expressway in the period 2017-2020, some criteria and conditions for domestic investors have been "loosened". According to Mr. Nguyen Viet Huy, Deputy Director of the Public-Private Partnership Department (Ministry of Transport), in terms of experience capacity, instead of 30% as in the previous international prequalification documents, investors will be eligible when participating in a construction bidding package with a capital value of at least 20% of the construction and installation value of the project participating in the bidding. Regarding the joint name of investors, it is still required that the leading investor must account for at least 30% of the contributed capital, and each joint name shall not exceed five investors. However, the rule that other investors participating in the joint name must account for at least 15% of the contributed capital was abolished. Thus, investors participating in the joint name (except for the leading investor) only need 5-10%, or even lower. And the rule that each joint name does not exceed five investors is maintained to avoid splitting, causing complicated management.

In addition, investors with foreign capital are allowed to participate in the investment (or join investors' joint name), in the condition that their contributed capital does not exceed 51% (i.e. foreign investors do not hold controlling shares).

“The equity of the investors’ joint name needs to ensure at least 20% of the total investment of the project that are considered only to be satisfactory. This regulation aims to facilitate investors with financial capacity but lacking experience to link with investors with experience but lacking capital to join the project,” said Huy.

This is considered an important point in the domestic prequalification dossier to select investors to implement some BOT sections of the North-South Expressway in the 2017-2020 period.

In addition, the Ministry of Transport maintains previous regulations such as the equity of the investor (investors’ joint name) must be equal to at least 20% of the project participating in the bidding value; the commitment to finance capital from credit institutions is also required; the state does not guarantee exchange rates, and minimum revenue. In case investors cannot be found, the Ministry of Transport will report to the Government to report to the National Assembly for public investment.

30 investors participated

Regarding the capital disbursement plan, according to the Ministry of Transport, the total capital allocated under the Resolution No. 52/2017/QH14 was 55,000 billion VND, of which about 27,306 billion VND was to implement the entire clearance of 11 projects and build three public investment projects using all state budget capital; 27,694 billion VND was to partially support construction costs for the eight PPP projects to ensure their feasibility. The capital for construction costs of the eight PPP projects will be disbursed only after disbursing 50% of investors' equity and disbursing in parallel with the ratio of the state's investment capital, commercial loans and owner's equity on the basis of the volume of performance. Investors have a maximum of six months to arrange credit loans and to perform disbursement procedures.

According to the Minister of Transport Nguyen Van The, about 30 domestic investors have bought bidding documents and are expected to attract 50 - 60 domestic investors.

The North - South expressway project, National Highway 45 - Nghi Son section has attracted interest from a number of big investors such as Deo Ca Group, Hoa Binh Construction Group, and Central Construction Group. And the section from Nha Trang - Cam Lo also has attracted interest from many investors such as Phuong Thanh Group, Cienco4 Group Joint Stock Company, Vinaconex, Pacific Group, and Cuong Thuan IDICO.

These are all big and experienced business groups with financial capacity in implementing transport projects in Vietnam. Hoa Binh Group, for example, is one of the most competitive and efficient enterprises in the construction industry. As a subcontractor to foreign companies in large-scale projects in the past, Hoa Binh has become the main contractor and now a general contractor of many large-scale and high-tech projects. In particular, in the trend of internationalization, Hoa Binh is also the first Vietnamese construction contractor that has entered foreign markets in Malaysia (Le Yuan Residence project, Desa Two project) and Myanmar (GEMS project).

One of the “big” investors in this competition is Cienco 4 Group Joint Stock Company with a series of big projects such as Lang - Hoa Lac, Roads 14, 51 and National Road 5. Up to 19 bridges on the National Highway 1A, section from Ho Chi Minh City to Can Tho, the National Road 1A, section Vinh - Dong Ha, Dong Ha - Hue, Tan De Bridge, R5 Project - National Highway 10 - Hai Phong, Ben Luc bridge, Da Rang bridge, and Vinh Tuy bridge. This company, together with Thang Long Construction Corporation, invested in building Yen Lenh bridge under the Build - Operate - Transfer (BOT) method. In 2003, this enterprise also invested in constructing a bypass road of the National Highway 1A bypassing Vinh City with a total budget of nearly 400 billion VND under the BOT method. Currently, these projects have been put into operation.

The eight Eastern sections of the North - South expressways in the period 2017-2020 call for investment under the form of BOT with the amount of capital invested by investors of about 63,716 billion VND. In particular, the equity of investors is about 12,743 billion VND, loans are about 50,973 billion VND, and the rest is supported by the state budget, including:

Mai Son - Highway 45 section (through Ninh Binh - Thanh Hoa), 63 km long, with a total investment of about 12,900 billion VND; the National highway 45 - Nghi Son (Thanh Hoa) section, 43 km long, with a total investment of over 6,300 billion VND.

Nghi Son - Dien Chau section (Thanh Hoa - Nghe An), with a length of 50 km and a total investment of over 8,300 billion VND; Dien Chau - Bai Vot section (Nghe An - Ha Tinh) section, 50 km long, with a total investment of more than 13,300 billion VND.

Nha Trang - Cam Lam section, 50km long with a total investment of more than 7,615 billion VND, of which the state supports more than 5,058 billion VND; Cam Lam - Vinh Hao section, 79km long, with a total investment of more than 13,687 billion VND, of which the state supports more than 9,311 billion VND.

Vinh Hao - Phan Thiet (Binh Thuan) section, 101 km long, with a total investment of over 11,600 billion VND; Phan Thiet - Dau Giay section, 99 km long, with a total investment of more than 14,359 billion VND, of which the state supports more than 2,480 billion VND.