North-South Highway project to use public investment
Explaining the shift in policy, Minister of Transport Nguyen Van The cited great difficulties to secure the needed investment as banks were tightening their purse for long-term loans in a post-COVID-19 financial market.
The National Assembly discussed changing to the public investment model for the North-South Highway during a meeting on Tuesday in Ha Noi.
The Ministry of Transport proposed three sections of the national highway, Vinh Hao-Phan Thiet, Mai Son-National Route 45 and Phan Thiet-Dau Giay, employ a public investment model. The remaining five sections would use the public-private partnership (PPP) model.
Explaining the shift in policy, Minister of Transport Nguyen Van The cited great difficulties to secure the needed investment as banks were tightening their purse for long-term loans in a post-COVID-19 financial market.
In addition, it has been difficult to find interested parties for projects under the build-operate-transfer model as the country still lacks an effective risk-sharing mechanism for investors.
Given the current speed site clearance for the highway was being carried out, the ministry said construction could begin as early as this September. Meanwhile, the PPP model would require a lengthy process to find investors and at least six months to seek capital, making it near impossible to start any work before July 2021.
In a worst-case scenario, should the Government fail to find suitable investors or secure the required investments, the process to shift from PPP to public investment would add another six months and delay the construction into 2022.
Also, using public funds would help local economies and industries, cutting borrowing costs and ensure the project’s uninterrupted progression.
According to a report from the transport ministry, switching to public investment would require an investment of VND100.8 trillion ($4.2 billion) with VND55 trillion already secured.
Vu Hong Thanh, chairman of the NA’s Committee of Economic Affairs, said the committee supports the shift to public investment. The committee, however, insisted the Government produce a report to the NA’s Standing Committee and go through the formal process to change the investment model for the project.
The committee also urged Government agencies and ministries to improve transparency and fairness for investors, to ensure smooth progression and construction meets quality standards.
Minister of Planning and Investment Nguyen Chi Dung stressed the importance of the project, which aims to connect numerous seaports, airports and tourism hubs across the country and provide economic benefits for 60 per cent of the population.
Dung said the project has been discussed and studied carefully by the NA and the Government. The NA gave the green light for the public investment model work on the ground to start as early as August 2020 and the three sections to be completed by the end of next year. — VNS
