Road infrastructure construction under PPP model

CA - An official from Ministry of Traffic and Transportation said the ministry now has at least 10 road infrastructure projects calling for Public Private Partnerships (PPP) investment. With this model, the state can attract capital from private enterprises and share risks of construction. However, according to specialists, PPP projects are facing obstacles in mechanism.

 

The fact shows that PPP model was piloted successfully in many developed countries. In Vietnam, when the state budget remains limited, PPP investment model will likely bring in high efficiency because the state and private firms co-develop infrastructure, said Nguyen Trong Tin-head of Ministry of Planning and Investment (MPI)'s Department for Infrastructure and Urban Centres.

 

In November 2009, MPI announced that World Bank pledged a non-refundable aid of $500,000 for Vietnam to build an office of developing PPP investment model in infrastructure. In addition, WB will aid extra $850,000 (sourced from AusAID) to help Vietnam build the legislative frame on financing PPP projects. In infrastructure construction field, these are really good news for piloting PPP projects in the country.

 

Ngo Thinh Duc, vice minister of traffic and transport said, prime minister in 2008 allowed Bitexco Group to draw up the Dau Giay-Phan Thiet four-lane expressway project with total expense of 14.355 trillion dong, construction time of 36 months and 100 kilometres in length by the end of 2010 as the first PPP project in Vietnam. Due to the difficulties in capital withdrawal, so contractors could be allowed to borrow WB's loans via PPP method at low interest rates, long lending time and fewer risks whereby calls for state's financial support will be limited.

 

Currently, the ministry listed nine other road projects calling PPP investment of domestic and foreign private firms, namely Ninh Binh-Thanh Hoa expressway, Da Nang-Quang Ngai highway ($1.6 billion), My Thuan-Can Tho ($400 million), Noi Bai-Ha Long ($940 million), Noi Bai-Mong Cai ($850 million), Dau Giay-Da Lat ($1 billion), Ben Luc-Long Thanh expressway ($1 billion), and Hai Phong international port ($415 million) and HCM City-Can Tho high speed railway (nearly $1.6 billion).

 

According to Ha Khac Hao-vice head of MPI's Planning and Investment Department, the ministry proposed the government to arrange enough funding for preparing aforementioned PPP road projects and give the detailed finance support plan to negotiate with investors.

 

He added, the government should issue a comprehensive legislative frame on the PPP investment and capital mobilisation mechanism. Basing on this, the ministry will promote first PPP projects in the country.