The Ministry of Transport outlines five advantages of entrusting VEC with the investment in expanding the Ho Chi Minh City expressway.

The Ministry of Transport has outlined five advantages of entrusting the Vietnam Expressway Investment and Development Corporation (VEC) with the investment in expanding the Ho Chi Minh City - Long Thanh expressway.

Avoid having to deal with conflicts of interest.

The Ministry of Transport has just submitted a report to the Standing Committee of the Government on the investment plan for the expansion project of the Ho Chi Minh City - Long Thanh expressway.

Ho Chi Minh City - Long Thanh Expressway (Photo: Ta Hai).

In agreement with the opinion of the State Capital Management Committee at Enterprises (State Capital Management Committee) that VEC has sufficient capacity to be the investor and manage, operate, and manage the Ho Chi Minh City - Long Thanh expressway, the Ministry of Transport believes that, compared to public investment and investment under the PPP method, entrusting VEC with the project will have 5 advantages.

Firstly, it is important to leverage the role and resources of state-owned enterprises, in line with the objectives of establishing VEC, ensuring synchronization in the operation and exploitation of expressways, and laying the groundwork for VEC to invest in expanding the expressways under its management.

Secondly, this is consistent with VEC's ownership of this road project in the near future (currently undergoing procedures to transfer this asset to VEC through an increase in charter capital);

Thirdly, it avoids the need to use public investment funds, reducing pressure on the state budget.

Fourthly, the implementation time is shorter.

Ultimately, the option of assigning the project to VEC would avoid resolving conflicts of interest between VEC and the new entity (as in the case of investment under the PPP method).

"Using capital from state-owned enterprises like VEC for investment is one of the three current forms of investment in transport infrastructure, similar to how the Vietnam Air Traffic Management Corporation and the Vietnam Airports Corporation invest in airport infrastructure," the report stated.

The increasing traffic density has created an urgent need for the expansion of the Ho Chi Minh City - Long Thanh expressway (Photo: Ta Hai).

Expedite the procedures for applying for an increase in charter capital, ensuring eligibility for commercial loans.

To ensure the resources for the implementation of the Ho Chi Minh City - Long Thanh Expressway expansion project by VEC, in report No. 1734/BC-UBQLV dated August 7, 2024, the Capital Management Committee proposed that the competent authority consider and allow the deferral and postponement of principal repayment (nearly 4,000 billion VND advanced by the Ministry of Finance to VEC) and interest related to the construction bonds advanced by the Ministry of Finance from the 2022-2026 period to the 2031-2034 period.

Commenting on this issue, the Ministry of Transport stated that VEC is currently dedicating all its available resources (over 9,400 billion VND) to completing the Ben Luc - Long Thanh project. Therefore, the only solution left for VEC to have equity capital to implement the expansion project of the Ho Chi Minh City - Long Thanh expressway is the one proposed by the Capital Management Committee.

"According to the provisions of Government Decree No. 92/2018/ND-CP on the Management and Use of the Debt Repayment Accumulation Fund; and Government Decree No. 91/2018/ND-CP on the Issuance and Management of Government Guarantees, the Prime Minister has the authority to consider debt restructuring based on the report of the Minister of Finance."

The Ministry of Transport supports VEC's proposal. However, VEC needs to further study the option of repaying the principal and postponing interest payments. Specifically, it should clarify the interest payments in each stage to propose a plan for submission to the competent authority for decision," the Ministry of Transport requested.

Regarding the capacity to mobilize commercial loans, on October 17, 2024, the State Capital Management Committee submitted to the Government a plan to supplement VEC's charter capital for the 2024-2026 period with 38,251 billion VND. The Government Office is currently seeking opinions from relevant ministries and agencies.

To ensure VEC meets the conditions for commercial loans, the Ministry of Transport has requested relevant agencies to expedite the procedures for reporting to the Government for consideration and submission to the National Assembly for a decision on the policy of supplementing VEC's charter capital. This is one of the conditions for the Prime Minister to approve the investment policy for the project.

The Ministry of Transport also noted that, in the event VEC does not meet the conditions to invest in the project, according to the draft amended Law on Public Investment currently being considered and approved by the National Assembly at the 8th session of the 15th National Assembly (expected to take effect from January 1, 2025), the Prime Minister may balance the medium-term public investment capital for the period 2026-2030 to allocate to the state-owned enterprise (VEC) to invest in the project through public investment.

According to the proposed plan, the expansion project of the Ho Chi Minh City - Long Thanh expressway section will have a total length of nearly 22km.

Specifically, the section from the Ho Chi Minh City Ring Road 2 intersection (Km 4+000) to the Ho Chi Minh City Ring Road 3 intersection (Km 8+770) will be expanded to 8 lanes according to the plan.

The section from the Ho Chi Minh City Ring Road 3 intersection (Km 8+770) to the Bien Hoa - Vung Tau Expressway intersection (Km 25+920) will be expanded to 10 lanes according to the plan.

The preliminary total investment for the project is approximately VND 14,955 billion (including interest on loans during the construction period, excluding land clearance costs). Of this, VND 5,555 billion (37%) is equity capital and VND 9,400 billion (63%) is commercial loan capital.

VEC will mobilize 100% of the capital to implement the project investment and organize operation and toll collection for capital recovery. Central/local budget funds (Ho Chi Minh City, Dong Nai) will be used for land clearance and separated into an independent project under the public investment model.

If approved by the competent authorities, the project will be prepared for investment from 2024-2025, and implemented from 2025 to 2027.

Source: https://www.baogiaothong.vn/bo-gtvt-neu-5-uu-diem-khi-giao-vec-dau-tu-mo-rong-cao-toc-tphcm-long-thanh-192241127155352804.htm