Open bidding to select investors for Ho Chi Minh City expressway

The Ho Chi Minh City - Moc Bai Expressway project will select investors through domestic open bidding, and in case foreign investors participate, international open bidding will be used.

In early October 2024, the Ho Chi Minh City Traffic Construction Investment Project Management Board (abbreviated as the Traffic Board) completed a draft notice to survey investors' interest in the Ho Chi Minh City - Moc Bai Expressway Construction Project (Phase I). The draft provides full options for selecting investors with many mandatory requirements on financial capacity, experience in investing in highway projects, etc.

The total investment in phase I is 19,617 billion VND, of which the capital of investors and enterprises participating in the project is 9,943 billion VND (accounting for 50.69% of the total investment) used to build the main road. The state capital participating in the project is 9,674 billion VND, accounting for 49.31% of the total investment of the project, used to clear the land and build bridges for people.

According to the plan developed by the Ho Chi Minh City Department of Transport, of the total VND 9,943 billion arranged by the investor, there must be at least VND 1,491 billion in equity capital, accounting for 15% of the total investment of the Project as prescribed in Clause 1, Article 77, Law on Investment under the Public-Private Partnership method (PPP Law).

In the case of a consortium, each member must meet the requirements corresponding to the equity capital contribution according to the consortium agreement. If any member of the consortium is assessed as not meeting the requirements, the consortium investor is assessed as not meeting the equity capital requirements. The leading investor of the consortium must have a minimum equity ownership ratio of 30%, and each consortium member must have a minimum equity ownership ratio of 15% in the consortium.

Investors participating in the Project investment will enjoy incentives on tax, land use fees, land rent and other incentives according to the provisions of the law on tax, land, investment and other relevant legal provisions.

In particular, this project will have a mechanism for sharing the increase and decrease in revenue in accordance with the provisions of Article 82 of the PPP Law and Decree No. 28/2021/ND-CP of the Government. In particular, the capital source expected to be used to pay for the decrease in revenue will come from the central budget reserve.

After the Project is completed, the investor will be able to collect tolls for an expected period of 16 years and 9 months, with an expected starting price of about VND 2,100/km for Group 1 vehicles. The collection rate for the remaining vehicle groups is determined according to the correlation coefficient between vehicle groups according to the form of toll collection by stage as prescribed in Circular 28/2021/TT-BGTVT dated November 30, 2021 of the Ministry of Transport. In which, the coefficient for Group 2 vehicles is 1.4 times; Group 3 vehicles is 2.1 times; Group 4 vehicles is 3.8 times and Group 5 vehicles is 5.7 times compared to Group 1 vehicles.

The draft also provides a preliminary return on investor equity for the project of about 11.77%/year. The project's loan interest rate is based on the provisions of Decree No. 28/2021/ND-CP, according to which the loan interest rate is determined based on the reference of current lending interest rates of commercial banks and similar projects being implemented by the Ministry of Transport (expected to be applied to the Project at 10.7%/year).

One of the issues that investors are most concerned about is the form of investor selection, which is also stated in the final draft.

Specifically, if there are no more than 3 investors meeting the requirements to implement the Project, there will be competitive negotiations. If there are 6 or more interested investors, of which at least 1 foreign investor registers interest, there will be an international open bidding with pre-qualification.

If there are 6 or more domestic investors registering interest, there will be a domestic open bidding with pre-qualification.

In case there are less than 6 interested domestic investors, there will be a domestic open bidding (no pre-qualification). Similarly, in case there are less than 6 interested investors, including 1 foreign investor, there will be an international open bidding, no pre-qualification.

To increase the attractiveness of the Project, Ho Chi Minh City hopes that investors will have a preliminary assessment of the attractiveness, feasibility and financial efficiency of the Project; the expected return on equity of the investor; the ability to mobilize and provide credit capital to implement the Project.

In addition, Ho Chi Minh City also hopes that investors will give their opinions on the progress of the project implementation; difficulties and problems in site clearance, resettlement, and material supply for project implementation...

Currently, the project has received attention from a number of domestic and foreign investors. In early February 2024, China Road and Bridge Corporation (CRBC) sent a proposal to the Ho Chi Minh City People's Committee with the desire to participate in investing in the Ho Chi Minh City - Moc Bai Expressway Project.

Source: https://baodautu.vn/dau-thau-rong-rai-chon-nha-dau-tu-cao-toc-tphcm---moc-bai-d228061.html