Friendship Expressway Project

The Huu Nghi - Chi Lang Expressway Joint Stock Company has recently sent a written request to the Provincial Party Committee, the Provincial People's Council, the National Assembly Delegation, and the Provincial People's Committee of Lang Son province regarding several issues related to credit capital for the Huu Nghi - Chi Lang project.

Construction is underway on the Huu Nghi - Chi Lang expressway project.

In the document sent out, Mr. Luong Van Hiep, the General Director of the enterprise, stated that immediately after the groundbreaking ceremony (April 2024), the consortium of investors led by Deo Ca Group Joint Stock Company, together with the project enterprise (DNDA) and the construction contractor, mobilized 15 construction teams, 180 pieces of equipment, and 350 personnel to accelerate progress right from the initial stage.

However, the Huu Nghi - Chi Lang expressway project is facing difficulties in securing credit financing.

According to Mr. Hiep, on March 13, 2024, TPBank committed to providing 2,500 billion VND in credit financing and issued a performance guarantee for the project.

By April 14, 2024, the loan agreement had been signed. However, after six months, the loan funds had still not been disbursed to the project.

The reason given by the bank is concern about the low proportion of state budget funding involved.

"The initial state budget contribution to the project was allocated by the Government and local authorities at 6,000 billion VND (accounting for approximately 55% of the total investment), but the People's Committee of Lang Son province had to adjust it down to ensure the maximum percentage as stipulated by the PPP Law."

Currently, TPBank is concerned about the insufficient proportion of state budget capital participation. When actual revenue is not met, the bank will not share or support the costs as stipulated in Article 82 of the PPP Law," the document stated.

According to DNDA, another reason why TPBank is cautious about disbursing credit for the Huu Nghi - Chi Lang project is that some financial issues related to the previously invested Bac Giang - Lang Son expressway project have not been thoroughly resolved.

As a connecting route to the Huu Nghi - Chi Lang expressway project, the Bac Giang - Lang Son expressway was stalled for nearly 5 years due to a lack of state budget funding.

Upon commissioning, traffic volume was significantly lower than initially predicted due to several objective factors not attributable to the investor (Deo Ca Group), such as the removal of one toll station on National Highway 1 and widespread fare reductions. This resulted in actual revenue reaching only 39% of the initial financial plan, insufficient to repay the principal and interest to the lending bank.

Following numerous requests from investors and DNDA, the People's Committee of Lang Son province reported to the Government, proposing an additional 4,600 billion VND from the State budget to support the project (accounting for 37.75% of the total investment, less than the stipulated 50%). However, to date, this has not been resolved by the competent authorities.

Citing the case of the Dong Dang - Tra Linh expressway project, which secured funding from VPBank (2,300 billion VND) thanks to an increase in state budget capital to approximately 70% of the total investment, Huu Nghi - Chi Lang Expressway Joint Stock Company proposes that the Lang Son Provincial People's Committee direct the Provincial People's Committee to continue submitting a report to the Prime Minister to adjust and increase the percentage of state budget capital supporting the Huu Nghi - Chi Lang expressway project to 70% of the total investment.

The enterprise also proposed that the Lang Son Provincial National Assembly Delegation recommend to the National Assembly to amend the PPP Law in the direction that for projects already in operation that experience a serious decline in revenue due to objective reasons (not the fault of the investor), after applying contractual solutions but still proving unfeasible, the competent authority should consider supplementing state capital support, up to a maximum of 70% of the total project investment based on the audited and finalized value.

Source: https://www.baogiaothong.vn/du-an-cao-toc-huu-nghi-chi-lang-gap-kho-nguon-von-tin-dung-192241012101305377.htm