Exit for Bao Loc City bypass

The Bao Loc City bypass project under the BT Project for Investment in Construction of Restoration and Renovation of National Highway 20 will be resumed with public investment capital, after 4 years of "standing still" due to lack of capital as an independent project.

Due to the lack of capital for construction investment and site clearance compared to the approved financial plan, the Bao Loc City bypass has not been completed and construction has been suspended since October 2020.

Clear treatment direction

There have been important decisions that can change the "fate" of the Bao Loc City bypass, according to the latest direction of Permanent Deputy Prime Minister Nguyen Hoa Binh in Notice No. 534/TB-VPCP at the meeting on the plan to handle the Bao Loc City bypass project under the BT Project for Investment in Construction of the Restoration and Renovation of National Highway 20, section Km0 - Km 123+105.17 in the territory of Dong Nai and Lam Dong provinces (National Highway 20 Project).

In Notice No. 534, Permanent Deputy Prime Minister Nguyen Hoa Binh said that it is necessary to promptly resolve problems related to the Bao Loc City bypass project under the National Highway 20 Project, in order to promote the effectiveness of the entire route, avoid unfinished and degraded projects, affecting traffic safety and wasting State resources.

Accordingly, Permanent Deputy Prime Minister Nguyen Hoa Binh agreed to stop investing in the Bao Loc City bypass route under the BT form and organize the establishment of a new project for the remaining routes of the Bao Loc City bypass route to invest with public investment capital, as proposed by the Ministry of Transport (MOT) and agreed by ministries and Lam Dong Provincial People's Committee at the meeting. The Ministry of Transport is fully responsible for the contents and proposed reports, ensuring compliance with regulations.

As of July 2020, the Bao Loc City bypass has completed 15.48/15.58 km of roadbed, but the National Highway 55 intersection has not been completed; 3/3 bridges have been basically completed, Nausri, Minh Rong 2 and Au Co bridges have been constructed to the bridge deck, railings, expansion joints have not been completed, asphalt concrete surface on the bridge... cone reinforcement has not been completed; crushed stone aggregate foundation, cement reinforcement completed 15/15.58 km (12.15 km accepted)... Project Management Board 7, project enterprises and localities are continuing to handle the section of the route that has collapsed and sunk due to storms and rain.

The Ministry of Transport is assigned to preside over and coordinate with the Ministry of Finance, the Ministry of Planning and Investment, the Ministry of Justice and relevant agencies to review legal provisions to complete related procedures as prescribed, avoiding complaints; is responsible for balancing capital allocation for the National Highway 20 Project to fully and timely pay due debts, without affecting Vietnam's national credit rating and the Government's reputation.

Lam Dong Provincial People's Committee shall base on the provisions of the Road Traffic Law and its implementing guidelines after they come into effect to invest in completing the remaining items of the Bao Loc City bypass in accordance with regulations, ensuring completion in 2025.

“The Ministry of Transport will coordinate with the Lam Dong Provincial People's Committee to complete investment procedures according to regulations. The Lam Dong Provincial People's Committee is responsible for reviewing and balancing capital to implement the remaining items of the Bao Loc City bypass in accordance with legal regulations,” Deputy Prime Minister Nguyen Hoa Binh directed.

The Bao Loc City bypass route, which has a rather unfortunate fate, was originally a component of the National Highway 20 Project, section Km0 – Km123+105.17, to reduce the load on National Highway 20 running through the center of Bao Loc City.

Previously, on the basis of the Prime Minister's approval of the investment policy under the BT contract form, the Ministry of Transport approved the National Highway 20 Project, section Km0 - Km123+105.17 in August 2013, and signed a contract with the project investor/enterprise in accordance with the law on January 16, 2014.

According to Original Contract No. 12/HD.BT.BGTVT, the total investment of National Highway 20 Project is VND 5,264,634 billion, of which the investor's equity is VND 601,463 billion and foreign loan capital guaranteed by the Government is USD 250 million with loan contract insurance from the Multilateral Investment Guarantee Organization (MIGA), part of the World Bank Group (WB).

The total payment value of the National Highway 20 Project is provisionally determined to be VND 8,795,380 billion, excluding value added tax (VAT) refund.

National Highway 20 project completed construction, opened to traffic on April 28, 2015 and was handed over for exploitation and put into use from September 2015.

To promote the effectiveness of the Project investment, based on the proposal of the locality and the investor, after balancing the remaining capital of the Project, the Ministry of Transport reported and received approval from the Prime Minister for the policy of adding investment in the Dau Giay intersection and the Bao Loc City bypass to the National Highway 20 Project.

Implementing the policy approved by the Prime Minister, the Ministry of Transport approved the Project adjustment, negotiated and signed the contract appendix with the project investor/enterprise in March 2018 in accordance with legal regulations.

Accordingly, the total investment of the Project is adjusted to VND 5,160.852 billion, including the construction cost of Dau Giay intersection of about VND 324 billion and the Bao Loc City bypass of about VND 806 billion. The total payment value including interest, fees, other costs... is temporarily determined to be VND 9,456.356 billion, including VAT refund of VND 361.869 billion in the Project's financial plan according to the conclusion of the Government Inspectorate.

In fact, the project investor/enterprise has started construction of 2 additional items since February 2017, of which the Dau Giay intersection has been completed and put into operation on June 20, 2022. Regarding the Bao Loc City bypass item, by October 2020 when construction had to be temporarily suspended, the construction volume had reached 70%.

Avoid affecting the national credit rating

In an official dispatch sent to the Government in June 2024, the Ministry of Transport reported quite specifically the reasons why the Bao Loc City bypass project could not be completed and has been stalled for the past 4 years.

Specifically, the site clearance cost approved by the locality increased by about 61.5 billion VND. According to the financial plan of the Project, in 2018, the Project was supplemented with VAT refund source to repay foreign loans, however, according to the guidance of the Ministry of Finance, the Project was not refunded VAT of about 361.869 billion VND, so there was a shortage of funds.

In addition, in 2018, the state budget did not have time to allocate capital to repay foreign loans, so the project investor/enterprise used the project's capital to repay the debt in advance. Meanwhile, Lam Dong Provincial People's Committee could not allocate the remaining capital from the local budget as committed to complete the entire Bao Loc City bypass route, due to the State Budget Law at the time of construction.

According to Mr. Le Anh Tuan, Deputy Minister of Transport, due to the lack of capital for construction investment and site clearance compared to the approved financial plan, the Bao Loc City bypass has not been completed and construction has been temporarily suspended at the technical stop, posing many potential risks of traffic safety and landslides due to storms and floods.

In particular, because the land clearance costs have not been paid and completed for the people, MIGA has had some opinions on environmental and social issues related to the Project, and warned that failure to complete could lead to a breach of commitment assessment, impact on loan finance and impact on the national credit rating.

In Official Dispatch No. 12041/BGTVT-CĐCTVN sent to the Government leaders in early November 2024, the Ministry of Transport reaffirmed that stopping investment in the Bao Loc City bypass route under the BT contract form and establishing a new project for the remaining routes of the Bao Loc City bypass route to invest with public investment capital is the optimal solution to soon complete and put the project into operation.

While waiting for the organization to establish a new project, the Ministry of Transport directed its units to coordinate with relevant parties to manage and maintain the route; at the same time, review and arrange capital in the medium-term public investment plan of the Ministry of Transport and other legal capital sources (estimated at about 352.12 billion VND) for implementation.

The Ministry of Transport said that the handling plan has been agreed upon by the People's Committee of Lam Dong province and the project investor/enterprise. The lender also sent a letter (dated April 5, 2024) agreeing in principle on the handling plan proposed by the Ministry of Transport; the relevant ministries basically agreed on the plan to completely resolve the existing problems and difficulties, and continue to invest in completing the Bao Loc City bypass to ensure traffic safety.

“Based on the assigned medium-term public investment plan for the period 2021-2025, the Ministry of Transport is responsible for reviewing in detail the capital needs of a number of projects, in addition to balancing capital to fulfill the obligation to repay foreign debt on time for the Project, without negatively affecting Vietnam's national credit rating and the Government's reputation,” the leader of the Ministry of Transport emphasized.