Examining the appraisal results of the PPP project of Dinh Khao bridge worth 2,846 billion VND

Reviewing the appraisal results of the 2.846 billion VND Dinh Khao Bridge PPP project.

The Đình Khao bridge construction project, connecting Vĩnh Long and Bến Tre provinces under the PPP (Public-Private Partnership) model, has a total length of 4.3 km, including a main bridge spanning the Cổ Chiên River that is 1.54 km long.

The inter-agency appraisal council has just submitted Report No. 7402/BC – HĐTĐLN to the People's Committee of Vinh Long province on the results of the appraisal of the pre-feasibility study report for the investment project to build the Dinh Khao bridge connecting Vinh Long and Ben Tre provinces under the PPP method.

This project is being implemented in Mang Thít district, Vĩnh Long province and Chợ Lách district, Bến Tre province.

Illustrative image.

According to the proposal of the People's Committee of Vinh Long province, the project has a total length of approximately 4.3 km, a road scale of class III, and a design speed of 80 km/h; the route and bridges along the route (including the Cai Cao bridge over the Co Chien river branch on the Ben Tre side) have a road surface width of 12 m (2 lanes), and in the completed phase, it will be 20.5 m (4 lanes), with land clearance completed in one go; the Dinh Khao bridge over the Co Chien river has a length of 1.54 km, and will be completed to a scale of 4 lanes, 17.5 m wide.

The preliminary total investment for the project, excluding interest, is VND 2,846 billion; including interest, it is VND 2,971 billion, of which the State capital in the PPP project is VND 1,452 billion (equivalent to 48.9% of the total investment).

In Report No. 7402, the Inter-Ministerial Appraisal Council stated that 12 out of 13 members agreed to approve the report (92%), of which 6 out of 13 members agreed without objection (46%); 6 out of 13 members agreed with comments to improve the draft (46%); and 1 out of 13 members did not vote but only provided written comments on the draft appraisal report (8%).

"Based on the provisions of point d, clause 3, Article 10 of Government Decree No. 35/2021/ND-CP dated March 29, 2029, the number of members voting in writing is 12/13, accounting for over 2/3 of the total number of members, thus meeting the conditions to approve the Report on the results of the appraisal of the Pre-feasibility Study Report of the Project," Report No. 7402 stated.

Among the comments contributing to the completion of the pre-feasibility study report, it is noteworthy that some members of the inter-agency appraisal council requested the People's Committee of Vinh Long province to clarify whether the existing Dinh Khao ferry service should be maintained after the Dinh Khao bridge is completed and put into operation, as the project is not part of National Highway 57 according to the Road Network Planning for the period 2021-2030 with a vision to 2050.

According to a survey by the consulting firm reported on May 30, 2024, the actual number of passengers and vehicles crossing the Dinh Khao ferry in 2022 and 2023 increased by an average of approximately 9% per year.

According to the calculations, the projected average growth rates are as follows: approximately 5.7% per year from 2025-2030; up to approximately 20% per year from 2030-2035; and a tendency to slow down to around 2.5% per year from 2035-2050.

The project dossier, submitted to the inter-ministerial appraisal council for review, has undergone numerous changes in data regarding flow forecasts, financial plans, and project payback periods. These changes, occurring within a short period, indicate a low level of reliability in the forecasting process.

Furthermore, traffic volume is projected to grow significantly during the 2030-2035 period (approximately 20%) and then decrease in the subsequent period (approximately 2.5%). These factors greatly influence the selection of investment scale and the calculation of the project's financial plan.

Because no project appraisal consultant was used, the inter-agency appraisal council requested the People's Committee of Vinh Long province to clarify the basis for traffic flow forecasting, carefully assess input factors to determine investment scale, calculate project financial plans, and develop solutions to handle risks in case of adverse fluctuations (increase in total investment, revenue not meeting forecasts, etc.).

According to the pre-feasibility study report, the revenue for recouping the investment and recovering the equity for the project is the revenue from toll fees collected at the toll station minus operating costs and related taxes. This revenue will be used to repay loans and recover equity simultaneously, in proportion to the capital raised for the construction project.

The preliminary financial indicators for the Project are as follows: Net Present Value (NPV) is approximately VND 2.44 billion (>0); Internal Rate of Return (IRR) is approximately 9.85%; Benefit-Cost Ratio (B/C) is approximately 1.01 (>1); and Weighted Average Cost of Capital (WACC) is approximately 9.67%. The above results indicate that the Project's financial feasibility is low.

Therefore, the Council requests the People's Committee of Vinh Long province to direct the unit preparing the Project to review the costs, supplement the sensitivity calculation of financial indicators due to changes in total investment, operating costs, revenue, and project contract duration to further clarify the financial feasibility of the project as stipulated in point d, clause 8, Article 4 of Decree No. 28/2021/ND-CP, as a basis for submission to competent authorities for consideration and decision.

Source: https://baodautu.vn/soi-ket-qua-tham-dinh-du-an-ppp-cau-dinh-khao-tri-gia-2846-ty-dong-d225472.html