Deo Ca Group cooperates with VDB to deploy investment in transport PPP projects

Vietnam Development Bank – VDB plans to provide a credit limit worth about VND20,000 billion in the period of 2024 – 2027 for Deo Ca Group to invest in transport infrastructure projects under the PPP method.

VDB agrees to cooperate in financing State investment credit capital for transport infrastructure investment projects invested by Deo Ca Group in the list of eligible loans and meet the loan conditions according to State regulations.

On March 28, in Hanoi , Deo Ca Group and Vietnam Development Bank (VDB) - Lam Dong Branch signed a cooperation agreement on financing state investment credit capital to implement transport infrastructure investment projects under the public-private partnership (PPP) method.

"We highly appreciate the cooperation between VDB and Deo Ca Group. This is a new cooperation model, promising to bring many benefits between the leading development credit unit and the largest investor in Vietnam in the field of transport infrastructure," said Mr. Le Anh Tuan, Deputy Minister of Transport .

Mr. Tuan said that the capital investment demand for developing transport infrastructure in the next 10-15 years is about 2 million billion VND, while the State budget can only balance a maximum of about 30%, equivalent to 600,000 billion VND; the remaining capital will have to mobilize private investment capital in the form of PPP.

The leaders of the Ministry of Transport hope that with its emerging role in the field of infrastructure investment, Deo Ca Group will continue to research new capital mobilization models, while expanding cooperation with domestic and foreign credit institutions, including VDB.

It is known that with the total amount of State investment credit capital provided to the economy reaching over 200,000 billion VND, in recent times, VDB has met an important part of the capital demand for socio-economic infrastructure development as well as improving the production capacity of economic sectors through financing and lending to nearly 200 key projects (Group A) nationally.

“VDB hopes that through Deo Ca Group, development credit capital will soon be invested in a transport infrastructure PPP project to have specific cooperation products,” said Mr. Dao Quang Truong, General Director of VDB.

According to Mr. Ho Minh Hoang, Chairman of Deo Ca Group, up to now, this unit has participated in investing in many large transport infrastructure projects with a total investment capital of more than 100,000 billion VND, thereby accumulating a lot of experience in implementing large PPP projects and expanding credit relations with many large domestic banks.

"We realize that signing credit contracts and disbursing capital from commercial banks is difficult, disbursing development credit capital from a state financial institution is even more difficult. However, we believe that from today's initial step, with the goodwill and determination of both sides, VDB and Deo Ca Group will soon finalize a number of specific projects to jointly implement in the coming time," Mr. Ho Minh Hoang emphasized.

It is known that according to the agreement just signed, the two sides agreed to cooperate in financing State investment credit capital for transport infrastructure investment projects invested by Deo Ca Group in the list of projects eligible for loans and meet the loan conditions as prescribed in Decree No. 78/2023/ND-CP dated November 7, 2023 amending and supplementing a number of articles of Decree No. 32/2017/ND-CP dated March 31, 2017 of the Government on State investment credit.

According to the agreement, the total expected capital supply for the period from 2024 to 2027 that VDB will provide to Deo Ca Group is about 20,000 billion VND, allocated annually, 2024: 1,400 billion VND, 2025: 3,500 billion VND, 2026: 9,600 billion VND, 2027: 5,500 billion VND.

The actual loan demand will be notified by Deo Ca Group to VDB Lam Dong Branch immediately after the projects are approved by authorized authorities for investment policy.

VDB assigns VDB Lam Dong Branch to perform the responsibility of arranging and meeting the maximum demand for State investment credit capital for projects invested by Deo Ca Group; providing credit undertakings suitable to the needs of each project; coordinated with Deo Ca Group to report to VDB to remove difficulties and debt in the process of receiving loan evaluation, disbursement and collection for projects of Deo Ca Group.

Deo Ca Group will provide VDB Lam Dong Branch with a list of investment projects, expected loan demand, status and progress of investment projects as soon as the Project has an approved investment policy; fully implement regulations on borrowing State investment credit; effectively implement investment and project management and exploitation, strictly perform the obligation to repay the debt in full and on time: principal, interest, fees (if any)...

Currently, to implement PPP projects, investors must mobilize capital from commercial banks with short terms and high interest rates. Banks are often not interested in this field because the proportion of state capital participation is low and many BOT traffic projects have encountered problems that have not been completely resolved.

The cooperation between the two units will solve some difficulties in implementing PPP projects, making capital mobilization easier, reducing the financial burden for and contractors participating in the project. This creates trust among stakeholders, promotes the approval and implementation process of the project, and at the same time, opens up new opportunities for transport infrastructure development, creating favorable conditions for the implementation of other PPP projects in the future.

Deo Ca Group - the leading unit in Vietnam and aiming to reach international level in the field of investment, construction, management and operation of Vietnam's transport infrastructure projects. To date, Deo Ca Group has completed more than 30km of road tunnels, more than 400km of highways and national roads, 6 large bridges and manages 15 toll stations nationally.

In particular, the Cam Lam - Vinh Hao Expressway PPP Project implemented by Deo Ca Group will be inaugurated before April 30, 2024. This is the most difficult project when Deo Ca involved in the bidding to reduce the price by nearly 1,000 billion VND, the project has complex terrain and geology, very difficult access roads, material shortages, and the Covid epidemic, but now it is also rushing towards the finish line.

In 2024, Deo Ca Group proposed to invest in more than 300 km of highways and belt roads from typical projects such as Huu Nghi - Chi Lang highway (in Lang Son), Tan Phu - Bao Loc (in Lam Dong), Ho Chi Minh City - Thu Dau 1 - Chon Thanh, Ring Road 4 through Binh Duong province, Ho Chi Minh City - Trung Luong - My Thuan phase 2... with a total investment of more than 100,000 billion VND.

From the PPP model, Deo Ca Group has pioneered the application of the PPP++ model with the aim of optimizing capital mobilization for projects by diversifying capital sources including state budget capital, equity, credit, construction profits, bonds, stocks and BCC contracts to improve mobilization efficiency and minimize implementation risks.

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