VietNamNet
Bridge – On April 14, the Saigon 2
bridge project would be kicked off after two years of considering shifting from
BOT (build – operation – transfer) to BT (build –transfer) mode. Investing in
infrastructure items under the BOT mode has reached an impasse.
High
risks latent
When the state budget cannot provide huge capital for infrastructure projects, BOT, BT and PPP (private public partnership) prove to be the reasonable investment modes which are believed to help develop transport infrastructure. The Planning and Investment Department of the Ministry of Transport also said that the BOT-based investment was very effective.
However, things have got quite different. The Saigon 2 Bridge in HCM City is a typical example. Due to the shortcomings in programming fee collection stations, big problems were only realized just a short time before the project implementation day.
Experts then pointed out that the BOT mode would not be suitable to the project, because it would be impossible to build more fee collection stations on the Hanoi Highway. Therefore, the project has been delayed for two years, during which experts discuss the shifting of the investment mode from BOT to BT.
Some problems have also arisen at another BOT project – the Phu My Bridge. Since the volume of traffic is modest, the investor’s fee collected is not big enough to pay debts. Therefore, the investor has proposed to give back the bridge to the HCM City authorities.
The Ministry of Transport is now running 26 transport infrastructure projects under the mode of BOT, capitalized at 128 trillion dong. The ministry has reported that the projects with the investment capital of less than 1500 billion dong were all successful. Meanwhile, the projects with the total investment capital bigger than 1500 billion dong would not be able to take back the investment capital, if the investors only rely on the fee collection.
An official of the Ministry of Transport, who asked to be anonymous, said that the projects’ costs would be very high in the context of high bank loan interest rates and the delay in site clearance, thus leading to the slow project implementation.
Therefore, when considering making investments under the mode of BOT, investors need to have high financial capability. Meanwhile, it would be risky to borrow capital from banks to implement the projects, because of the high interest rates and the long time needed to collect fees.
Most recently, the Ministry of Transport has proposed the Ministry of Finance to promulgate a circular guiding the requirements on financial capability for BOT. BTO and BT projects.
Investors keep hesitant
In late 2011, BIDV Express Development Corporation (BEDC) sent a document to the Ministry of Transport, asking for the permission to withdraw from the BOT project on the Trung Luong-My Thuan Highway.
The investor said that it was very difficult to seek capital from credit institutions, while the capital contributed by BEDC’s shareholders was not enough for the project implementation.
Though the investor were offered a lot of preferences (collecting fee on My Thuan bridge, collecting fee on HCM City-Trung Luong Highway and the Highway No. 1, exclusively exploiting the services and infrastructure items within a certain area, and having exclusive right for advertisement along the HCM City-Trung Luong Highway), the investor still decided to give up the game.
Le Vu Hoang, General Director of CII, an infrastructure investment company, also said that the BOT investment mode is facing a lot of problems, especially the one on setting up fee collection stations.
Hoang went on to say that CII is interested in the projects on the belt roads NO. 2 and 3. However, in the current conditions, he would have to think carefully before deciding whether to invest.
Source: TBKTSG
When the state budget cannot provide huge capital for infrastructure projects, BOT, BT and PPP (private public partnership) prove to be the reasonable investment modes which are believed to help develop transport infrastructure. The Planning and Investment Department of the Ministry of Transport also said that the BOT-based investment was very effective.
However, things have got quite different. The Saigon 2 Bridge in HCM City is a typical example. Due to the shortcomings in programming fee collection stations, big problems were only realized just a short time before the project implementation day.
Experts then pointed out that the BOT mode would not be suitable to the project, because it would be impossible to build more fee collection stations on the Hanoi Highway. Therefore, the project has been delayed for two years, during which experts discuss the shifting of the investment mode from BOT to BT.
Some problems have also arisen at another BOT project – the Phu My Bridge. Since the volume of traffic is modest, the investor’s fee collected is not big enough to pay debts. Therefore, the investor has proposed to give back the bridge to the HCM City authorities.
The Ministry of Transport is now running 26 transport infrastructure projects under the mode of BOT, capitalized at 128 trillion dong. The ministry has reported that the projects with the investment capital of less than 1500 billion dong were all successful. Meanwhile, the projects with the total investment capital bigger than 1500 billion dong would not be able to take back the investment capital, if the investors only rely on the fee collection.
An official of the Ministry of Transport, who asked to be anonymous, said that the projects’ costs would be very high in the context of high bank loan interest rates and the delay in site clearance, thus leading to the slow project implementation.
Therefore, when considering making investments under the mode of BOT, investors need to have high financial capability. Meanwhile, it would be risky to borrow capital from banks to implement the projects, because of the high interest rates and the long time needed to collect fees.
Most recently, the Ministry of Transport has proposed the Ministry of Finance to promulgate a circular guiding the requirements on financial capability for BOT. BTO and BT projects.
Investors keep hesitant
In late 2011, BIDV Express Development Corporation (BEDC) sent a document to the Ministry of Transport, asking for the permission to withdraw from the BOT project on the Trung Luong-My Thuan Highway.
The investor said that it was very difficult to seek capital from credit institutions, while the capital contributed by BEDC’s shareholders was not enough for the project implementation.
Though the investor were offered a lot of preferences (collecting fee on My Thuan bridge, collecting fee on HCM City-Trung Luong Highway and the Highway No. 1, exclusively exploiting the services and infrastructure items within a certain area, and having exclusive right for advertisement along the HCM City-Trung Luong Highway), the investor still decided to give up the game.
Le Vu Hoang, General Director of CII, an infrastructure investment company, also said that the BOT investment mode is facing a lot of problems, especially the one on setting up fee collection stations.
Hoang went on to say that CII is interested in the projects on the belt roads NO. 2 and 3. However, in the current conditions, he would have to think carefully before deciding whether to invest.
Source: TBKTSG
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