Making news

Ministry seeks bids from domestic investors for North-South Express

The Ministry of Transport has announced that  they would cancel open international bidding for eight projects of the North-South expressway, in favour of domestic investors.

The decision was made on the consensus reached after consulting relevant agencies, the transport ministry said in an announcement sent to the media, adding that it would adjust pre-qualification bidding invitations to better suit open domestic bids for eight public-private-partnership (PPP) projects for the eastern section of the trans-Vietnam highway.

The ministry's project management boards had received 60 applications as of the end of July, two months after the international bidding invitation.

Four of the projects did not have investors that passed the prequalification requirements; two projects had only one; one project had two; and one project had three, according to the report made by the procuring entity and State agencies.

“The number of investors passing this stage was not high, leading to a lack of competition,” the ministry said.

As a result, the projects for the eastern section of the North-South Expressway are being re-examined to take into account global and regional disputes and national security concerns, as well as the empowerment of domestic enterprises.

Domestic investors, according to the ministry, are fully capable of implementing construction sub-projects for the expressway project.

However, experts have pointed out that Vietnamese investors face major challenges because of financial limitations, which would require them to seek alliances (in the form of joint-ventures) to pass the prequalification stage.

Nguyen Danh Huy, general director of the ministry's Public-Private Partnership (PPP) Investment Project Management Department, told Vietnam News Agency that the criteria for investors would remain unchanged and would be in line on the Law on Bidding.

Domestic investors have been asked to meet the minimum standards specified by the law and Government Decree No. 20, and to have equity capital that reaches 20 percent of the total costs. Or, the investor could have total capital that is equal to at least 50 percent of the total investment for the project under construction.

“Investors who satisfy all the requirements can attend the prequalification for the eastern section project for the North-South Expressway,” Huy said.

Regarding the criteria for having "at least 50 percent of the total investment for a project under construction”, Huy said investors could form a joint-venture with another investor.

“The ministry will meet with related ministries and agencies soon to discuss the issue. The plan is to hold another prequalification in October and results are expected to be released by 2020,” he added.

Dang Dai, deputy head of the Vietnam Association of Financial Investors, said that domestic investors have the appropriate capacity and the construction techniques to carry out the project.

“Domestic investors only need to pay attention to the capital for eight eastern sections in which the State commits to ensure 30 percent of the total investment capital. Therefore, investors are responsible for 20 percent, so the rest can be mobilised from loans. Domestic investors definitely can fund the 20 percent. For technical issues, many of them have carried out expressway, bridge and tunnel projects, which have shown their capability,” Dai said.

Transport expert Nguyen Xuan Thuy said that domestic investors should be given priority for the key national projects like the North-South Expressway to ensure quality and reduce costs.

“Only a few international investors joined the bidding because they may have not met the criteria or they were concerned about issues related to procedures, capital, interest, and other matters. Also, the project might not be attractive enough for them,” said Thuy. 

Since domestic investors would likely face financial challenges, he recommended that they cooperate with others.

“Large Vietnamese corporations such as Vingroup, Sun Group and T&T can work with road construction companies to have sufficient financial resources and at the same time meet standards related to experience," Thuy said.

The eastern section of the expressway will be 654km long and have total investment of 118.7 trillion VND (5.11 billion USD), including 55 trillion VND (2.36 billion USD) allocated from the State budget.

It will run through 13 provinces and cities from the northern province of Nam Dinh to the southern province of Vinh Long.

The highway is divided into 11 sub-projects, including eight under PPP investment form./.