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|Some component projects of the North-South Expressway did not attract bidders. (Photo: plo.vn)|
Hanoi - A proper mechanism is needed to attract investors to infrastructure projects implemented following the public-private partnership (PPP) model, experts have said.
In the context of a tight State budget, PPP projects are a model which helped attract private investment in infrastructure projects. However, investors recently showed hesitancy in participating in PPP projects.
In early October, the Ministry of Transport opened bidding for five component projects of the North-South expressway.
However, the road project from Nghi Son to Dien Chau did not attract any bidders. The project from national highway No 45 to Nghi Son attracted only one, but the bidding was cancelled because the bidder did not meet technical requirements, according to the Ministry of Transport.
The other three component projects – Dien Chau – Bai Vot, Nha Trang – Cam Lam, Cam Lam – Vinh Hao – were underbid evaluation.
The Ministry of Transport said that it was necessary to develop a mechanism which would harmonise the benefits of the Government, the investors and the users as well as solutions to solve difficulties in existing build-operate-transfer (BOT) projects to create favourable conditions and trust to attract investors and credit institutions in PPP projects.
According to expert Nguyen Huu Duc, the failure in attracting investors in two-component projects of the North-South Expressway demonstrated that PPP projects were not attractive enough to investors.
Duc said converting these projects into fully-public invested forms needed careful consideration in term of urgency, importance, economic efficiency, finance and implementation mechanisms, in the context of a tight State budget.
Bui Quang Thai, Deputy Director of the PPP Department under the Ministry of Transport, said that the Government would report to the National Assembly Standing Committee for consideration in case PPP projects failed to select investors.
Regarding credit for North-South Expressway projects, at a recent working session between the Ministry of Transport and commercial banks, Tran Long, deputy director general of the Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV) said that BIDV had so far provided credit for 43 BOT transportation projects with a total outstanding loan of 30 trillion VND (1.3 billion USD).
However, lenders were facing difficulties as many projects must restructure their debts and some turned into bad debts.
Because the North-South Expressway was a key national project, BIDV was willing to provide credit if the projects could guarantee investment efficiency and meet requirements of the lender and the laws, Long said.
He stressed the most important point was that the Ministry of Transport must tackle problems in existing BOT projects so that banks could recover debts and consider new loans.
Chairman of the Vietnam Association of Road Systems Investors Tran Chung said that PPP projects were experiencing too many problems which must be resolved early to attract investors.
According to Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry, three things must be tackled for PPP projects, including ensuring the fairness between the State agencies and investors, solutions to deal with changes in mechanisms and policies which might affect PPP projects’ finance and mechanisms to share risks between the State agencies and investors.
Tran Dinh Thien, member of the Prime Minister’s advisory group, said that PPP was giving significant opportunities for Vietnamese companies. However, the Government should also create a proper mechanism to attract investors..