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Huu Nghi - Chi Lang expressway: Matter of capital will be solved soon

In the latest issue of VLR, we already had an article on value of the expressway of Bac Giang - Lang Son when investors, local authorities and banks, under the guideline from the Government, built the road. However, it is required that the road connect to Lang Son City and gateways of Huu Nghi and Tan Thanh for its full utilization.

Huu Nghi - Chi Lang expressway: Matter of capital will be solved soon

The project of Huu Nghi - Chi Lang will perform the task. The project had some difficulties in term of capital, however, at the end of June 2020, there were active signs in solving difficulties for the project.

The need for “initial” capital

The Governmental Office recently had a document to assign the People’s Committee of Lang Son Province to work with the Ministry of Planning - Investment on the ability of using capital from the State’s budget to the project, to find the most optimized project suitable to the capital mobilization ability for the project of Huu Nghi - Chi Lang.

Previously, the People’s Committee of Lang Son had a document to the Government after having attempts to solve difficulties for the project. According to the province, investors contributed VND 425bn and disbursed VND 290bn for ground clearance, consulting fee, and project management… Work of ground clearance has been finished 8.5/43.6km (20%). Now it is temporarily stopped for the shortage of capital.

Responding to proposal from voters of Lang Son Province in March 2020, the State Bank of Vietnam said they asked the People’s Committee of Lang Son Province to work with the Ministry of Transport to adjust the total investment of the project, financial scheme and participating capital structure, ensuring feasibility of the project. These are basis for commercial banks to consider for a loan decision.

However, according to leaders of Bac GiangLang Son BOT JSC, project investors and banks hesitated to offer loans for the project’s large scale. Without ‘initial capital’ from the Government’s assistance as they have done in PPP project of NorthSouth Expressway projects, it is difficultly feasible in term of capital arrangement.

Deo Ca Group suggested dividing the projects to reduce loans. With the project of Component 1, the enterprise had a proposal that the People’s Committee of Lang Son Province ask the Prime Minister to approve the allocation of an assisting budget of over VND 2,000bn. The project of Component 2 will use the State’s budget together with investors’ capital sources and local budget.

In a speech in the Assembly’s meeting in June 2020, Nguyen Lam Thanh, member of the Assembly of Lang Son Province, there should be a change in capital structure of the total investment (currently VND 8,310bn): VND 1,750bn from investors; VND 1,000bn as committed by Lang Son Province; VND 2,000bn as committed by BIDV.

Nguyen Lam Thanh also suggested the Government allocate VND 2,160bn for ground clearance of ancillary works as they were carried out with other works of expressways. With the missing capital of VND 1,400bn, the State Bank of Vietnam will offer assistance and ask other commercial banks to take part in the work.

The Ministry of Planning- Investment to solve the difficulties?

In the afternoon of June 22nd, the Minister of the Ministry of Planning- Investment Nguyen Chi Dung had a working session with the working group of the Standing Party Committee of Lang Son Province on plans of economic-socio developments and infrastructure projects in Lang Son area. With top priority is the Project of Component 2: building the Huu Nghi Expressway section belonging to the BOT Project of building Bac Giang- Lang Son Expressway.

The Minister Nguyen Chi Dung said the Project of Component 2 of Chi Lang- Huu Nghi section is an important work for economic-socio developments of Lang Son province for the purpose of connecting areas serving the country’s agricultural export to China’s market

The Minister Nguyen Chi Dung said the Project of Component 2 of Chi Lang- Huu Nghi section is an important work for economic-socio developments of Lang Son province for the purpose of connecting areas serving the country’s agricultural export to China’s market.

The project of 2 components of Chi Lang- Huu Nghi section is an important work for economic- socio developments of Lang Son Province and for connecting areas, serving the country’s agricultural export to China’s market. Minister of the Ministry of Planning - Investment Nguyen Chi Dung TRANSPORT INFRASTRUCTURES Focus Therefore, the Ministry agreed with the suggestion proposed by the People’s Committee of Lang Son Province: implementing the project to Huu Nghi International Gateway with the total investment of over VND 7,600bn. The Ministry is currently consulting the Government to put the project in the list of key national projects in the midterm public investment plan of the period of 2020 - 2025 to assist the province to implement the project.

“This is a must-do project and it should be implemented soon. It is not only to serve Lang Son but also to serve transport nationwide, to serve the country’s economy. With its urgent and important characters, the project can be classified as an important one- a steel fist for the province,” emphasized the Minister.

Mentioning the solution of dividing the Project, the Minister asked the leaders of Lang Son Province to make a choice of the project that using the least budget from the local budget, investors’ capital and the State’s budget and achieving the target of opening 43km of the expressway from Chi Lang to Huu Nghi Gateway.

According Ho Tien Thieu- Deputy Chairman of the People’s Committee of Lang Son Province, to implement the guideline from the Deputy Prime Minister Trinh Dinh Dung at the Document no.4327/VPCP-CN dated June 1st, 2020 from the Government’s Office, the People’s Committee of Lang Son Province collected ideas from ministries, sectors and modified the divided project of investment scale as suggested by the Ministry of Transport (besides the two projects proposed by Lang Son Province previously).

Particularly, the People’s Committee of Lang Son Province will carry out ground clearance and invest in the road-bed with the road scale of 4 lanes and the width of 22m. The investment is divided into 2 components.

The section from Km44+750 (Chi Lang) – Km17+420 (the intersection with the National Road 4B belonging to Lang Son City) with the length of 27.3km with 4 lanes and the width of 16m; the section from Km17+420 (Lang Son City)- Km1+800 (Huu Nghi International Gateway) with the length of 15.7km with 2 lanes and the width of 12.5m. With the project divided as above, the total investment of the project is around VND 7,609bn: VND 1.609bn from the BOT investors as the owners’ capital; VND 2,000bn from commercial banks’ loans; 1,000bn from the local budget; VND 3,000bn from the State’s budget. The time of fee-collecting for payback is expected around 19 years and 5 months.

To ensure financial scheme, the People’s Committee of Lang Son Province suggested the Ministry of Planning Industry to consider the State’s Budget in the plan of midterm investment of the period 2021 - 2025 with the amount of VND 3,000bn to support the Project of Huu Nghi- Chi Lang Expressway. This will help to solve difficulties to implement the project soon to open the whole expressway from Hanoi to Huu Nghi International Gateway, ensuring investment efficiency of the project of Bac Giang- Lang Son Expressway as guideline from the Prime Minister.

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