Phasing of investment in the method of scale back to reduce costs in phase I is optimal solution for the financial feasibility plan of Huu Nghi - Chi Lang Expressway BOT Project.

The section of National Road No.1 through Lang Son has been overload for a long time, it is necessary to have another expressway to reduce the load

Struggling

Bac Giang - Lang Son - Huu Nghi BOT Joint Stock Company has officially proposed the Ministry of Planning and Investment, the Ministry of Transport (MOT) and the People's Committee of Lang Son Province agree on a plan to diverge the investment of Huu Nghi - Chi Lang expressway (Km1 + 800 - Km44 + 749) under the Bac Giang - Lang Son expressway BOT project into two stages.

This is an open direction that the Prime Minister has assigned investor to review and develop an appropriate design and divergence investment plan by the end of September 2019 in order to break the deadlock lasted from 2018 of Huu Nghi - Chi Lang Expressway Project.

At the proposal of the investor, the Huu Nghi - Chi Lang Expressway Project will be diverged in two phases of investment. In phase I, the project will build the section from Huu Nghi border gate to the Lang Son city (Km1 + 800 - Km17 + 420) with 2 lanes and a width of 13.5 m; the section from Lang Son city to Chi Lang intersection (Km17 + 420 - Km44 + 749) has 4 lanes and 17.5m wide. Total investment of Phase I is VND 5,869 billion, of which, equity of investors is VND 1,174 billion (20%); credit capital is 2,000 billion dong (interest rate during construction and operation is 11%) and state budget is 2,695 billion dongs.

Phase II, the project will be implemented to complete as a type A expressway with 4 lanes on the whole 43 km of the route when the capital and financial plan are guaranteed.

Mr. Vu Minh Hoang, General Director of Bac Giang - Lang Son BOT Joint Stock Company said: apart from the aforementioned capital structure, to ensure the feasibility of the financial plan, the starting fare at the base year (2020) for 5 types of vehicles must reach 2,000 - 2,500 - 3,500 - 5,500 and 7,200 VND / vehicle / km respectively; Increase the fare 15% every 3 years. With the above parameters, the project possibly pays back capital in about 18 years and repays credit loans within 15 years.

Bac Giang - Lang Son - Huu Nghi BOT Joint Stock Company also proposed to Lang Son Provincial People's Committee to direct Lang Son Construction Investment Project Management Board aggregate the opinions on the capital structure for implementation of the Project, including: local budget, equity from investors and bank loan to report to the Ministry of Planning and Investment, Ministry of Finance to consider the the support plan from the central budget and report to the Prime Minister for approval.

It is known that during the consultation process, a specialized department of the Ministry of Transport has proposed the investment plan for the section Km17 + 420 (intersection in Lang Son City) - Km44 + 749 (Chi Lang), connected to Bac Giang - Lang Son expressway with 4 lanes, 22m wide in advance. The section Km1 + 800 (Huu Nghi) - Km17 + 420 (Lang Son City) with a length of 15.7km will be implemented when the capital is arranged.

According to the representative of the project management enterprise, this option may reduce the total investment but cause Bac Giang - Lang Son expressway, including Huu Nghi - Chi Lang component to end up without connection to Huu Nghi border gate - where many logistics points and border gate economic zones are expected, affecting traffic flow of the whole route. Not to mention the disruption of the connectivity of Dong Dang (Lang Son) - Tra Linh (Cao Bang) expressway that is about to start investing.

Necessary and sufficient conditions

It is rare for any expressway project have a struggling fate as Huu Nghi - Chi Lang Expressway Project, the last segment is in the overall planning of the expressway from Hanoi to Huu Nghi border gate (Lang Son).

According to initial investment policy of the Ministry of Transport, this section is built with 4 lanes, total investment of VND 8,743 billion, using commercial loans from the Asian Development Bank (ADB) invested by Vietnam Expressway Corporation (VEC). Due to the concern about the risk of increasing public debt, the Prime Minister has agreed to add this route to the Bac Giang - Lang Son Expressway BOT Project and assigns Lang Son Provincial People's Committee as a competent state agency. Difficulty continues with this project when capital funders refuse to lend with the initial investment scale due to concerns about the capital repay ability.

According to Mr. Vu Minh Hoang, General Director of Bac Giang - Lang Son BOT Joint Stock Company, it is possible that Huu Nghi - Chi Lang section could not be completed in 2020, thereby the entire Hanoi - Lang Son - Cao Bang expressway will be disconnected.

The investment divergence therefore reducing the project investment cost to about VND 5,661 billion will be more suitable to the current credit capital conditions (ensuring the loan limit of the credit issuing bank), as well as balance funding from the state budget. Besides, participating in the support from the state budget (VND 2,695 billion) for site clearance compensation, resettlement and a part of construction is also considered a prerequisite for the group of banks led by BIDV to lend 2,000 billion.

After more than 2 years of stagnation, the pressure to invest in the Huu Nghi - Chi Lang expressway before 2020 not only accrues to the competent state agency - the People's Committee of Lang Son province, but also a great concern for Bac Giang - Lang Son BOT Joint Stock Company.

It is known that, despite a huge investment, the radial expressway 110 km long from Hanoi to Lang Son including 2 projects: Hanoi - Bac Giang with 45.8 km long and Bac Giang - Lang Son ( ending in Chi Lang district) 64 km long with 4 lanes scale, although basically completed but still an "open circuit" when Huu Nghi - Chi Lang expressway still could not determine the starting time.

The halfway end at 30 km from Lang Son and 45 km from Huu Nghi border gate making the remaining roads to two important traffic hubs at the end of the route still have to borrow National Road No.1 with two lanes renovated 20 years ago and has been overload long ago.

Anh Minh

According to Vietnam Investment Review