Tan Phu - Bao Loc Expressway is a section of Dau Giay - Lien Khuong expressway plan, the first project to be implemented under the public-private partnership model after the PPP law is applied. Tan Phu - Bao Loc has the great determination of Lam Dong province, the engagement of the investor consortium (in the proposing role), and the creativity in raising capital.

Sync and connect

On April 9, 2021, Minister of Planning and Investment (MPI) Nguyen Chi Dung, in the role of Chairman of the Interdisciplinary Appraisal Council, chaired the meeting of the Appraisal Council meeting on the pre-feasibility study report of Tan Phu - Bao Loc project. Attending the meeting were the leaders of 9 concerning ministries, leaders of Dong Nai and Lam Dong provinces, where the road went through and the investor consortium of Deo Ca Group and Hung Thinh Group.

Minister Nguyen Chi Dung chaired the meeting

Starting the meeting, Minister of Planning and Investment Nguyen Chi Dung expressed his fully supportive opinion and acknowledged the determination of the leaders of Lam Dong province. He also highly appreciated the capacity of investors, especially Deo Ca Group that has successfully organized many difficult projects and many national key projects such as tunnel project through Ca pass, Bac Giang - Lang Son expressway, Trung Luong - My Thuan expressway, etc.

After listening to the reports and petitions of Mr. Tran Van Hiep - Chairman of Lam Dong province (The competent state agency) and Mr. Ho Minh Hoang - Chairman of Deo Ca Group (Deputy Steering Committee of Tan Phu - Bao Loc Project), the representatives of Ministries offers several questions and discussing the issues such as choosing route direction, the investment phasing, the ability to arrange capital (local budget, investor's capital, other mobilized capital), the risk-sharing mechanism when revenue is not guaranteed, implementing efficiently 2 remaining sections Dau Giay - Tan Phu and Bao Loc - Lien Khuong.

Mr. Nguyen Chi Dung said: “The expressway from Dau Giay to Lien Khuong is divided into 3 projects: Dau Giay - Tan Phu, Tan Phu - Bao Loc and Bao Loc - Lien Khuong are all completely new routes. Tan Phu - Bao Loc that we are talking about today is “the middle part”, so how to figure out the solution for the synchronous connection problem? We must have a visionary plan”.

The visionary plan mentioned by the Minister of Planning and Investment is that the synchronous connection of the three above projects will ensure the feasibility of the “middle part” Tan Phu - Bao Loc. After that suggestive but crucial question, Mr. Nguyen Chi Dung waiting for an answer from the representative of the Ministry of Transport presenting at the meeting.

Deputy Minister of Transport Le Anh Tuan said the Ministry will balance capital from the medium-term state budget in the period of 2021-2025 to deploy Dau Giay - Tan Phu section. After that, the Chairman of Lam Dong province and investor also claimed to study the plan and implementation method of Bao Loc - Lien Khuong section to connect the key economic regions of Southern - Central Highlands areas, aiming to improve the travel capacity, promote socio-economic development, and temporary solutions to connect traffic when the two sections at the two ends have not been completed.

Also at the meeting, the representative of the Ministry of Finance highly appreciated the engagement of investors (Deo Ca, Hung Thinh, South Central) for accompanying Lam Dong province to implement the Tan Phu - Bao Loc project. It is “precious and respectful. If we look at the overview picture of the bidding of North-South Expressway sections in the East in PPP form, “it is obviously”, but no investor is interested and eventually the Ministry of Transport must turn to public investment!”.

Chairman of Lam Dong province said at the meeting: “To reach the consensus of the Interdisciplinary Appraisal Council on the proposal of the investor consortium represented by Deo Ca Group. In the beginning, the province has actively visited and checked investment and construction capacity in the projects that Deo Ca Group has deployed nationwide. When attending the route connection ceremony of Trung Luong - My Thuan expressway, we heard that Prime Minister Nguyen Xuan Phuc - now the President of the country highly appreciated the capacity of Deo Ca Group, the President affirmed, “for a prosperous Vietnam, the international businesses like Deo Ca Group is indispensable””.

Chairman of Lam Dong province Tran Van Hiep speaks at the meeting

At the meeting, Mr. Tran Van Hiep also said that on March 8, 2021, the MPI issued a document to consult opinions of related ministries, within a month, Lam Dong province and Deo Ca Group had many meetings to report to Central leaders and ministries leaders to introduce implementation plans, consult and received great support.

PPP project and the creation of the “3 letters P”

The person who coined the new concept of the “3 letters P” in PPP contract was Mr. Ho Minh Hoang. As Mr. Ho Minh Hoang’s concept, the 3 letters “P” are “P State budget”, “P investor's equity” and “P mobilized capital”. It may not be completely true to the original concept translated from English (Public-Private Partnerships) but suitable for Vietnam's current construction investment context.

Representative of investor reports on project research

So in the meeting pre-feasibility study report, how did the investor and the province present “3 letters P” of Tan Phu - Bao Loc project to convince the appraisal committee?

The first “P” - State budget capital is 6,500 billion VND, including 2,000 billion VND from the central budget, which has been allocated medium-term capital 2021-2025 in Document 419/TTg-KTTH dated April 2, 2021 of the MPI and 4,500 billion VND from the local budget were passed by the People's Council of Lam Dong province in resolution No.224/NQ-HDND dated March 26, 2021. Accordingly, in addition to the participation of the state budget capital, Lam Dong province proves the spirit of “so said, so done” when affirming that in 4 years of project construction, the province will spend more than 1,000 billion VND each year from local budget capital. “That's what we can do. The whole leadership system of Lam Dong has calculated and affirmed that we have enough financial power to spend. We commit to accompany the Government, ministries, investors in the implementation”, Chairman of Lam Dong - Mr. Tran Van Hiep said.

Route direction plan of Tan Phu - Bao Loc expressway

The second “P” - Equity capital is 1,500 billion VND (equivalent to 15% of total investment, according to the provisions of PPP law), with the experiences of Deo Ca Group combine with the financial capacity of Hung Thinh Group (Top 10 Real Estate Investors) and South Central Group (the leading group in shrimp seed production), the investors affirm that if winning the bid, it’s not a “big problem”.

And the third “P” - Mobilized capital is about 8,500 billion VND. With the payback time of more than 27 years, it is very difficult to mobilize credit capital from banks or seek other investors to participate. Therefore, Lam Dong province has offered a series of mechanisms to attracting investment in real estate, commercial services, logistics,... learning from Quang Ninh the model of developing real estate, marine economic services to generate capital for projects such as Van Don - Mong Cai expressway,... PPP method really took shape when the province participated in sharing the financial burden with enterprises.

Lam Dong province and the investor identified the third “P” as the key issue for the project's success. To realize the project which has lasted more than 17 years, the province will report to the Prime Minister for a special supporting mechanism, the sharing of businesses that have interests and obligations related to the expressway project is needed; through investment promotion conferences to call for investment capital; have a policy to control the commitments of investors to participate in the form of bonds, cooperation contracts...

Since the new PPP investment environment is new and remains inadequate, the commercial banking system is not enthusiastic, offering a different but scientific capital mobilization solution is a creation of the proponent of Tan Phu - Bao Loc project. This plan has obtained the approval of many Appraisal Council members. The Project Appraisal Council said that the project dossier basically met the requirements. They agreed on the proposed route direction and the investment phasing, and agreed on one-time site clearance plan. This may be the first time that a PPP investment does not need to “pawn” the project to get credit, opening a promising future for the construction of transport infrastructure in Vietnam.

By QUANG THANH