(Continued from previous period) -Hanoi - Hai Phong Expressway: Driving force to accelerate the key economic region of the Red River Delta

Special capital mechanism

In the context of a difficult economy, limited State budget capital, investment in the Hanoi - Hai Phong expressway is urgent, so the Government assigning banks to mobilize capital and companies to contribute capital to invest in building the route is in line with the policy of socialization of investment. While some expressway construction investment projects using state capital and some expressway projects requested by some banks and corporations to be assigned by the Government cannot be implemented due to lack of capital, the Hanoi - Hai Phong expressway has basically ensured progress. Currently, the Development Bank is still promptly providing capital for key State projects, socialization projects, projects in difficult areas and export items according to the priority list prescribed by the Government.

To ensure capital for the project, NHPT signed a principle contract to lend VIDIFI VND 21,566 billion to invest in the Hanoi - Hai Phong expressway project. The lending interest rate is close to the market interest rate, based on the interest rate mobilized by the Development Bank, the State Budget does not have to subsidize. Currently, Vietnam Development Bank has been actively negotiating to mobilize capital. The total capital that Development Bank has mobilized from international organizations is 600 million USD and international financial and credit institutions have committed to lending nearly 400 million USD, bringing the total capital mobilized from international organizations to nearly 1 billion USD, equivalent to 20,600 billion VND to finance the Hanoi - Hai Phong Expressway Project. The remaining investment capital will be arranged by Development Bank using domestic loans. Total investment (temporarily determined) in 2008 is 24,566 billion VND. Currently, VIDIFI is organizing an adjustment project, including adjusting the total investment.

Construction items are accelerating

The investment capital for expressways is very large and cannot be recovered from toll collection alone; Therefore, to facilitate recovery of investment capital, investors have been allowed to invest in a number of urban and industrial park projects at intersections and some locations along the route. According to preliminary calculations in 2008, when VIDIFI signed a BOT contract with a competent State agency, the project could recover its investment capital within 30.36 years.

The Hanoi - Hai Phong expressway is invested as a type A expressway, design speed 120km/h, 6 main lanes, 2 emergency stopping lanes, toll collection in a closed form, both sides have a collector road system connecting to local roads and 2 strips of green trees. The site clearance scope is 100m wide, of which the cross-section of the main road is 33m wide, the total length of the route is 105.5km. The project goes through 04 provinces and cities: Hanoi, Hung Yen, Hai Duong and Hai Phong. The project's starting point starts from Ring Road III of Hanoi city, about 1,025m from Thanh Tri bridge abutment. The project's endpoint ends at Dinh Vu dam, Hai An district, Hai Phong city.

Proactive and effective

The area requiring site clearance phase 1 on the entire route is 1,106 hectares, including residential land, agricultural land and other land. Up to now, about 1,102 hectares have been handed over to the construction contractor, equivalent to 99.6%, while about 4 hectares, equivalent to 0.4% of the area that has not yet been handed over, is mainly residential land. The main problems are related to compensation unit prices, support, and resettlement policies. Although localities have tried very hard to implement, the progress of site clearance work has been slower than the direction of the Standing Government by more than 2 years. However, it is still considered one of the large-scale traffic projects that organizes quick site clearance.

According to Mr. Dao Van Chien, General Director of Vietnam Infrastructure Development and Investment Finance Corporation (VIDIFI), after 4 years from the start of construction, due to proactively doing a good job of site clearance, the road mainly passes through people's fields and agricultural land. The basic site clearance was completed before Decree 69 was issued, currently 99.6% of the site area has been handed over, helping to save tens of thousands of billions of VND in investment capital. Currently, 9/10 bidding packages have been implemented with 100% of construction contractors being foreign enterprises with strong brands. The investor has separated the organic soil removal and compensation items for construction first to take advantage of the site, so at the beginning of 2009, the work of organic soil removal and backfilling was carried out to the highest level to treat weak soil, completed on the entire route (except for some intersections that have not yet cleared land). Currently, 150 km of public service roads have been constructed along the route to serve the transportation of materials, machinery and equipment to the construction site. The highway foundation has been formed.

Help rural areas take off

The Hanoi - Hai Phong expressway project is implemented in the BOT form, not using state capital. VIDIFI has actively worked with provinces and cities to speed up the progress of surveying and planning urban areas and industrial parks according to Decision No. 1621/QD/TTg dated November 29, 2007 of the Prime Minister on a number of pilot mechanisms and policies for investment in the Hanoi - Hai Phong Expressway Project to invest and recover capital. In Hanoi, there will be Gia Lam urban area where VIDIFI successfully organized an international consulting competition for planning Gia Lam Urban Area and Park. It is expected to build a modern new urban area with its own identity and environmental friendliness, attracting domestic and foreign investors, making a decisive contribution to recovering highway investment capital. After the Hanoi People's Committee approved the 1/2000 planning project, VIDIFI immediately organized the work to implement the 1/500 detailed planning; Up to now, the Hanoi People's Committee has approved the task of planning 1/500, VIDIFI is organizing the selection of consultants for detailed planning 1/500. VIDIFI has submitted to Hai Phong City, Hai Duong Province, Hung Yen to implement planning of Industrial Park and Urban Projects in the area and will organize project investment when effective.

There are still difficulties and problems

Regarding site clearance, despite the very positive attention of the Government and localities, the progress of phase 1 site clearance has not met the Government's direction requirements (more than 2 years late). This is the main reason leading to the slow progress of the project. The technical design of the project had to be adjusted again because the local planning was adjusted and changed a lot compared to the period when the investment project was established, making agreements with localities very difficult.

Due to strong price fluctuations, the total investment of the Hanoi - Hai Phong expressway project increased significantly. The capital source for highway investment is very large, while interest rates in the capital market are high. Shareholders encountered difficulties, with 3 units not contributing enough capital as initially committed. Although the capital market is facing many difficulties, Vietnam Development Bank is currently trying to mobilize enough capital for project investment with interest rates that are not too high. VIDIFI is hiring consultants to appraise prices of assigned urban areas and industrial parks to prepare financial plans according to BOT contracts to submit to the Prime Minister in the second quarter of 2012. After that, shareholders will be restructured at the request of the Prime Minister.

The delay in approving planning of urban areas and industrial parks by provinces and cities affects the progress of building the official financial plan of the BOT contract to submit to the Government for approval. Currently, VIDIFI is urging provinces and cities to complete approval in 2012.

According toBao Minh - Cong Luan Newspaper