Vietnam to complete bidding process for North-South expressway by next year

Vietnam to complete bidding process for North-South expressway by next year

Investors for eight components of the North-South expressway project, with total private investment capital for 11 sub-projects is estimated at VND 51.7 trillion (US$2.22 billion), will be named in August next year.
18:30, 25/10/2019
Pillars are erected for the Trung Luong-My Thuan expressway, which is part of the North-South expressway project. (Photo: Le Anh)

Investors and the procurement process for eight sub-components of the North-South expressway project, which will be executed under the build-operate-transfer format, will be set to complete and named in August next year at the earliest, according to a report sent by the Government to the National Assembly.

The report indicated that, as of present, the Ministry of Transport (MoT) has basically completed survey work, technical specifications and the estimated investment calculation for eight BOT projects. All the technical designs will be approved this month, while the appraisal process is scheduled to be completed in November 2019, Tuoi Tre Online newspaper reported. The prime minister has also passed compensation and resettlement policies for the subprojects.

The Ministry of Transport has transferred the capital needed for site clearance to the State Treasury branches in localities that the expressway will pass through. These localities have established site clearance councils and chosen consultants and are now measuring the land lots to be used for the subprojects and working out compensation plans.

The Eastern North-South expressway project is of national priority for investment in the 2017 – 2020 period, which includes 11 sub-projects with total length of 654 kilometers running through 13 provinces and cities, of which three will be financed from state budget and eight under the public private partnership (PPP) and build-operate-transfer (BOT) arrangements.

The Government’s report revealed that the North-South expressway project, with 11 sections in total, will require a total investment of over VND102.5 trillion (US$4.4 billion), including VND50.8 trillion sourced from the State budget and VND51.7 trillion from private sources.

After cancelling all the preliminary screening results of international tenders to choose investors for the eight subprojects, the Ministry of Transport on October 10 started to shortlist local firms as bidders for the subprojects.

The minimum time required for bidders to prepare their bids is 30 days, so the preliminary bidding process is expected to begin in November.

Under the prevailing regulations, these bidding applications would follow a 30 days of evaluation and another 40 days for appraisal and approval. In a favorable scenario, the first preliminary bidding process would be completed in February 2020.

Under the protocol, the MoT would then open the tender for bidders having qualified preliminary process in a maximum time span of 270 days, including the appraisal works for procurement plan in 40 days, and 20 days for bidding documents. By April 2020, the MoT is scheduled to issue the bidding documents.

Enterprises will have at least 60 days to prepare their bidding files and can submit them by June next year. Following that, the applications will be assessed in 90 days and approved in 50 days.

With such timeline, the MoT would complete the bidding process for investors by November 2020. However, the ministry is committed to speeding up the process, so that by the end of August 2020, investors for eight BOT projects would be identified.

A map shows sections of the North-South Expressway project. The Ministry of Transport has relaxed some requirements for investors' participation in the North-South Expressway project. (Photo: Le Anh)

The Ministry of Transport, at the same time, has relaxed some requirements for the North-South Expressway project to encourage domestic investors to get involved in the expressway’s eight subprojects.

As for the requirements on financial capacity, investors working under the private-public partnership (PPP) format are required to have equity accounting for at least 20% of the total capital needed, instead of 30% as before.

The ministry kept the requirement on consortiums unchanged, requiring that each consortium have a maximum of five firms and the leader contribute at least 30% of the total investment of other members. However, the ministry removed the requirement that other members’ capital contribution equal at least 15% of the total capital.

Besides this, foreign investors will be allowed to join the project if their investment does not exceed 51%.

Requirements that remain unchanged include investors securing commitments from credit institutions to provide loans for the project and the Government refraining from guaranteeing loans or minimum revenues for investors.

Earlier in May, the Ministry of Transport issued the bidding papers for international tenders for eight parts of the PPP cross-country expressway project to domestic and foreign investors.

According to the MoT, as of the end of July, two months since the issuance of bidding documents, the MoT’s project management units had received 60 proposals. Chinese contractors made up the majority among those proposals with 30 (under the form of joint-venture or single entity) and submitted proposals in all eight sub-component projects, the other 15 proposals were from investors of South Korea, France and the Philippines, and the remaining 15 from Vietnamese enterprises.

The evaluation of these proposals showed no one was qualified for preliminary process in four sub-component projects; only one proposal in each of two projects; one project with over two proposals and one with over three proposals qualified for preliminary evaluation.

As a result, the number of bidders qualifying for preliminary qualification is low, leading to low competitiveness of the tender, said the MoT in a statement.

Under this circumstance, the MoT on September 24 decided to cancel the result of preliminary qualification process under the form of international bidding, while adjusting procedures to launch a bidding session for domestic investors for all eight sub-component projects. The ministry also explained that few bidders were eligible.

This would help “ensure national security and enhance capacity of Vietnamese enterprises in fields of infrastructure development,” added the MoT.

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