There would be no direct contracting for the Eastern North-South expressway project, according to Nguyen Ngoc Dong, vice minister of transport.
In case no bidder qualifies for selection, the Ministry of Transport (MoT) would propose adjusting the financing mechanism of the project to public investment, Dong said at a quarterly press conference of the MoT held on September 27.
On September 24, the MoT announced the cancellation of international bidding process for eight sub-component projects of the Eastern North-South expressway project under the public-private partnership (PPP) arrangement, while turning to open new domestic bidding process.
Dong said the MoT has requested related agencies to speed up the process of issuing bidding documents for domestic bidders in October.
According to Dong, the adjusted bidding documents would retain requirements for financial capabilities of contractors, in which its equity must be in equivalent to 20% of total investment capital of the project.
However, to encourage domestic bidders, the MoT would revise the experience criteria, as currently, Vietnam only has 1,000 kilometers of expressway, so the revision is expected to allow contractors with expertise in infrastructure development participating in the project, Dong added.
Dong admitted difficulties in getting loans for the project, due to the large investment capital required for each sub-component project. As such, the MoT is asking the government for a financing mechanism, aiming to mobilize credits for the project.
Previously, the MoT cited the low number of proposals qualified for preliminary process as reason for cancellation of international bidding method for the project.
As of the end of July, two months since the issuance of bidding documents, the MoT’s project management units had received 60 proposals.
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.
A domestic bidding process for the project would help “ensure national security and enhance capacity of Vietnamese enterprises in fields of infrastructure development,” added the MoT.
The MoT’s decision was a surprise to the public, as two months ago, project management units under the MoT informed among 60 proposals, Chinese contractors made up the majority 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.
Notably, one of these Chinese contractors was China Railway Sixth Group, which was the EPC (Engineering, Procurement and Construction) contractor for the Cat Linh – Ha Dong railway project in Hanoi, a notorious project that has several times missed the deadlines and suffered hefty cost overruns.
The high number of Chinese contractors would lower the chance for domestic companies to win the bids.
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 by state budget and eight under the public private partnership (PPP) and build-operate-transfer (BOT) arrangements.
The 11 projects are estimated to cost a total of VND118 trillion (US$5.04 billion), including VND55 trillion (US$2.35 billion) in state capital to be pumped into three public investment projects, and counterpart funds for the other eight projects.
