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Operation of Cau Gie-Ninh Binh Expressway may be franchised

Released at: 10:51, 11/05/2017

Operation of Cau Gie-Ninh Binh Expressway may be franchised

Photo: VnEconomy

Move the first of its kind in expressway operations in Vietnam.

by Nguyen Quynh

Vietnam Expressway Development and Investment Corp (VEC) has proposed to Ministry of Transport (MoT) a plan to franchise the rights to expressway operations of Cau Gie-Ninh Binh expressway, which is has never been precedent in Vietnam.  

VEC proposed MoT to submit the plan to the government for approval. As the plan, it is estimated that the Cau Gie-Ninh Binh expressway can be franchised O&M with value of VND9.2 trillion ($404.8 million).

Investors who keen on securing the rights to expressway operations must meet the following requirements: experienced on franchise projects; have the financial capacity and capable of operating expressway projects.

VEC targets to build 1,000 kilometers expressway, Mr. Mai Anh Tuan, CEO of VEC told local media. He also added that in order to achieve the target, VEC need to mobilize new investment capital. Therefore, plan to franchise the right of operation and maintenance of Cau Gie-Ninh Binh expressway is necessary.

Currently, there have been some foreign investors wishing to involve franchise the right to charge fee of Cau Gie - Ninh Binh expressway. Among them, France’s VINCI Group signed a cooperation agreement with VEC. However, the selection of investors will only be made after the franchise scheme for the Cau Gie - Ninh Binh expressway has been approved by the Prime Minister with feasible mechanisms.

Cau Gie - Ninh Binh expressway (phase 1) has 50 kilometers long invested by VEC by chartered capital and bond capital with a total investment capital of VND8.9 trillion ($391.6 million).

In addition, the VEC is also considering transfer rights to operation the Ho Chi Minh City - Long Thanh - Dau Giay expressway.

After the franchise, VEC and investors will jointly set up an enterprise to operating Cau Gie - Ninh Binh expressway. The proceeds from the franchise will be used to invest other VEC projects.

Cau Gie - Ninh Binh expressway was started in January 2006 with the investment of nearly VND9 trillion ($396 million). The 50-kilometers expressway of Cau Gie-Ninh Binh, with six lanes, i

The Vietnam Expressway Development and Investment Corp. (VEC) has sent a plan to the Ministry of Transport (MoT) on franchising the rights to operate and maintain the Cau Gie-Ninh Binh Expressway; a move without precedent in Vietnam. 

It proposed that MoT submit the plan to the government for approval. Operations and maintenance (O&M) for the expressway could be franchised under the plan for VND9.2 trillion ($404.8 million).

Investors keen on securing the rights must be experienced in franchise projects, have the financial capacity, and be capable of operating expressway projects.

VEC targets building 1,000 km of expressways in Vietnam, Mr. Mai Tuan Anh, CEO of VEC, told local media, and needs to mobilize new investment capital to do so, making the franchising plan a necessity.

A number of foreign investors expressed a desire to become involved in toll collections on the expressway, with France’s VINCI Group signing a cooperation agreement with VEC. The selection of investors will only be made after the franchise scheme has been approved by the Prime Minister and feasible mechanisms identified.

The Cau Gie-Ninh Binh Expressway (Phase 1) runs for 50 km and is invested by VEC with total investment capital of VND8.9 trillion ($391.6 million).

It is also considering transfer the rights to operating the Ho Chi Minh City-Long Thanh-Dau Giay Expressway.

If a franchise was arranged, VEC and the investors would jointly set up an enterprise to operate the expressway, with the proceeds used for investment in other VEC projects.

The expressway began in January 2006 with investment of nearly VND9 trillion ($396 million) and was the first of its kind in the Red Delta connecting Hanoi with provinces to the south.

VEC currently has six investment projects with total capital of VND135.4 trillion ($6 billion). Of the 600 km of expressways it is investing in, 350 km have been put into operation, representing half of all the expressways now in operation around the country.

Mr. Anh told local media that many foreign investors are keen on securing the rights to expressway operations in Vietnam.

VEC has established three companies to operate three expressways: Noi Bai-Lao Cai, Cau Gie-Ninh Binh, and Ho Chi Minh City-Long Thanh-Dau Giay.

Any sale of rights to operations will be conducted by selling shares in the three companies. “If investors want to buy all the shares then the State will sell all the shares,” Mr. Anh said.

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