Phap Van-Cau Gie could be Vietnam’s first build-operate-transfer highway project with foreign investors onboard.
Last month, the Ministry of Transport (MoT) turned to the prime minister for permission to expedite the upgrading of the 30 kilometre route to reach highway standards under build-operate-transfer (BOT) form. It assigned the project to Japan’s Nexco-Central Company and other Japanese investors.
The MoT also sought the rights to decide on toll collections on the road to ensure the project is financially viable. In the ministry’s proposal, MoT minister Dinh La Thang said the project would use Jica loans with around 3 per cent per year interest rate.
“The project’s success could inspire other foreign investors, including Japanese ones, to ramp up investment into Vietnam’s transport infrastructure projects,” Thang noted.
According to a MoT source, from early June it received many proposals to help ameliorate the quality of this southern gateway to Hanoi under BOT form from domestic investors.
The government once assigned Phap Van-Cau Gie road to Vietnam Expressway Corporation (VEC) to invest as part of an expressway connecting Hanoi and northern Ninh Binh province.
In early 2011, Japan’s Nexco-Central voiced a proposal to team up with VEC to jump-start the project under public-private partnership (PPP) model, but the proposal was later dropped.
Last month, the firm, after nearly four years opening a representative office in Vietnam, submitted to the MoT a plan to upgrade Phap Van-Cau Gie road with an estimated VND1.5 trillion ($72 million) investment.
The project will be in progress for one year and is slated for completion in late 2013. Jica’s Hanoi office gave an official note to the MoT expressing its support and financial assistance to the project.
Nexco-Central was founded in October 2005 after splitting from Japan Highway Public Corporation. Headquartered in Nagoya, the company is currently a wholly state owned unit taking charge of operating and managing a portfolio of 1,746km highways and 430km road sections under construction in Japan.
The company reports $19.9 billion total asset value according to its 2011 annual financial report.