The Ministry of Planning and Investment (standing office of the inter-sector appraisal council) has just announced the conclusion of the appraisal of the pre-feasibility study report for the adjusted investment project for the construction of Sa Pa Airport in the form of a Public-Private Partnership (PPP).
Regarding the failure to select an investor, the council requested the People’s Committee of Lao Cai province to explain, clarify some contents and propose solutions.
Sa Pa Airport’s master plan.
Previously, a survey by the People’s Committee of Lao Cai province showed that there were two investors interested in developing the Sa Pa Airport: Fansipan Sa Pa Cable Tourist Services Company Limited (under SunGroup Corporation) and T&T Group Joint Stock Company. However, after issuing the invitation to bid, no investors submitted bids.
Explaining this, the local authority said that investing in airport infrastructure requires a large amount of capital, while the capital recovery period is prolonged, making many investors hesitant, especially due to the impact of the COVID-19 pandemic, as well as difficulties in the real estate sector.
Regarding Lao Cai’s desire to adjust the investment policy of the project to increase the state capital contribution from 39.29% to 49.74%, the inter-sector appraisal council requested the locality to clarify the basis for the proposal and further analyze the relationship between the increase in the state capital ratio and the absence of investors participating in the bidding.
The Ministry of Transport (MoT) is preparing a socialization scheme for the aviation industry to submit to the competent authorities. The council requested the People’s Committee of Lao Cai province to continue coordinating with the MoT to clarify the necessary conditions to ensure the feasibility of attracting investment capital for the project.
One of the current implementation difficulties of the project is the very long capital recovery period, which is difficult to attract capital from commercial banks. According to calculations by the locality, the capital recovery period is up to 43 years and 11 months.
The forecast of transport demand of Sa Pa Airport is also pointed out as not having a convincing basis. The location of the airport is about 80km from the center of Sa Pa town, diverging with the expressways and railways connecting Lao Cai province with other localities.
However, the People’s Committee of Lao Cai province believes that the forecast of about 1 million passengers traveling by plane at Sa Pa Airport in 2027 is feasible. The road connection to the airport is being invested in upgrading (the section from Lao Cai city to Sa Pa is about 30km – National Highway 4D and Provincial Road 155; the project of a road tunnel through Hoang Lien Son Pass connecting Sa Pa town with Tam Duong district, Lai Chau province)
The Appraisal Council also requested the People’s Committee of Lao Cai province to clarify the capital source, total investment, time, progress, form of investor selection… of the project.
In October 2021, the Prime Minister issued Decision No. 1773/QD-TTg on the investment policy for the project to build Sa Pa Airport, Lao Cai province, in the form of PPP. The total investment of the project is nearly VND 7,000 billion, of which phase 1 is nearly VND 4,200 billion, and phase 2 is nearly VND 2,800 billion.
The expected construction scale of Sa Pa Airport is divided into 2 phases: Phase 1 will be implemented from 2021, building Sa Pa Airport to meet the standards of a grade 4C civil airport and a grade II military airport, with a capacity of 1.5 million passengers/year. Phase 2 will be implemented after 2028, completing the items of the project to reach a capacity of 3.0 million passengers/year, ensuring conformity with the planning.
The project site is located in Cam Con commune, Bao Yen district. The expected land use area is 371 ha. The expected project implementation period is 50 years (the expected construction time is 4 years; operation, exploitation, and capital recovery time is 46 years)
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