Expanding the HCMC – Long Thanh Expressway to 8-10 Lanes: Smoothening the Path to Progress

The Ministry of Transport has just sent a report to the Government Standing Committee on the investment plan for the expansion of the Ho Chi Minh City – Long Thanh Highway section.

According to the report of the State Capital Management Commission, the investment scope is from the Vanh Dai 2 intersection of Ho Chi Minh City to the Bien Hoa – Vung Tau Highway intersection (Km4+000 – Km25+920), with a length of 21.92 km.

In terms of investment scale: The section from Vanh Dai 2 intersection of Ho Chi Minh City (Km4+000) to Vanh Dai 3 intersection of Ho Chi Minh City (Km8+770): 8 lanes according to the plan. The section from Vanh Dai 3 intersection of Ho Chi Minh City (Km8+770) to Bien Hoa – Vung Tau Highway intersection (Km25+920): 10 lanes as planned.

Vietnam Expressway Corporation (VEC) mobilizes 100% of capital to invest in the project and organize exploitation and collection of fees for capital recovery. Use central budget/local budget (Ho Chi Minh City, Dong Nai) for site clearance and separate it into an independent project in the form of public investment.

The preliminary total investment is about VND 14,955 billion, of which owner’s equity is VND 5,555 billion (37%), and commercial loans are VND 9,400 billion (63%).

If approved by the competent authority, the project will be prepared for investment from 2024 – 2025 and implemented from 2025 to 2027.

The Ministry of Transport agrees with the opinion of the State Capital Management Commission that VEC has sufficient capacity to be the investor and manage, operate and exploit the Ho Chi Minh City – Long Thanh Expressway, and believes that compared to public investment and investment in the form of PPP, VEC is assigned to invest in the project will have 5 advantages.

Firstly, it promotes the role and resources of state-owned enterprises, in line with the goal of forming VEC, synchronism in operation and exploitation of expressways, and is a premise for VEC to invest in expanding expressways managed by VEC.

Secondly, it is suitable for VEC’s ownership of the assets of this road in the coming time (the procedure for handing over these assets to VEC through the form of charter capital increase is being carried out). Thirdly, it does not use public investment capital, reducing pressure on the state budget.

Fourthly, the implementation time is shorter. Finally, the option of assigning VEC to implement will not have to deal with conflicts of interest between VEC and new subjects (in case of investment in PPP form).

To ensure resources for VEC to implement the Ho Chi Minh City – Long Thanh Expressway expansion project, the State Capital Management Commission has proposed that competent authorities consider and allow the enclosure and postponement of principal repayment (nearly VND 4,000 billion that the Ministry of Finance has advanced bond payment to VEC) and interest related to the construction bond that the Ministry of Finance has advanced from the period of 2022 – 2026 to the period of 2031 – 2034.

Commenting on this issue, the Ministry of Transport said that VEC is currently using all available resources (more than VND 9,400 billion) to complete the Ben Luc – Long Thanh project. Therefore, in order for VEC to have equity to implement the Ho Chi Minh City – Long Thanh Expressway expansion project, only the solution proposed by the State Capital Management Commission is left.

According to Decree No. 92/2018/ND-CP and Decree No. 91/2018/ND-CP, the Prime Minister has the authority to consider debt rescheduling on the basis of the report of the Minister of Finance.

The Ministry of Transport supports VEC’s proposal. However, VEC needs to further study the debt repayment plan, postponing interest payment. Clarify the interest amounts in each period to propose a plan for the competent authority to decide.

In terms of mobilizing commercial loans, on October 17, 2024, the State Capital Management Commission submitted to the Government a plan to supplement VEC’s charter capital for the 2024-2026 period of VND 38,251 billion. The Government Office is collecting opinions from ministries and branches.

To ensure conditions for VEC to borrow commercial capital, the Ministry of Transport requested that agencies quickly complete the procedures and report to the Government for submission to the National Assembly for a decision on the policy of supplementing VEC’s charter capital. This is one of the conditions for the Prime Minister to approve the investment policy of the project.