Transport infrastructure projects face cash crunch

Funding is expected to be a major problem for transport infrastructure works this year, with allocation by the Government falling short of requirement and investors still reluctant to open their purse strings.

The Thoi bao Kinh te Viet Nam (Vietnam Economic Times) newspaper quoted the Ministry of Transport as saying on Monday that work on 40 new projects would start this year in addition to many ongoing projects.

They include the HCM City – Long Thanh – Dau Giay Expressway project, Van Phong International Port project in the central province of Khanh Hoa, and the Noi Bai – Lao Cai, Cau Gie – Ninh Binh, and Ha Noi – Hai Phong expressways in the north.

Minister of Transport Ho Nghia Dung has admitted funding would be difficult across the spectrum of official development assistance, bond issue, and built – operate – transfer (BOT) this year.

Truong Tan Vien, director of the ministry’s Planning and Investment Department, said: “The amount allocated for infrastructure projects from the budget and bond issues this year is much lower than the actual need.”

For instance, the allocation from bond issues is only VND12 trillion ($628 million) while the ministry needs VND17 trillion for projects dependent on bond funds, he said.

“If there is a cash crunch, some projects will be delayed and payment to contractors postponed,” he said.

The State-run Viet Nam Expressway Investment and Development Corporation (VEC), which depends on BOT investors and government bond issues, said it is struggling to raise funds since commercial banks’ interest rates are high, affecting bond issue.

“Last year VEC only succeeded in issuing bonds worth VND423 billion ($22.1 million) with coupon rates of 8.9 to 10.5 per cent while it needed VND2.5 trillion ($130 million),” Tran Xuan Sanh, the corporation’s general director, said.

Several BOT investors have said they find it difficult to mobilise capital, including for the expansion of National Highway 51 and the Trung Luong – My Thuan Expressway.

VietNamNet/Viet Nam News

Tags: Vietnam Infrastructure, Vietnam Transport infrastructure projects