|
BOT, BT projects may suffer loss due to high lending interest rates
A lot of investors who undertake transport projects under the mode of BOT (build – operation – transfer) or BT (build – transfer) are facing the risk of incurring loss because the lending interest rates are very high, while it is very difficult to access loan sources.
No official agreement has been signed to date, but it is sure that the component project of the BT contract on upgrading the Highway No 20 that links Lam Dong and Dong Nai provinces would be assigned to the joint name headed by the Cuu Long General Corporation for Investment & Development and Transport Management.
Though all the four investors in the joint name who would undertake the project, have been well known as financially capable and experienced contractors, experts still think that implementing the project capitalized at 4600 billion dong under the mode of BT in the current period is a venturous decision.
The investors must commit to arrange enough capital to ensure that the investment cash for the project is not interrupted. Besides, the interest rates of the capital must not be higher than 4.5 percent per annum as stipulated by the Ministry of Transport. These are the two regulations experts believe would put big difficulties for the investors.
According to Tran Quoc Viet, Director of the Department of Construction Management and Quality of Transport Works under the Ministry of Transport, besides the construction costs and the costs for compensation for site clearance, the total investment capital of the project of 4600 billion dong includes the profits for investors, lending interest rates and the provisioning against the price slippage.
Especially, investors are now allowed to mobilize capital at the interest rates higher than 4.5 percent per annum, which is just equal to 1/3 of the medium term commercial loans’ interest rate. Therefore, even if the investors accept lower profits and apply optimal project execution management method, the risk of incurring losses proves to be very high, since the project would terminate in three years.
In fact, the difficulties once forced many transport project contractors to “flee for their lives.” The problem was that investors could not mobilize capital, or they only could seek the capital at the interest rates higher than the interest rates set up by the Ministry of Transport.
In early November 2011, the BIDV’s Expressway Development Corporation BEDC had sent a document to the Ministry of Transport, asking for the permission to stop the implementation of the project on building the Trung Luong – My Thuan highway.
The move by BEDC once surprised some people, because the investor of the project could enjoy some preferential policies. For example, it could collect fee from the vehicles going on My Thuan Bridge, collect fee on the HCM City – Trung Luong and on Highway No 1. It was allowed to exclusively exploit the services and infrastructure items within the road and underground works, exclusively sale advertisements along the HCM City – Trung Luong Highway.
Especially, the joint stock company in which BIDV (the Bank for Investment and Development of Vietnam) contributed the biggest proportion of capital even refused to purchase the right to collect fee on the HCM City – Trung Luong Highway.
The delay in capital contribution to BEDC, the improper arrangement of the capital from other credit institutions--since some foreign institutions have stated that they will not consider giving support to the project, were the main reasons which made BIDV refused the two projects
The fact that BIDV has refused to buy the right to collect fee on the HCM City – Trung Luong Highway has put the Ministry of Transport into dilemma.
“At this moment, it is very difficult to find domestic investors who are financially capable enough to spend 10 trillion dong to purchase the right to collect fee for 20-25 years,” Vien said.
A lot of other investors have admitted that they are reconsidering whether to undertake transport projects in this difficult period.
vietnamnet
|
