Complex loaning terms
Mr. Ho Minh Hoang, Chairman of the Board of Directors of Trung Luong - My Thuan BOT Joint Stock Company, said that since April 2016, contractors and investors have been gathering all material and monetary resources to speed up the progress of Trung Luong - My Thuan Expressway project, and have completed 25% of the total work volume so far.
Up to now, the contractors have spent nearly VND2,500 billion (about US$107. 27 million), and the People's Committee of Tien Giang province has advanced VND173 billion (about $7,423,000) to help fund constructions. However, if neither the expected state capital of VND9,000 billion (about $386. 35 million) nor the credit capital of VND2,186 billion (about $9.83 million) is obtained by August of 2019, the contractors will end up in quite a pickle. Mr. Luu Xuan Thuy, Vice Chairman of Trung Luong - My Thuan BOT Joint Stock Company, said that the lack of capital will delay opening the expressway to public use in 2020.
On May 31st, 2019, VietinBank - CN4, the bank primarily providing credits for this project, has issued Document No. 1365/CV-PKHDNL-CN4 regarding its consideration of granting credits to the Trung Luong - My Thuan project.
Regarding the amount of state budget involved, the bank requires a guarantee of VND2,575 billion (about $110.54 million) which is equivalent to 20.5 percent of the project’s total investment, while only VND2,186 billion (about $93,831,000) was proposed to the National Assembly as said above. Additionally, equity is required to reach 30% of the total investment which is about VND3,765 billion (about $161.67 million), much higher than any other project under Article 10 in Decree No. 63/2018/ND-CP. On the other hand, the state capital involved in PPP projects is not accounted for in the total investment capital.
Deducing from the above amounts, VietinBank only agreed to loan out a maximum of VND6,210 billion (about $266.45 million) not including VAT, whose amount was instructed by the bank to be obtained independently by the investors. VietinBank also requested a notice of credit commitment to be sent to them before the first date of disbursement. This is a very difficult requirement to meet when the VAT refund period depends on tax agencies’ progress and budget capacity.
According to Mr. Mai Manh Hong, General Director of Trung Luong - My Thuan BOT Joint Stock Company, the terms listed by Vietinbank consists of quite a few unreasonable points. Therefore, the Ministry of Transport, the People's Committee of Tien Giang province, and the investors union have proposed VietinBank to appraise and solve any dilemma arising from its credit contracts, and promptly complete all procedures to ensure the expressway project can advance as per the Prime Minister’s directions.
Additionally, Trung Luong - My Thuan BOT Joint Stock Company had sent a petition to VietinBank to consider some matters, such as determining the bank’s financing limit and adjusting credit contracts before July 30th of 2016; setting loan rates in accordance with Decree 63; and most importantly, disbursing credits with no increase in interest during construction phase, unless there is any directive from the Government.
Constructions going at a decent pace
Construction site of Package XL-06 of Trung Luong - My Thuan Expressway project. Photo: VNA
According to the Management Board of Tien Giang Civil and Industrial Construction Investment Project, the project’s contractors have taken over a ready-for-construction area of 50.64km out of the total 51.1km. Also, there are only 411 of 3,292 households who have not received their compensations. The People's Committee of Tien Giang province is focusing on getting every household compensated and repositioned in order to hand over the ground to project managers in its entirety.
Regarding the progress of construction packages, according to Trung Luong - My Thuan BOT Joint Stock Company, 21 of the 25 packages have been approved of, out of which 19 packages are undergoing constructions. As per Sai Gon Giai Phong reporters’ on-site observation, most of the main asset has been constructed, and auxiliary roads and intersections are gradually taking form.
The Trung Luong - My Thuan expressway was planned to bridge the Mekong Delta region with Ho Chi Minh City and key economic sections in the South. The Government, the Prime Minister and ministries have paid special attention to making sure the project is completed on time and see this as a political mission.
On June 12th, Trung Luong - My Thuan BOT Joint Stock Company organized a meeting to restructure its shareholders. As a result, Yen Khanh Group JSC, Thang Loi Group JSC and Hoang An JSC were disqualified. The remaining 3 shareholders include: CII Bridge and Road Investment JSC, Tuan Loc Construction and Investment JSC, and BMT Construction Investment JSC.