MoT paves way for foreign toll rights
A number of foreign companies have been rushing to negotiate with Vietnamese partners to secure the right to collect tolls on expressways in Vietnam to tap into their profit potential.
Nguyen Ngoc Thuyen, deputy head of the Department for International Co-operation under the Ministry of Transport (MoT), told VIR that, “As toll collection is a very profitable business, which could help investors quickly recoup their investment, foreign investors from the US, India, Japan, and France have been working with the ministry on the possibility of buying toll rights on certain expressways.”
He added that India’s GMR Group was negotiating with the investor of the My Thuan-Can Tho expressway project about the transfer of toll collection rights, while Vinci Group from France officially asked for concessions to collect tolls on three high-way projects.
The trend of buying toll rights has been prevalent since an international consortium led by Indian infrastructure company IL&FS signed an agreement with Vietnam Infrastructure Development and Finance Investment Company (Vidifi) to buy the toll collection rights on the Hanoi-Haiphong expressway in October 2014, making it the first foreign investor to bag a deal of this kind.
One of the most potentially lucrative routes, in terms of toll collection, is the recently-opened 105km Hanoi-Haiphong expressway. Under construction for five years, and with a price tag of over US$2 billion, this is the first route in Vietnam to have a 5cm polymer concrete surface.
The new route is of great interest to prospective toll collectors as it reduces travel times between Hanoi and the northern port city of Haiphong from 2.5 hours to just 1.5.
Transferring the rights to collect tolls on expressways is a new and unprecedented policy. The IL&FS contract would open up more opportunities for other foreign investors to secure similar deals on other expressway projects, according to Thuyen.
Earlier, Vietnam Expressway Corporation (VEC) also wanted to sell the toll collection rights on five expressways, namely the Cau Gie-Ninh Binh, Noi Bai-Lao Cai, Ho Chi Minh City-Long Thanh-Dau Giay, Danang-Quang Ngai, and Ben Luc-Long Thanh, to private investors.
These projects collectively cover 540km and are worth VND125.572 trillion (roughly US$6 billion).
“We have contacted some major investors in the industry in Japan, the Republic of Korea, the EU, and the US. We believe that this policy will help VEC quickly recoup investment to work on other expressway projects,” said VEC general director Mai Tuan Anh.
As selling the right to collect tolls on expressways would help prevent losses during the toll collection process, while reducing the pressure on public spending, Minister of Transport Dinh La Thang has asked VEC to prepare for the sale of toll collection rights on the US$1.5 billion Noi Bai-Lao Cai expressway, prior to July 2016.
This is the longest expressway in Vietnam, running through Hanoi, Vinh Phuc, Phu Tho, Yen Bai and Lao Cai.
However, many investors and international organizations, including the Japan International Cooperation Agency (JICA), recommended that to encourage more investors in the field, the problems relating to the lack of a guarantee system and risk sharing between the state and expressway developers and operators should be solved.