Vietnam’s HLD expressway commissioned-

Vietnam’s big-ticket expressway development plan was unveiled almost a decade ago. Since then, the country has commissioned and launched several expressway projects. One such project is the Ho Chi Minh City (HCMC)-Long Thanh-Dau Giay (HLD) expressway, which has been commissioned almost a year ahead of schedule. The expressway has been constructed as part of the North-South expressway and will serve Ho Chi Minh City, which is expected to be the economic hub of Vietnam.

Project genesis and scope

The four-lane access-controlled project was conceived as part of the Expressway Master Plan of Vietnam, which is a short-term programme for developing priority expressway projects in the country.

The 51 km HLD expressway originates at the junction of the Second Ring Road in District 9, HCMC, and terminates at a junction with National Highway (NH)-1 at Dau Giay in Dong Nai province. It will provide direct connectivity between HCMC and is expected to generate economic growth in provinces to the north of HCMC. The Vietnam Expressway Corporation (VEC) has initially restricted commuter access to three locations – the intersection with the Second Ring Road, the intersection with NH-51 at the southern end of Long Thanh town, and at Dau Giay. The project also involved the construction of a 1,700 metre bridge over the Dong Nai river at Long Thanh.

According to the traffic volume forecast conducted for the stretch, traffic on the expressway is expected to increase at a compound annual growth rate of about 7.5 per cent between 2015 and 2030. By 2030, the stretch will cater to 181.6 passenger car units (PCUs) per day on the HCMC-Long Thanh section and 116.42 PCUs per day on the Long Thanh-Dau Giay section. The expressway has enabled shortening of travel time between HCMC and Dong Nai from three hours to one hour.

Project execution

Construction work on the project, which was divided into two sub-projects, began in October 2009. The first 20 km section of the expressway, which links the Vietnamese southern hub with its neighbouring Dong Nai province, was operationalised in 2014. The second section links the city’s belt road and Dau Giay.

Some of the key contractors involved in the project are China Road and Bridge Corporation, Civil Engineering Construction Corporation No. 6, Civil Engineering Construction Corporation No. 8 and Korea-based Posco Engineering and Construction.

Financing arrangements

VEC is the implementing agency for the project. The expressway has been developed at a total investment of $1 billion, jointly funded by VEC, the Asian Development Bank (ADB) and the Japan Bank for International Cooperation (JBIC). Notably, the HLD expressway is one of the few projects which have been co-financed by the two multilateral agencies. Co-financing has been done on a parallel basis. While ADB funds have been deployed for land acquisition and resettlement activities, JICA funds have been used for the installation of electronic toll collection and the traffic information and monitoring system on the expressway. The project’s revenue stream will be supplemented through toll collection, which has been fixed at VND 2,000 per km.

 

Future path

According to experts, one of the direct benefits that will accrue following the commissioning of the expressway is increased efficiency in the movement of goods along the southern and eastern economic corridors in the Greater Mekong Subregion.

While the project has been commissioned ahead of schedule, the initial stages of the project were delayed by the slow finalisation of detailed designs and procurement of civil work contracts. Now that the project has been commissioned, VEC’s financial position will play a key role in efficient operation and maintenance of the expressway. However, VEC’s sources of revenue are currently limited to only a few operational and revenue generating ventures. Its capital investments over the last six years have made it the biggest public debtor in the country: its capital is mostly sourced through debt, whereas the corporation’s chartered capital is only 1 trillion dong. In addition, a large part of VEC’s debt has been issued in maturities that are far shorter than the life of the expressway assets. All of VEC’s commercial bank loans have an original maturity of less than five years. Consequently, some of this debt will be due soon, even though many of the expressways have not even begun operations.

According to reports released in October 2014, the Ministry of Transport and VEC are planning to sell their stake in some of the expressway projects to foreign investors. This will ensure capital inflows that will help VEC implement other projects and reduce reliance on multilateral funding.