If Airports Corporation of Vietnam (ACV) is chosen to develop the first phase of the Long Thanh International Airport project in Dong Nai Province, it must borrow over US$2.6 billion, posing a high risk of a surge in the country's public debt, according to the National Assembly's (NA's) Economic Committee.
If Airports Corporation of Vietnam (ACV) is chosen to develop the first phase of the Long Thanh International Airport project in Dong Nai Province, it must borrow over US$2.6 billion, posing a high risk of a surge in the country’s public debt, according to the National Assembly’s (NA’s) Economic Committee.
At a group discussion on October 24, as part of the NA’s ongoing eighth sitting, Vu Hong Thanh, head of the NA’s Economic Committee, noted that the Government has yet to assess the impact of official development assistance loans for the project on the country’s public debt.
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| Vu Hong Thanh, head of the NA’s Economic Committee, speaks at the group discussion - PHOTO: QUOCHOI.VN |
Under the Law on Public Debt Management, the project is under the guarantee of the Government, so the loans that ACV may have to seek will be taken into account in the country’s public debt strategy.
Therefore, he asked the Government to clarify its ability to provide a guarantee for ACV’s loans.
In addition, the State currently holds 95% of ACV’s charter capital, so it must bear responsibility for risks to the State capital at the firm.
If the Government does not provide a guarantee for ACV’s loans, other agencies must tightly control ACV’s borrowing and use of loans.
Moreover, ACV had earlier been selected as the main investor for the expansion of Tan Son Nhat International Airport and other airports. Therefore, its capacity to mobilize capital for all these projects has also raised concern, Thanh remarked.
The Government has completed the preliminary design for parts of the airport project. Once the detailed designs are created, the investment required may increase.
Therefore, the Government should make accurate calculations of the required capital for the projects.
The NA’s Economic Committee also asked the Government to report on Vietnam Air Traffic Management Corporation’s financial capacity (VATM).
If ACV and VATM are chosen as the investors for the Long Thanh international airport project, the Government must consult with the Commission for the Management of State Capital at Enterprises on the use of State capital at these two firms.
According to the NA’s Economic Committee, the NA has no jurisdiction to appoint investors for projects. Under the Bidding Law, investor selection falls within the prime minister’s jurisdiction.
However, the project has national importance and is related to the country’s security and national defense, so the investors must be selected carefully and in line with the law.
Minister of Transport Nguyen Van The, on behalf of the prime minister, delivered the feasibility report for the first phase of the airport project.
The first phase requires an estimated investment of nearly VND111.7 trillion (US$4.8 billion). The Government proposed that ACV invest in the headquarters of management agencies at the airport, essential components for the airport and service items, worth some US$4.6 billion. Meanwhile, flight control facilities, which need US$147.9 million, should be assigned to VATM.
According to Minister The, VATM is the only firm to be allowed to provide flight control and operation services in Vietnam. Meanwhile, ACV is managing and operating 21 out of 22 airports nationwide, so it is experienced in developing and operating airports.
If tenders are held to choose investors, work on the project will not start until 2022, making it lag behind schedule.
As for ACV’s financial capacity, the corporation currently has VND25 trillion deposited at banks and VND10 trillion in annual revenue. It will have some VND75 trillion by 2025.
Further, some investment funds and banks have indicated that they are willing to offer loans at low interest rates without the Government’s guarantee as they have realized the potential of the project, The said.
The Government also proposed the NA allow an increase in the first-phase construction area from 1,165 hectares to 1,810 hectares to add more items such as cargo storage and a cargo terminal and to accommodate a future second runway, as well as for the development of two roads leading to the airport.
If the two road projects are separated from the airport project, they will not be executed until 2021. If they are assigned to ACV, the firm will allocate VND4.8 trillion to build the roads.
The NA approved the Long Thanh International Airport project in 2015. Two years later, it allowed the separation of compensation, site clearance and resettlement costs from the airport project’s overall costs.
The Dong Nai government was assigned to take charge of the compensation, site clearance and resettlement aspect, while the Government will be responsible for the development of a terminal and other items.
The airport, when in place, is expected to handle 100 million passengers and five million tons of cargo per year.
The project is divided into three phases. In phase one, which is scheduled for completion in 2025, a runway and a passenger terminal along with other auxiliary facilities will be developed, with a capacity of 25 million passengers and 1.2 million tons of cargo per year.
(Source:SGT)
