Illustrative image (Source: infornet.vn) Hanoi (VNA) - Investorflight from build-operate-transfer (BOT) traffic projects is triggering worriesthat the Government must rethink how to promote private investments in BOTinfrastructure projects, experts said.
Most recently, infrastructure developer Tasco decided to stopinvesting in BOT projects after 10 years.
Tran Thi Thanh Tam, a member of Tasco’s Management Board, said ata meeting late last week in HCM City that returns on BOT projects stand ataround 11.5 percent annually, a small payback for investments of such a largesize and long duration.
Tasco says it sees better investment channels elsewhere.
Traffic projects under BOT practice - one type of Public-PrivatePartnership (PPP) to deal with infrastructure development capital shortagescaused by State budget limitations - had been attractive to private investmentsin the past few years, but they are now losing their appeal. Several investorsare facing financial difficulties with their BOT traffic projects.
Tran Ngoc Le, from Yen Khanh Service, Trading and ProductionCompany, an investor in Hac Tri Bridge in Phu Tho province, was quoted by Lao Dong(Labour) newspaper that the current revenue from operating the project is notenough even to pay banking interests.
It collected around 5 billion VND (219,000 USD) of fees per month,while the amount for paying banking interests was two times higher. This wasbecause many drivers choose to run on the old road to avoid paying fees, shesaid.
Le added that the pay-pack period was initially estimated at 17years but now it could be up to 50 years.
According to economic expert Ngo Tri Long, a major reason forinvestors withdrawing out of BOT projects was struggle in capital, as banks aretightening lending to BOT projects.
Experts say the management towards investments in BOT projects isbeing tightened, thus, profits will not be as high as previously expected.“That’s why both banks and investors might see that BOT projects are no longera fertile land to pour investments in,” said Bui Danh Lien, President of the HanoiTransport Association.
Nguyen Danh Huy, head of the management board for PPP projectsunder the Ministry of Transport, said that there are problems in the legalframework and operation mechanism of BOT projects.
Huy said that while domestic investment capacity is limited,attracting foreign investments in BOT projects is not easy, as foreigninvestors often require high profits from 17 percent to 19 percent togetherwith a number of guaranteed terms.
Huy said the ministry had proposed a new mechanism on BOT to theGovernment to promote investments in traffic infrastructure projects.
Statistics show that the ministry raised 186.7 trillion VND toinvest in 62 projects under BOT and build – transfer (BT) practices from 2011-2015.-VNA
VNA
