Why do investors demand "return" of management and operation of Hai Van tunnel?

Hai Van Tunnel. Illustration photo: IE.

Mr. Luu Xuan Thuy said that he will report to the company's Board of Directors to propose the General Meeting of Shareholders to approve the handover of the management and operation of Hai Van tunnel to the Vietnam Road Administration from July 1, 2018.

The Hai Van Tunnel Expansion Project (part of the Deo Ca Tunnel Project) includes two phases. Phase 1 includes repairing and upgrading Hai Van Tunnel No. 1, the approach road and the road through Hai Van Pass; Phase 2 includes expanding Hai Van Tunnel No. 2 and building a new approach road.

According to the contract between the investor and the Ministry of Transport, after completing Phase 1, from January 1, 2017, the investor will be able to collect tolls to recover capital and have funding to carry out the management and operation of Hai Van Tunnel 1.

“We have completed phase 1 for more than a year with a value of more than 1,200 billion, which has been accepted by the State Council for Acceptance of Construction Works and audited by the State Audit. We have completed 50% of Hai Van 2 Tunnel and have advanced nearly 300 billion for the management and operation of Hai Van 1 Tunnel from 2016 to now, but have not yet collected fees to recover capital,” said Mr. Thuy.

Currently, the investor has not been allowed to collect tolls at Nam Hai Van station, according to Mr. Thuy, because Bac Hai Van station is collecting tolls for the Phuoc Tuong - Phu Gia tunnel project located right at the North gate of Hai Van tunnel (if collecting tolls at Nam Hai Van station, the distance between the two stations is 8km).

At the same time, the Ministry of Transport has just reported to the National Assembly that it will no longer collect tolls at La Son - Tuy Loan station to recoup capital for the Hai Van tunnel construction investment. Therefore, the Ministry of Transport has directed the General Department of Roads to negotiate with investors on the management and operation costs of the Hai Van tunnel.

Mr. Thuy said that, up to now, after many meetings, the Vietnam Road Administration has not yet determined the budget to negotiate with the investor. Although the Hai Van tunnel has been in operation for 12 years, the annual budget has been provided by the budget.

“The above reasons lead to too great a risk for the project enterprise when it has advanced too much cost but is not guaranteed to be repaid as in the original contract, and at the same time we cannot afford to pay the annual management and operation costs anymore - it is too much to bear and too unfair to us! Therefore, we plan to propose that the Vietnam Road Administration take over the Hai Van tunnel for management and operation from July 1, 2018,” Mr. Thuy added.

It is known that the Hai Van tunnel project currently has a total investment capital of about 8,300 billion VND. Deo Ca Investment Joint Stock Company has disbursed more than 1,500 billion VND to complete phase 1 and carry out management and operation since 2016, and has constructed more than 50% of the length of Hai Van tunnel 2.