Why do investors demand to "return" the 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) consists of two phases. Phase 1 includes the repair and upgrade of Hai Van Tunnel No. 1, the approach road and the road through Hai Van Pass; Phase 2 includes the expansion of Hai Van Tunnel No. 2 and the construction of 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 fees to recover capital and have funds 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 VND, which has been accepted by the State Council for Acceptance of Construction Works and audited by the State Audit Office. We have completed 50% of Hai Van 2 Tunnel and have advanced nearly 300 billion VND for the management and operation of Hai Van 1 Tunnel from 2016 to present, but have not yet collected fees to recover capital,” said Mr. Thuy.

Currently, investors have not been allowed to collect fees at Nam Hai Van station, according to Mr. Thuy, because Bac Hai Van station is collecting fees for the Phuoc Tuong - Phu Gia tunnel project located right at the North gate of Hai Van tunnel (if collecting fees at Nam Hai Van station, the distance between the 2 stations is 8km).

At the same time, the Ministry of Transport has just reported to the National Assembly that toll collection at La Son - Tuy Loan station will no longer be collected to recover 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 Hai Van Dam has been in operation for 12 years, the annual budget has been provided.

“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 are no longer able to cover the annual management and operation costs - 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 implement management and operation since 2016, and has constructed more than 50% of the length of Hai Van tunnel 2.