Bankruptcy looms for BOT transport infrastructure investors

Phu Ha BOT Company, which built the Van Lang Bridge between Viet Tri, capital of the northern Phu Tho Province, and Hanoi, said toll fees are less than 30% of the target.

Speaking at a meeting on the issue on Monday in Hanoi, Le Minh Nghia, the company’s director, said Van Lang Bridge was finished in early 2019 but has incurred losses of some VND75 billion a year.

“We are facing more and more difficulties, and the risk of bankruptcy. The best option is for the government to buy it.”

Toll collection is low with the number of vehicles using the bridge declining steadily due to the availability of new toll-free roads.

National Road No.91 in Can Tho city was upgraded in 2016, and toll collection was good.

But in 2019 one of the two toll booths on it had to be closed after a new bridge was built. Toll collection so far is only 15-20% of the target.

Nguyen Van Khang, chairman of the company which upgraded it, said, “The bank has designated our loan as a bad debt, and the company’s owners cannot borrow money personally either.”

The two BOT projects are among eight that are earning lower revenues than expected.

The reasons include authorities reducing tolls or not increasing them as agreed and closing down toll booths after public protests, including against the collection of toll from people traveling in their own neighborhood.

But Ho Minh Hoang, chairman of Deo Ca Group Joint Stock Company, rightly pointed out that when policies change and adversely affect BOT projects, it is necessary to renegotiate contracts.

If the fault is that of authorities’, they should pay investors as committed in the original contract, he said.

Tran Chung, president of the Vietnamese Association of Road Systems Investors, said the association would ask the government to quickly resolve problems facing BOT projects so that their investors do not go bankrupt.

Contracts usually state that the government would provide support and share the risks when BOT projects earn low revenues.

Recently the Ministry of Transport has recommended that the government should buy out eight projects at a cost of VND13.12 trillion and terminate the contracts.