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Infrastructure & PPPs in Vietnam - Q1 2024 Update

VIETNAM is seeing development of infrastructure projects in transport and urban infra sectors, including use of PPP modality to deliver such projects. We see continued interest from interenational developers given encouraging local policy and regulatory framework. The country has also notified a National Hydrogen Strategy 2030 as part of its clean energy transition journey, along with planned renewable energy project pipeline being developed through international investments.

Read the latest developments in Infrastructure and PPPs in Vietnam in our Q1 2024 insight.

 

January 2024

VIETNAM MINISTRY PROPOSES INCREASING STATE FUNDS IN RAIL PPPS

The ministry has proposed to amend the Law on Railway to make railway projects more attractive to investors. Under current laws, state capital in PPP railway projects account for no more than 50% of total investment of the projects. However, Ministry of Transport (MOT) has proposed that the ceiling capital contribution needs to be raised from 50% to 80%.

A higher state capital proportion will help attract non-state resources, especially when Vietnam is preparing for key railway projects. MOT has stressed that the increase in state capital contribution will create a breakthrough in railway infrastructure development, especially urban and high-speed railways. The ministry has estimated that if the state contributes 80% of total capital of railway projects, and the remaining 20% from private investors, Vietnam would mobilize up to VND 48 Trn (USD 1.95 Bn) worth of non-state capital by 2030 for national railways.


VIETNAM PLANS HIGHWAY PPP IN MEKONG DELTA

The Vietnamese government plans to attract private sector investment for a highway PPP project in the southern part of the country.  The country’s Bac Lieu provincial government proposed to use public funding to finance the IC7 intersection-Bac Lieu part of the Tien-Rach Gia-Bac Lieu Expressway. It is looking to develop the remaining section of the motorway in the PPP mode and prepare a pre-feasibility study.

The IC7 intersection is where the Can Tho-Ca Mau Expressway and the proposed road project will cross. The 58 km Ha Tien-Rach Gia-Bac Lieu Expressway will be a major motorway in the Mekong Delta. It will also be connected to the highway network linking to the country’s northern region via the intersection with Can Tho Ca Mau section. The highway connects Ha Tien city and Rach Gia city in Kien Giang province, as well as Ba Lieu city in its namesake coastal province. It will help reduce pressures on the congested National Highway 1 project. In 2019, private company Cuu Long Transport Infrastructure Management and Development Investment Corporation submitted a proposal to the Ministry of Transport to develop the project. The total investment was estimated at about VND 33 Trn (USD 1.35 Bn) at the time.

 

VIETNAM'S HCM CITY PLANS COMMITTEE TO PROMOTE PRIORITY PROJECTS

Vietnam’s Ho Chi Minh City plans to launch an interdisciplinary steering committee to promote key infrastructure projects for those poised for completion during 2024-2030. The steering committee will determine the list of priority projects, and it will select the investment modes, which will include PPP and pure private-sector financing. It will also monitor and review the progress of the project implementation.

The committee will also need to work out the scale and preparation procedures of the projects and resolve any major problems facing the projects. It will provide opinions on policy-making regarding the ways for the government to mobilise various resources, land clearances and technology applications. The government will focus on railways and other transport projects that could bolster the surrounding property development. So far, the city’s investment planning, transport and construction department have identified a preliminary list of 29 key projects. They include the proposed Ring Road 3, Thu Thiem 4 Bridge, Can Gio Bridge and Xuyen Tam Canal.

 

CT GROUP PROPOSES USD 10 BN HSR PROJECT IN VIETNAM

The CT Group plans to invest USD 9.98 Bn to build a high-speed rail (HSR) line connecting Ho Chi Minh City and Can Tho City in Vietnam. The project will be implemented under a public-private partnership (PPP) model. The company has partnered with China Railway Engineering Design Group Corporation Limited (CRECG), Power China, China Railway No.2 Group, and Tedi South to form the CMEX alliance. This consortium is seeking financial support from the World Bank, China Construction Bank, and the National Bank of China for the transit project. Meanwhile, the Government of Vietnam will cover 25% of the total project cost.

The 174-km-long HSR line will connect 6 provinces of Binh Duong, Ho Chi Minh City, Long An, Tien Giang, Vinh Long, and Can Tho, featuring 12 stations for both passengers and freight. The line will serve 16.4 Mn passengers and transport 19.1 Mn tons of cargo annually by 2035 and 42 Mn passengers and 81 Mn tons of cargo annually by 2050.

 

CHINESE BUILDER SIGNS HANOI METRO AND BRIDGE DEALS

China Pacific Construction Group will collaborate with the Vietnamese government and a state-owned enterprise to develop infrastructure projects in capital city of Hanoi. The private-sector builder signed an agreement with the transport department of Hanoi and Vietnam Construction and Import-Export JS Corporation (Vinaconex) to mobilise its capital, market and technical resources in the joint project study and investment.

The projects they will team up on are the Hanoi Metro Line 5 and Tu Lien Bridge in the Vietnamese capital, with an estimated combined investment of about VND 85 Trn (USD 3.46 Bn). The 39 km Hanoi Metro Line 5 will connect downtown Hanoi to suburban areas, linking districts including Van Cao, Ngoc Khanh and Hoa Lac. The VND 68 Trn project will have underground, elevated and ground sections with 21 stations. Metro Line 5 was approved for implementation during 2021-2025.

 

February 2024  

VIETNAM PROVINCE SEEKS PRIVATE MONEY FOR URBAN HOUSING PROJECT

The Vietnamese province of Long An is seeking a minimum VND 11.1 Trn (USD 457 Mn) in funding from the private sector fora large-scale urban housing development. The USD 3 Bn Tân Mỹ ecological urban area, to be developed in the public-private partnership mode, will be spread across 930 ha, citing the provincial planning and investment department. It will include close to 7,300 apartments, more than 13,000 villas and townhouses, 7,000 social accommodation units, and about 400 resettlement houses.

The project is scheduled for completion in 7 years. Long An, which has 18 operational industrial parks, drew over 1,200 foreign direct investment projects totaling USD 11 Bn in year 2023.

 

VIETNAMESE CONGLOMERATE PLANS USD 3.3 BN ROAD INVESTMENTS IN 2024

Deo Ca Group, which is one of the largest private-sector conglomerates in Vietnam, plans to invest more than VND 82 Trn (USD 3.3 Bn) in building 300 km of roads this year. The group plans to develop and finance the Huu Nghi-Chi Lang, Tan Phu-Bao Loc, Ho Chi Minh City-Chon Thanh and the Ho Chi Minh City-Trung Luong-My Thuan (Phase 2) projects. 

The Vietnamese group plans to use a new model to fund the PPPs, which will integrate state budget, private sector equity, loans, as well as project bonds and other financial instruments. The engineering, procurement and construction contractors will also invest in the projects. The company will work with co-investors that participate from the preparation stage, firms that join at the project bidding stage and companies that contribute funds during the project construction. Those that engage earlier will likely enjoy a larger share of the investment revenues and have more say in determining the size of the project. 

 

MOU SIGNED TO DEVELOP A GREEN HYDROGEN PLANT IN VIETNAM 

Honeywell has signed a memorandum of understanding (MoU) with Green Solutions Group Corporation (TGS) to develop the Tra Vinh Green Hydrogen project in the Mekong Delta region in Vietnam. Honeywell will incorporate its battery energy storage system (BESS) in the hydrogen plant. This will allow the use of renewable energy (RE) beyond sunlight hours and will provide stability to the grid even during periods of low wind power generation. Additionally, the BESS system will provide solutions and expertise covering the entire hydrogen value chain. The project aligns with the Government of Vietnam’s commitment to achieve net zero emissions by 2050.

 

VIETNAM’S NATIONAL HYDROGEN STRATEGY TARGETS 500,000 TONNES OF CLEAN H2 BY 2030 

Vietnam aims to produce 1,00,000-5,00,000 metric tonnes of hydrogen a year by 2030 as part of its energy transition efforts. The output would be raised to 10-20 Mn tonnes by 2050, including green hydrogen. The production, distribution and usage of hydrogen will help meet the country’s national targets for climate change, green growth and to meet its net zero target by 2050. Hydrogen is categorized 'green' when it is extracted from water using electrolysis powered by renewable energy and is seen as crucial to help decarbonize industry, though the technology is still expensive and at an early stage of development. 

 

March 2024

CIP AND PETROVIETNAM TO DEVELOP RE AND OFFSHORE WIND PROJECTS IN VIETNAM

Denmark-based Copenhagen Infrastructure Partners (CIP) has signed a memorandum of understanding (MoU) with PetroVietnam to launch renewable energy (RE) and offshore wind projects in Vietnam. The project is expected to be developed at an investment of USD 10.5 Bn and will power more than 7 Mn households. As per the MoU, the two companies will exchange knowledge about energy transition issues including technology, supply chain, logistics, infrastructure, and skills development. This will also include training programmes in new RE technologies such as Power-to-X (green hydrogen, green ammonia, etc.), battery storage and energy islands.

 

VIETNAM APPROVES NEW AIRPORT PPP PLAN 

The Vietnamese government has approved a plan to procure an airport in a southern city located to the northwest of Ho Chi Minh City in the PPP mode. Deputy Prime Minister Tran Hong Ha signed a document to assign the People’s Committee of Dong Nai province as the procurement agency for the Bien Hoa Airport Project. 

The airport project, to be in Dong Nai provincial capital of Bien Hoa, is part of the plan the Vietnamese government has laid out for development during 2021-2030. It will serve both civil aviation and military purposes. It will be about 25 km northeast of Tan Son Nhat International Airport serving Ho Chi Minh City, and about 32 km northwest of Long Thanh International Airport, which is under construction. The project will have a designed capacity to handle 5 Mn passengers/year, with a potential to welcome 10 Mn passengers per year by 2050. The estimated project cost will be about VND 6.7 Trn (USD 271 Mn). According to the national airport development plan for 2021 - 2030, Vietnam aims to add 8 more airports in Long Thanh, Lai Chau, Sa Pa, Na San, Quang Tri, Phan Thiet, Thanh Son and Bien Hoa cities.


VIETNAM PLANS USD 2 BN HANOI HIGHWAY AUCTION 

The Vietnamese government aims to complete an auction of the expressway section of Hanoi Ring Road 4 by the end of September 2024. The Hanoi city authorities have finalised bid documents for section 3 of the ring road. This will be revived by the end of June. The government will then call for proposals in the third quarter, with an aim to have a contract in place in time for construction to start in the fourth quarter, through December 2024. 

Section 3 will involve the development of a 113 km expressway with a total investment of about VND 56.5 Trn (USD 2.3 Bn). It is one of the sub-projects of the Hanoi Ring Road 4, which will require an estimated VND 84.3 Trn (USD 3.37 Bn). The Hanoi Ring Road 4 will run through Hanoi city, and the Hung Yen and Bac Ninh provinces in northern Vietnam. It has been divided into 7 sub-projects, including 3 for resident resettlement, 3 for building two-lane urban roads, and 1 for the development of a highway as a public-private partnership. The project is intended to improve the connectivity between Hanoi and northern provinces. The government has been engaged in providing land clearances for the project.

 

KOREA'S SK PLANS 700 MW RENEWABLES IN VIETNAM 

SK ecoplant will develop 700 MW of renewables projects in Vietnam jointly with local developer Bamboo Capital Group Energy, a unit of conglomerate Bamboo Capital Group. The two have signed an agreement to build 300 MW onshore wind, 300 MW rooftop solar and 100 MW ground-mounted solar projects. Some of the wind projects will be in Gia Lai province in the northern central highlands. The South Korean company also intends to secure carbon credits. 

It has registered for the Clean Development Mechanism (CDM) project of the United Nations Framework Convention on Climate Change (UNFCCC) in Vietnam in 2021. The carbon credits can be used to offset greenhouse gas emissions or sold to other companies. BCG Energy's portfolio comprises 600 MW of solar and 800 MW of wind projects. Vietnam's renewable energy power generation capacity increased more than fourfold to about 21.6 GW last year from 5.2 GW in 2019.

 

List of Key Transactions - Q1 2024



Source: YOG INFRA analysis

 

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