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Infrastructure & PPPs in Vietnam - Q2 2022 Update

VIETNAM has notified some very relevant targets for infrastructure development, including Power Development Plan VIII (PDP VIII); project pipelines by two major cities of Hanoi and Ho Chi Minh; and PPPs in new urban infra sectors like street lightning & waste management. We see good PPP project development potential in the country for both private sector and lenders; with these upcoming projects being structured with appropriate risk sharing mechanism.

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

 

April 2022

SINGAPORE INVESTOR TO SEEK PARTNERS FOR VIETNAM MIXED-USE PROJECT

Singapore-headquartered private equity firm CMIA Capital Partners will seek allies to build a mixed-use development project in Vietnam.Ho Chi Minh City Agri Food-Tech Eco Township will take at least seven years to develop, and is expected to attract USD 1.1 Bn of foreign direct investment.

The company signed a memorandum of understanding with the Ho Chi Minh City government for the project. The development will be spread over 200 Ha in the city’s Cu Chi district and will include a food science and technology industrial park. It will house 100,000 residents.

Temasek Holdings-owned infrastructure consulting firm Surbana Jurong will act as development manager, according to the statement, which added that the project is expected to generate annual revenue of approximately USD 2 Bn.


VIETNAM REDUCES POWER CAPACITY TARGET FOR 2030

The latest draft version of Vietnam's Power Development Plan VIII (PDP VIII), the country's roadmap for power development, has reduced a previously targeted capacity for 2030.

The document includes a goal to increase the country's power output to 146 GW by 2030, a drop of 35 GW from previous versions. The Southeast Asian nation currently has an installed capacity of 76.6 GW.

The government will adjust the capacity target depending on the country's socio-economic development, according to the announcement. Vietnam has decided on a flexible approach as the existing grid infrastructure cannot accommodate the electricity output that was targeted earlier.


KKR LAUNCHES ASIA RENEWABLES PLATFORM

Global investment firm KKR has launched a renewables platform to develop, build and operate solar, wind and energy storage projects in Taiwan and Vietnam. The Singapore-headquartered platform, Aster Renewable Energy, will consider expanding into other markets in Asia. Aster will prefer investments in development-stage opportunities in Asian markets over operational renewable energy projects.


May 2022

Hanoi blueprint for 2030 targets infra PPPs

The Vietnamese capital has laid out a roadmap for development till 2030, vowing to promote the public-private partnership (PPP) model for infrastructure projects. It plans to expand and upgrade the Noi Bai International Airport as well as study the possibility to build another international aerodrome to cater to the increasing needs of the capital city and of the northern Vietnam region.

The blueprint targets the development of a comprehensive and countrywide modern transport system, including ring roads and access roads, as well as highway interchanges and roads connecting different regions. The Ring Road 4 Project is targeted for completion before 2027 and Ring Road 5 for 2030.

The government aims to link Hanoi with all regions of the country and will launch projects establishing satellite cities, focusing on transit-oriented development.


VIETNAM STATE PROJECT UNIT PROPOSES USD 360 Mn EXPRESSWAY PPP

Vietnam's state-owned Thang Long Project Management Board has submitted a plan to the Ministry of Transport for a plan to develop the first phase of an expressway with a total investment of VND 8.3 Trn (USD 360 Mn).

The Dau Giay-Tan Phu Expressway will be built in a public-private partnership (PPP) in the build-own-transfer model. The project will be 60.1km and will connect the Ho Chi Minh City-Long Thanh-Dau Giay Expressway with the Tan Phu-BaoLoc Expressway in Tan Phu district of Dong Nai province.

It will have four lanes with a total width of 17m.The project requires more than 300 Ha of land with about 78 Ha in Thong Nhat and the remaining in Dinh Quan. The toll collection period is about 20 years and three months.


VIETNAM ALLOWS DIRECT PPAs FOR RENEWABLES IN POLICY DRAFT

The Vietnamese Ministry of Industry and Trade (MoIT) has released an updated draft of a direct power purchase agreement (PPA) pilot scheme.

The pilot will open opportunities for wind and solar plant operators to directly sell to large electricity users - such as those with voltage needs of at least 22kV - other than to EVN, the state-grid operator.

In order to qualify, generating units must be connected to the national grid and have individual capacities greater than 30MW. Those that are not yet operational, but are included in the latest national development plan, have identifiable investors, and are expected to start functioning within 270 working days of the pilot's commencement, may also register.


VIETNAM PLANS USD 160 Mn AIRPORT PPP IN THIRD QUARTER

Vietnam is looking to develop a VND 3.65 Trn (USD 160 Mn) airport in the northwest province of Lap Cai. The proposed Sa Pa airport will be built up to 4C standards and in the PPP mode. It will have a designed capacity of 1.5 million passengers per year and will feature a Grade II military airport, covering 275 Ha of land.

The project site is in the Cam Con commune in Bao Yen district. The build-own-transfer project will have a concession period of 50 years, including a construction period of three years and seven months.

The Lao Cai Provincial People's Committee will organise a domestic public tender to select investors. The bidding process will take place from the third quarter of 2022. The passenger capacity of the airport is like to reach 560,640 per year by 2024, and 4.7 million by 2045.


VIETNAM PROVINCE DISCUSSES PPP PROJECTS WITH SINGAPORE INVESTOR A provincial administration in Vietnam offered a number of public-private partnership (PPP) projects to privately-held Singaporean group Poly VN Entertainment. The government of Binh Phuoc presented opportunities in sectors such as transportation, education, healthcare, solar energy and information technology. Specific projects that were singled out included the Chon Thanh-Dak Nong and the Ho Chi Minh City-Thu Dau Mot-Chon Thanh expressways.

The State Capital Investment Corporation proposed the Chon Thanh-Dak Nong Expressway as a PPP. It said that the cost of development is estimated at VND 26 Trn (USD 1.1 Bn). The second expressway will cost an estimated VND 25 Trn and has a payback period of 32 years.


HANOI AGREES USD 1 Bn FOR FOURTH RING ROAD PROJECT

The government in Vietnam's capital Hanoi has agreed to spend VND 23.5 Trn (USD 1 Bn) for a fourth ring road project. The Hanoi People's Council has discussed the allocation of funds for its construction, and a proposal will be tabled in the National Assembly for consideration.

The 112.8 Km road will cost an estimated VND 85.8 Trn and will be awarded as a build, operate, transfer contract. It is scheduled for completion in 2027.


VINGROUP AND TECHCOMBANK TO STUDY VIETNAM HIGHWAY PPP

The Ministry of Transport has directed Vingroup - the country’s biggest conglomerate by revenue - and Vietnam Technological and Commercial Joint Stock Bank (Techcombank) to prepare a feasibility study for the Gia Nghia - Chon Thanh expressway project, proposed in a public-private partnership model.

Ho Chi Minh Highway Project Management Board will guide Vingroup and Techcombank - the country's largest largest private lender by deposits - to complete the feasibility study.

The two companies will also work out and submit an investment proposal for government review. Once the proposal is approved, the Ministry of Transport will launch a tender to select investors. The road will be 212 Km with either four or six lanes with a maximum design speed of 80-100 Km/h. It will connect the Dak Nong and Binh Phuoc provinces.


June 2022

VIETNAM CAPITAL PLANS SMART PUBLIC LIGHTING PPP

Vietnam's Ho Chi Minh City is planning to install smart public lighting systems this year in three central districts. As part of a draft plan by the municipal construction department, smart public lighting systems will be installed in a public private partnership (PPP) in districts 1, 3 and Thu Duc City of the Vietnamese capital.

The proposal has been tabled for approval. Ho Chi Minh City is also looking to overhaul and convert private lighting systems into public lighting systems and upgrade the management and operation centers of public lighting systems in districts 1, 3, 4, 5, 6 and 8.

The planning and investment department will execute the work and liaise with government segments to prepare a list of projects, research technology applications to build smart public lighting systems, and seek investment.


CHINESE ENVIRONMENT COMPANIES EVALUATING VIETNAM CITY WASTE PPP

Chinese environment management companies are evaluating a solid waste project in Vietnam's Da Nang city. They declined to identify the potential bidders, companies have obtained the project documents from the procuring authority.

The project involves the construction of a waste plant with a daily processing capacity of 1,000 tonnes. Authorities expect it will cost an estimated VND 803 Bn (USD 34.5 Mn). The internal rate of return is projected as 15.9%, and the net present value VND 303 Mn. They aim for construction to start sometime in 2023 and complete the work in 2024. The plant will be located in a waste management complex in Hoa Khanh Nam ward in Lien Chieu district.

The payback period is 12 years and 11 months. The operator will be paid a fee of up to USD 17 /tonne of waste treated.


HO CHI MINH CITY APPROVES PROJECTS WORTH USD 41 Bn

The Ho Chi Minh City government has approved 197 projects worth an estimated VND 944 Trn (USD 41 Bn). The list includes highways, urban railway lines, solid waste and water treatment, flood control, environment and social infrastructure projects.

The 50 Km Ho Chi Minh-Moc Bai Highway will require an investment of about VND 16 Trn and the Vo Van Kiet Toll Road Expansion project about VND 13.8 Trn. Two elevated roads - one of which will be 9.5 Km and the other 21.5 Km - will cost an estimated VND 17.5 Trn and VND 13.8 Trn respectively.

There are 12 urban rail lines worth more than VND 427 Trn for which the government is seeking private sector interest. The waste management, water and environment projects require about VND 40 Trn. This includes a waste treatment and energy recovery plant with a capacity of 2,000 tonnes/day - projected to cost VND 4.92 Trn - and a waste collection and treatment system in the Tan Hoa-Lo Gom basin, worth about VND 6.3 Trn.


VIETNAM CONSORTIUM SEEKS APPROVAL TO INVEST IN EXPRESSWAY PPP

Vietnam's CIENCO6, COTECCON, Thuan Viet Trade and Construction Company, and Tan Thanh Holdings have formed a consortium and are seeking government approval to invest in the Bien Hoa-Vung Tau Expressway in the PPP mode. It is the only group that has applied for the project. The consortium has committed to mobilizing capital from participating members.

Capital from the joint venture will account for 40%, or VND 5.2 Trn (USD 224.5 Mn), while banks will lend VND 3 Trn, and VND 3 Trn will come via bonds issued to potential partners. The consortium has committed for operations to begin in 2025. The 53.7km expressway will link Bien Hoa city to Ba Ria in Vung Tau province.

 

List of Key Transactions - Q2 2022

Source: Inframation, YOG INFRA analysis

 

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