Table of Contents 1 Introduction 1 1.1 Vietnam’s Rapid Growth and the Rationale for Expressway Development 1 1.2 Overview of Master Plan for Expressway Development (MPED) 5 1.3 Objectives of the Study 9 2 Project Finance Experience in Vietnam 11 2.1 Spectrum of Public Private Participation (PPP) Models 11 2.2 Vietnam’s Experience with PPP 12 2.2.1 Project appraisal and selection process 12 2.2.2 Transparency of bidding and negotiation process 13 2.2.3 Time over-runs and cost escalation 13 2.2.4 Public acceptability of tolls 13 2.2.5 Government Management of 14 3 International Experience 15 3.1 Synthesis of International Experience 15 3.1.1 Policy, Legislation and Regulation 17 3.1.2 Planning and Priority Setting 17 3.1.3 Examine Funding Options and Provide Public Funding 17 3.1.4 Monitor Performance and Adjudicate Delivery 18 3.1.5 Delivery of Infrastructure Assets 18 4 The Financing Framework 19 4.1 Financing Requirements and Constraints on Finance 19 4.2 Sources of Finance and Life Cycle Cost 22 4.2.1 Domestic Sources 22 4.2.2 Private Debt/Equity 23 4.2.3 IFI Sources 24 4.2.4 Bilateral Loans 24 4.2.5 Private Public Partnerships or BOT Funding 25 4.2.6 Tolls Revenue 26 4.3 Comparison of Sources of Funding 28 4.4 International Experience and Lessons Learned for Vietnam 30 5 The Institutional Framework 32 5.1 The Framework of Legislation 32 5.1.1 Explicit Expressway Legislation 32 5.1.2 Transfer of Ownership Rights 33 5.1.3 Regulation and Ensuring Public Welfare 33 5.2 Institutional Structure – Roles and Responsibilities 35 5.2.1 Conceptual Model 35 5.2.2 Current Structure for Road Development 37 5.2.3 Organizational Models from International Experience 40 5.2.4 Evaluation of the Strengths and Weakness of Each Model 43 6 Summary of Key Issues and Recommendations 45 6.1 An Organization Option for Consideration 45 6.1.1 The Central Ministries (Planning/Finance/Transport) 45 6.1.2 Establish a Vietnam Expressway Administration 45 .
During the concession period, the roads are both built and maintained at no cost to the State; At the end of the concession period, the State is left with an improved asset that is not only of greater value, but also entirely debt-free. Further, since the roads are funded without recourse to a government guarantee and their existence brings both tangible and quantifiable economic benefits, South Africa's international credit rating is improved thereby; and Perhaps most importantly, money that NRA saves the Government from having to spend on maintaining and expanding the road network can be used for social development programs without jeopardizing the Government’s long-term fiscal objectives. NRA looks increasingly to the private sector for capital to invest in the road infrastructure. NRA's Act entitles it to raise funds by means of loans from any source - including the money and capital markets - with the approval of the Minister of Transport and in consultation with the Minister of Finance. Therefore, while NRA has raised capital through the issuing of loans, it has also put market-making structures in place to facilitate tradability in the debt. It is NRA’s long-term intention to create a market in its debt in order to facilitate borrowing requirements, enhance its liquidity and, in so doing, reduce its cost of borrowing. All capital market bonds are listed by the Bond Exchange and can be traded both locally and offshore. Further, all conditions relevant to foreign investors have been met. Legal and Regulatory Structure The NRA is an independent, statutory company registered under the Companies Act in 1998 and established in 1998 by the South African National Roads Agency Limited and National Roads Act. The South African government, represented by the Minister of Transport, is the sole shareholder and owner of the Agency. The NRA mandate is to develop, maintain and manage South Africa's 7,200 kilometre national road network excluding land. Organisational Structure NRA’s Board of Directors reports directly to the Minister of Transport via its Chairman. Board members are experts in various spheres of business and infrastructure development. NRA’s key strategic challenge is the long-term sustainability of the primary road network. Therefore, a program has been developed to finance the provision of a primary road network consisting of both toll and non-toll roads. The organization structure of the NRA is shown below in figure below.