China Development Bank provides $500 million loan for Hanoi-Haiphong Expressway Project

Project narrative

In 2008, China Development Bank issued a $500 million loan to Vietnam Development Bank (VDB) for the Hanoi-Haiphong Expressway Project. The loan carried the following (estimated) borrowing terms: a 17.75-year maturity, a 6.25-year grace period, and a 3.5% interest rate. VDB on-lent the proceeds of the loan to a special purpose vehicle (SPV) known as Vietnam Infrastructure Development and Finance Investment Joint Stock Company (VIDIFI) — a joint venture (JV) of Vinaconex, Vietnam Development Bank (51% ownership stake), Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB) (29% ownership stake) and a consortium consisting of Bitexco Corporation and the Saigon Investment Joint Stock Company (VCB) (20% ownership stake) — that owns and operates the expressway through a Build, Operate, and Transfer (BOT) arrangement with the Government of Vietnam. In total, VDB and VCB reportedly provided 70% and 30% of the debt financing, respectively, that VIDIFI needed to implement the $2 billion (VND 45.5 trillion) project. Other external financiers of the project included Export–Import Bank of Korea ($200 million), KfW Development Bank ($100 million), Citibank Japan, Sumitomo Mitsui Banking Corporation, The Sumitomo Trust & Banking, and The Bank of Tokyo-Mitsubishi UF. The Ministry of Finance (MOF) of Vietnam issued a sovereign guarantee to VIDIFI. The purpose of the project was to construct a 105.5 km, six-lane highway that begins at the Belt Road 3 in Ha Noi, the capital city of Vietnam, runs through Hung Yen, Hai Duong, the two major provinces in northern Vietnam, and ends at Dinh Vu port in Hai Phong. It connects the existing highways at six points, enhancing access to Dinh Vu Port, the biggest seaport in the country. This project was designed as an A-grade road with a total length of 105.5 kilometres including seven grade-separated junctions, 17 large-size bridges, 25 medium-size bridges, and 22 over-bridges. A crossing was designed with six 3.75 meters-lanes for cars that can handle automobiles traveling 120 km per hour and two emergency stopping-lanes. China Road and Bridge Corporation (CRBC) was one of the contractors responsible for project implementation. However, several other contractors were involved. The construction contract for the project was awarded to SK C&C, the system integration subsidiary of SK Group. The company imported Korea’s cutting-edge traffic system for the project. It also installed a robust monitoring system, which collects data from tollhouse systems, vehicle detecting machines, traffic scoreboards and closed-circuit TVs, and sends it to the central management office of the expressway, enabling real-time monitoring of traffic volume on the expressway. Meinhardt International in association with Japan Engineering Consultants provided the construction supervision services. Hadicon was engaged in conducting survey and design works for three packages of the expressway for a total length of approximately 30km. Joton was the supplier of traffic paints for the project. A pre-feasibility study of the project was developed in 2003 by TEDI and invested by Bien Dong Project Management Unit (Bien Dong PMU). However, Bien Dong PMU could not mobilize enough investment capital for project delivery. In 2007 the Prime Minister approved the feasibility study of the project under a BOT model and VIDIFI was assigned to be the project company. A formal groundbreaking ceremony took place on May 19, 2008. However, construction did not begin until February 2, 2009. One month earlier, in January 2009, Vietnam’s Ministry of Planning and Investment granted an investment license for the project. The first (22.7 km) section of the expressway was opened in May 2015. The project as a whole was completed on December 5, 2015.