STUDY ON THE PUBLIC-PRIVATE PARTNERSHIP (PPP) PROGRAM FOR THE HANOI URBAN EXPRESSWAY NETWORK DEVELOPMENT IN THE SOCIAL REPUBLIC OF VIETNAM

Transcription

1 STUDY ON PRIVATE-INITIATIVE INFRASTRUCTURE PROJECTS IN DEVELOPING COUNTRIES IN FY2010 STUDY ON THE PUBLIC-PRIVATE PARTNERSHIP (PPP) PROGRAM FOR THE HANOI URBAN EXPRESSWAY NETWORK DEVELOPMENT IN THE SOCIAL REPUBLIC OF VIETNAM FINAL REPORT March 2011 Prepared for: The Ministry of Economy, Trade and Industry Prepared by: Ernst & Young ShinNihon LLC Japan External Trade Organization (JETRO) Katahira & Engineers International Katahira & Engineers Incorporated Central Nippon Expressway Company Limited Itochu Corporation

2 PREFACE This report summarizes the results of the Study on Private-Initiative Infrastructure Project in Developing Countries, in FY 2010 project entrusted to Katahira & Engineers International, Katahira & Engineers Incorporated, Central Nippon Expressway Company Limited and Itochu Corporation by Ernst & Young Shin Nihon LLC. This Study titled the Study on Private-Private Partnership (PPP) Program for Hanoi Urban Expressway Network was carried out in order to assess to feasibility of the projects to construct the expressway by PPP scheme. We sincerely hope this report will contribute to the implementation of the aforementioned project and provide practical information to those parties concerned on the Japanese side. March 2011 Katahira & Engineers International Katahira & Engineers Incorporated Central Nippon Expressway Company Limited Itochu Corporation

3 Location Map

4 Phap Van Cau Gie Expressway Phap Van Interchange (Starting Point) Thuong Tin Interchangeg Thuong Tin Overpass Van Dim Bridge Frontage Road Underpass

5 Mai Dich Noi Bai Expressway Mai Dich Interchange (Starting Point) Mai Dich South Thang Long Thang Long Bridge North Thang Long Noi Bai Existing Noi Bai Toll Plaza NH18 Interchange

6 Abbreviations AADT AAGR AASHTO ADB ASEAN BCR BOD BOT BT BTO CCTV CO 2 DARD DRVN DSCR EIA EIRR EPC FS GDP GNI GoV HOUTRANSS IDC IOL IUCN JETRO JICA LEP LLCR MARD MD-NB METI MOC MONRE MOT MPI NEXCO-Central NEXI NH Annual Average Daily Traffic Average Annual Growth Rate American Association of State Highway and Transportation Official Asian Development Bank Association of South-East Asian Nations Benefit Cost Ratio Biochemical Oxygen Demand Build-Operate-Transfer Build-Transfer Build-Transfer-Operate Closed-circuit television Carbon Dioxide Dept. Of Agriculture and Rural Development Directorate of Road in Vietnam Debt Service Coverage Ratio Environmental Impact Assessment Economic Internal Rate of Return Environmental Protection Commitment Feasibility Study Gross Domestic Product Gross National Income Government of Vietnam The Study on the Urban Transport Master Plan and Feasibility Study in Hochiminh Metropolitan Area, JICA, 2004 Interest During Construction Inventory of Losses International Union for Conservation of Nature and Natural Resources Japan External Trade Organization Japan International Cooperation Agency Law on Environmental Protection Loan Life Coverage Ratio Ministry of Agriculture and Rural Development Mai Dich Noi Bai Ministry of Economy, Trade and Industry, JAPAN Ministry of Construction Ministry of Natural Resources and Environment Ministry of Transport Ministry of Planning and Investment Central Nippon Expressway Company Limited Nippon Export and Investment Insurance National Highway

7 NO 2 NO X O 3 OD O&M PAPs PCE PCU PDOT ph PM PPP PV-CG QCVN ROW RP SEA SO 2 SPC TCVN TDS TSP TTC USD UXO VAT VEC VEMA VEPA VITRANSS 2 VND VOC WACC WTO Nitrogen Dioxide Nitrogen Oxides Ozone Origin and Destination Operation and Maintenance Project Affected Persons Passenger Car Equivalent Passenger Car Unit People's Department of Transportation Potential Hydrogen Particular Matter Public-Private Partnership Phap Van Cau Gie Vietnam Technical Regulations Right-of-Way (Compensation, Assistance and) Resettlement Plan Strategic Environmental Assessment Sulfur Dioxide Specific Purpose Company Vietnam Standards Total Dissolved Solid Total Suspended Particulates Travel Time Cost United States Dollar Unexploded Ordnance Value Added Tax Vietnam Expressway Cooperation Vietnam Expressway Management Administration Vietnam Environmental Protection Agency The Comprehensive Study on the Sustainable Development of Transport System in Vietnam, JICA, 2010 Vietnam Dong Vehicle Operating Cost Weighted average cost of capital World Trade Organization

8 TABLE OF CONTENTS Preface Location Map Photo Abbreviations SUMMARY Page 1. Background and Necessity of the Project i 2. Basic Policy to determine Project Scope of Works i 3. Outline of the Project iii 4. Project Implementation Schedule v 5. Feasibility of the Project viii 6. Schedule toward the realization of the Project xiii 7. Project Location Map xv CHAPTER 1 OVERVIEW OF VIETNAM AND ROAD SECTOR 1.1 Economic and Financial Condition of Vietnam GDP of Vietnam Income level Overview of Road Sector Road Administration System and Road Classification Modal Share of Vietnam Toll Collection Current Status of Expressway Development in Vietnam Capital Investment in Vietnam Public-Private Partnership (PPP) Projects in Vietnam Issues of Road Sector Outlines of the Project Area Project Area Socio-economic Conditions of the Project Area Population and Land Use Vehicle Registration Issues of Project Area 1-18 I

9 1.4 Environment for PPP Road Project Formulation and Implementation Collection Procedures Vietnam s Experience with PPP Decree 108/2009/ND-CP (BOT Law) Decision No. 71/2010/QD-TTg (formerly: Draft PPP Regulation Law) Issues of PPP 1-26 CHAPTER 2 STUDY METHOD 2.1 Objective of the Study Scope of the Study Study Schedule Assignment in Hanoi, Vietnam List of Meeting 2-7 CHAPTER 3 CONTENTS AND ITS TECHNOLOGICAL FEASIBILITY 3.1 Background and Necessity of the Project Issue of Traffic Condition around Project Area Project Outline Traffic Condition of Project Area Basic Studies to Determine Scope of Work of the Project Traffic Demand Forecast Issues of Projects Implementation Existing Structural Condition Outline of Phap Van Cau Gie Expressway Project Basic Policy Technical Studies Construction Work Issue on Implementing Project and Measures to Solve Outline of Mai Dich Noi Bai Expressway Project Basic Policy Technical Studies 3-65 II

10 Chapter 4 Environmental and Social Consideration Aspect 4.1 Environmental Improvement Effect and Impact toward Environmental and Social Aspects due to Implementation of the Projects Current Condition Analysis Legislative Ground for Implementation of Project & Relationship between Upper Level Plan Cumulative Impact, Secondary Impact, etc Future Provision Environmental Improvement Effect due to Implementation of the Project Affects on environmental and social aspects due to Implementation of the Project Opening of Public Consultations Consideration of other alternatives Law on Environmental Protection (LEP) and Laws and Regulations on SEA and EIA Related Agencies The SEA & EIA System Procedure on Land Acquisition and Compensation, Assistance and Resettlement Drafting procedure of Compensation, Assistance and Resettlement Plan(RP) Measures Required by the Vietnamese Government and Implementing Body Result of the Rapid Assessment Tentative Formation of Entitlement Matrix Estimate of Total Compensation Cost Other Requirements 4-50 III

11 CHAPTER 5 FINACIAL AND ECONOMIC FEASIBILITY 5.1 Estimated Project Cost PV-CG Expressway MD-NB Expressway Financial Analysis & Results List of Requisite Parameters Project Implementation Period Project Cost Estimates Financial Structure Financial Evaluation of the Project Sensitivity Analysis for PV-CG Economic Evaluation Results General Project Cost Benefit Estimate Cost Benefit Analysis Sensitivity Analysis Conclusion of economic analysis 5-35 CHAPTER 6 PROJECT SCHEDULE 6.1 PV-CG Expressway MD-NB Expressway 6-3 CHAPTER 7 ORGANIZATION IMPLEMENTING THE PROJECT 7.1 Outline of Implementing Agency Organization VEC Projects VEC Financial Position Project Implementation Organization Evaluation of Capacity of Implementation Agency 7-6 CHAPTER 8 TECHNICAL ADVANTAGES OF JAPANESE COMPANIES 8.1 Possible Form of Participation of Japanese Companies Advantages of Japanese Companies in this Project Necessary Measures to Promote Japanese Companies Participation 8-3 IV

12 CHAPTER 9 FUNDING PROSPECT 9.1 Funding Source and Financial Planning Possible Funding Sources Financial Planning Examination of Financial Feasibility Cash Flow Analysis 9-2 CHAPTER 10 ACTION PLAN AND ISSUES 10.1 Actions Taken or to be Taken by the Japanese proponent toward the Frmulation of the Project Actions Taken or to be Taken by the Concerned Agencies in Vietnam toward the Formulation of the Project Legal and Financial Constraints Necessity of Further Studies 10-2 Appendicies V

13 Executive Summary 1. Background and Necessity of the Project Traffic congestion in Hanoi is getting worse year by year for its growing economy and the increasing number of motorcycles and private cars. Hanoi city announced to early construct new viaduct roads on the heaviest congested 6 roads, as well as to enhance traffic regulation on March The most important roads in 6 congested roads is Mai Dich Noi Bai Expressway, which is main corridor between Hanoi city, Noi Bai International Air port and Industrial Zones in Northern Hanoi. According to Hanoi City Master Plan, three satellite cities will be constructed in the north of Noi Bai. Thus the necessity of Mai Dich Noi Bai Expressway will be even greater in future. On the other hand, Master Plan of North South Expressway, which connects Hanoi and Can Tho, was approved by prime minister on 21 st January Phap Van - Cau Gie Expressway, starting point of North South Expressway and the first road in the standard of expressway in Vietnam, is suffering from pavement deteriorations due to traffic loading and ground sinking. Phap Van - Cau Gie Expressway is supposed to be troubled with shortage of capacity and speed down caused by bad pavement condition after opening to Hanoi Ring Road 3 and Cau Gie Ninh Binh Expressway, which is now under construction extension to south section of Phap Van - Cau Gie Expressway. Many Japanese companies locate in Dong Van II Industrial Zone, which located at south of Cau Gie. As their businesses are concerning rare earth, machine parts of motorcycle and electronic parts, they are strongly requiring Phap Van - Cau Gie Expressway for time efficiency. Vietnam Expressway Corporation was approved above two projects by Government in 2005 and 2010 respectively, though these projects have not started yet because of difficulty of financing. 2. Basic Policy to determine Project Scope of Works (a) Phap Van - Cau Gie Expressway Upgrading to the expressway standards The traffic forecast predicts that by 2020 the traffic volume will reach 90,000 pcu/day and exceed the capacity of the existing road (4 lanes; 61,600 pcu/day). Since it is difficult to widen National Highway No.1 which runs in parallel and there is no other competing road, it is required to upgrade the existing Phap Van Cau Gie Expressway to secure the necessary capacity by i

14 increasing the design speed and widening the existing road. In order to improve the safety and ridability of the road to the expressway standards, in the plan it is aimed, as the basic policy, to remove the gaps caused by differential settlement and also to eliminate motorbikes and (illegal) bus stops from the mainline of the Phap Van Cau Gie Expressway. Project implementation in phases Construction and operation will be carried out in 2 phases. Phase 1 is upgrading of the existing 4-lane road, and Phase 2 is widening to 6 lanes and construction of frontage roads. Phase 1 construction will commence in the 1 st quarter of 2012 and to complete within 2012 to allow the tollroad operation to begin in It should be noted that in the Cau Gie - Ninh Binh Expressway Project which is under construction in the south of he Phap Van Cau Gie Expressway the following toll facilities are to be constructed: Km , Mainline toll plaza, Km toll plazas on the ramps at Thuong Tin Interchange, Km toll plazas on the ramps at Van Diem Interchange, and Km toll plazas on the ramps of Dai Xuyen Interchange. These toll plazas, within the Phap Van Cau Gie Expressway, will be constructed by the end of Thus it will become possible to collect revenue just after Phase 1 project is completed. Phase 2 construction will commence in the 1 st quarter of 2014 and to compete within 2016 to fully allow the 6-lane operation in Land acquisition outside of the existing Right-of-Way is required for widening to 6 lanes. Since it becomes more difficult to acquire the lands after commencement of Phase 2, the land acquisition work is assumed to proceed in parallel with Phase 1 construction and operation. (b) Mai Dich Noi Bai Expressway Plan conforming with Hanoi City Master Plan According to Hanoi City Master Plan, the project shall be invested in the following 2 phases. Phase 1: Improving and rehabilitating Mai Dich Noi Bai route: widening of the road width to 29m. Design speed V= 60-80km/h. Provision of signal lights and splitter island in intersections at grade. Widening of bridges to B=29m corresponding to widening of roadbed width. Improving pavement, drainage works and underpasses, Phase 2: Construction of Mai Dich Noi Bai expressway with design speed of 100km/h. the roadbed width in line with planning standard of Ha Noi City. Construction of 3 rd ring road, Nam Hong and Co Nhue interchange. Construction of viaduct from Mai Dich South Thang Long. At present, Phase 1 has already been under progress. In this study, for Mai Dich Noi Bai Expressway project will focus on Phase 2. ii

15 3. Outline of the Project Both of Phap Van Cau Gie Expressway and Mai Dich Noi Bai Expressway will be constructed mainly by upgrading, widening and/or elevating the existing roads. Neither expressway is a road newly constructed. (a) Project Outline Table 1: Outline of Phap Van Cau Gie Expressway Phase Item Phase 1 (upgrade) Phase 2 (widening) Length ((km) No. of Lanes (2 directions) 4 6 Frontage Road length (km) - 30 (both sides) Bridge Structures across the expressway Overpass Box Culvert No. 2 2 Length (m) No. - - Length (m) - - No Length (m) Rectification 1,282.5 Interchange 4 4 Main Line Toll Plaza (by VEC) 1 - Table 2: Outline of Mai Dich Noi Bai Expressway Section Item Total A B C Length (km) No. of Lanes (2 directions) Frontage Roads/At-Grade Roads (km) Viaduct, Bridge Structures Overpass across the expressway Underpass No. 1 1 Length (m) (widen) 1 (new) ,057.5 No Length (m) - - 1,049 1,049 No Length (m) Interchange Main Line Toll Plaza (existing) 1 iii

16 (b) Project Costs Table 3 Cost Estimates for Phap Van Cau Gie Expressway Unit:USD Item Phase I Phase II Total Total Cost Work Items 21,531,823 88,029, ,561,037 General Items Temporary Works 2,153,182 8,802,921 10,956,104 VAT (10%) 2,368,501 9,683,214 12,051,714 Construction Cost 26,053, ,515, ,568,855 Basic Design (Construction Cost x 1.0%) 260,535 1,065,153 1,325,689 Detailed Design (Construction Cost x 1.5%) 390,803 1,597,730 1,988,533 Supervision Cost (Construction Cost x 3.0%) 781,605 3,195,460 3,977,066 EIA, EMP, RP (Construction Cost x 1.0%) 260,535 1,065,153 1,325,689 Sub-Total A 27,746, ,438, ,185,832 PPP Administration Cost (Sub-Total A x 3%) 832,410 3,403,165 4,235,575 UXO Clearance Cost (Sub-Total A x 0.1%) 27, , ,186 Land Acquisition & Resettlement 0 138,934, ,934,507 Sub-Total B 28,607, ,889, ,497,100 Physical Contingency (5%) 1,430,357 5,847,772 7,278,130 Price Contingency (18%) 5,149,285 21,051,981 26,201,267 Grand Total 35,186, ,789, ,976,497 Table 4 Cost Estimates for Mai Dich Noi Bai Expressway Unit:USD Item Section A Section B Section C Total Total Cost Work Items 129,963, ,623,471 28,640, ,227,277 General Items Temporary Works 12,996,330 12,862,347 2,864,050 28,722,727 VAT (10%) 14,295,963 14,148,582 3,150,455 31,595,000 Construction Cost 157,255, ,634,400 34,655, ,545,004 Basic Design (Construction Cost x 1.0%) 1,572,556 1,556, ,550 3,475,450 Detailed Design (Construction Cost x 1.5%) 2,358,834 2,334, ,825 5,213,175 Supervision Cost (Construction Cost x 3.0%) 4,717,668 4,669,032 1,039,650 10,426,350 EIA, EMP, RP (Construction Cost x 1.0%) 1,572,556 1,556, ,550 3,475,450 Sub-Total A 167,477, ,750,636 36,907, ,135,429 PPP Administration Cost (Sub-Total A x 3%) 5,024,316 4,972,519 1,107,228 11,104,063 UXO Clearance Cost (Sub-Total A x 0.1%) 167, ,751 36, ,136 Land Acquisition & Resettlement 128,939,149 28,157, ,161, ,258,419 Sub-Total B 301,608, ,046, ,213, ,868,047 Physical Contingency (5%) 8,633,450 8,544,445 1,902,586 19,080,481 Price Contingency (18%) 31,080,420 30,760,003 6,849,310 68,689,733 Grand Total 341,322, ,350, ,965, ,638,261 iv

17 (c) Proposed PPP Scheme The PPP schemes proposed to each expressway are summarized in Tables 5 & 6. Table 5 Proposed PPP Scheme for Phap Van Cau Gie Expressway Phase Sector Construction Land Acquisition O&M I: Upgrade the existing 4-lane expressway GOV - SPC - II: GOV Widen to 6 lanes SPC Possible to carry the cost partially Table 6 Proposed PPP Scheme for Mai Dich Noi Bai Expressway Section Sector Construction Land Acquisition O&M A: Mai Dich South Tang Long B: 2 nd Thang Long Bridge GOV SPC GOV SPC C: North Thang Long GOV Cash Subsidy required Noi Bai SPC 4. Project Implementation Schedule The recommended implementation schedules for Phap Van Cau Gie and Mai Dich Noi Bai Expressways are shown in Tables 7 & 8. v

18 Table 7 Implementing Schedule (Phap Van Cau Gie Expressway) vi

19 Table 8 Implementing Schedule (Mai Dich Noi Bai Expressway) vii

20 5. Feasibility of the Project (1) Feasibility of the Project Financial Evaluation <Phap Van Cau Gie Expressway>: Financial evaluation of Phap Van Cau Gie Expressway provides the following FIRR, Equity-IRR and DSCR. Table 9 Toll Rates & Financial Analysis Results (Phap Van Cau Gie Expressway) ROW Cost Carrying Options Toll Rate = 800 [VND/km] Equity- AVG.. FIRR IRR DSCR Toll Rate = 1,000 [VND/km] Equity- AVG. FIRR IRR DSCR 1 - GOV carries ROW Cost 13.2% 26.1% % 29.5% SPC carries ROW Cost 4.4% 9.7% % 14.7% SPC carries 63% and GOV carries 37% of ROW Cost 6.7% 16.4% % 20.9% 1.6 It could be concluded that the Phap Van Cau Gie Expressway is financially viable subject to the extent of GOV s contribution to the land acquisition cost. <Mai Dich Noi Bai Expressway>: Financial evaluation of Mai Dich Noi Bai Expressway provides the following FIRR, Equity-IRR and DSCR. Table 10 Construction Cost and Financial Analysis Results (Mai Dich Noi Bai Expressway) Construction Cost Carrying Option Equity- AVG FIRR (Toll Rate = 800 [VND/km]) IRR DSCR 1 - SPC carries the Construction Cost of Sections A, B & C N/A N/A SPC carries the Construction Cost of Sections A & B N/A N/A SPC carries the Construction Cost of Sections A & C -12.6% N/A SPC carries the Construction Cost of Section C 5.1% 0.8% 1.2 viii

21 The financial viability of the project is poor even if SPC carries only the construction cost of Section C with the smallest section among 3 sections. It is considered that in addition to the GOV s injecting the public fund (including ODA) into Sections A & B the construction costs of which are high, a government cash subsidy is also required to improve the financial viability of the project. Economic Evaluation The result of economic analysis indicates Phap Van Cau Gie Expressway is effective as shown by EIRR, NPV and BCR figures. Mai Dich Noi Bai is still effective but in case of higher cost of investment, EIRR is insufficient Table 11 Sensitivity Analysis by Changing Cost and Benefit for Phap Van Cau Gie Cost (EIRR:%) Benefit Base case -10% -20% -30% Base case % % % Table 12 Sensitivity Analysis by Changing Cost and Benefit for Mai Dich Noi Bai Cost (EIRR:%) Benefit Base case -10% -20% -30% Base case % % % ix

22 Environmental and Social Consideration Negative impacts are expected to be brought about mainly in land acquisition and resettlement, which are summarized below: Table 13 Impact to Land Acquisition and Resettlement Item Phap Van - Cau Gie Mai Dich Noi Bai Residential land (including fish pond land) and agricultural land, etc Residential, commercial structure and sub-structure Residential Land 16,831m2 141,137m2 Commercial Land 12,562m2 3,255m2 Agricultural Land 690,796m2 395,334m2 Fish Pond Land 469,139m2 59,648m2 Housing Area 41,245m2 172,137m2 Full impact, in need of resettlement 289 houses 1,814 houses Partial impact 65 houses 323 houses Others Yearly crop, trees - - Total Compensation Cost (rough) Based on current market price VND5,076.6bil VND16,572.9bil Based on unit price set by Hanoi People's Committee VND2,450.2bil VND6,082.6bil Land acquisition needs not only large areas but also compensation for large number of houses/structures to be affected and inevitably enormous cost is required. Coping with the issue, it is desirable to take planning and action as soon as possible. As per result of rapid assessment, although widening of the road is not expected at phase I of the Phap Van Cau Gie Expressway route, at its phase II, approximately 290 structures and more than 1,300 residents are to-be-affected for demolishment and resettlement. Therefore, the subjected project s realization can be assumed as slightly difficult. On the other hand, with regard to the Mai Dich Noi Bai Expressway route (expecting approx. 1,815 structures to be demolished, and approx. 9,500 residents to-be-affected for resettlement), the section south of Thang Long Bridge in particular, since it crosses through urban areas, packed with residential and commercial structures, its realization can be considered most difficult (or extremely difficult and shall take a long number of years ). Whereas, the two section north of the Thang Long Bridge, is mainly agricultural land and fish ponds with less extreme residential areas, therefore, its realization can be assumed as slightly difficult. However, through result of screening, it is presumed that both routes will need to adopt the EIA procedure (except phase I of Phap Van Cau Gie route, which the EPC: Environmental Protection Commitment procedure may be applied, in stead of EIA). Also, based upon criteria of the x

23 World Bank operational policy, which JICA follows suite, both of the subjected routes expect more than 200 residents to-be-affected for resettlement, thus both can be assumed as Category A project. Also, as for consideration of other alternatives subjected for further consideration at the F/S stage, in reference with issues raised at the public consultations conducted during this study, such as (i) (avoidance of) impact to cultural heritages, and (ii) issue on height of underpasses, prioritization must be placed upon compliance, following the domestic law and regulation, for its consideration. In all, based upon prerequisite condition that profitability can be secured whereby the Vietnamese side could afford to bear all compensation costs for the project affected persons (PAPs), then both route projects may have the plausibility for implementation, due to background on their ease on traffic congestion effect and economic benefit effect toward enterprises located in surrounding industrial parks. Nonetheless, final judgement for the subjected projects implementation should take into concern, all environmental and social consideration aspects as per explained here above. (2) Implementing Agency Phap Van - Cau Gie Expressway is virtually the first PPP expressway project for VEC and it is expected that a variety of experts/staff will be necessary to cover all of its aspects. However, it does not appear that VEC s current resources can meet the requirements and therefore VEC should mobilize additional resources. Furthermore, it is recommended the Private Sector assume the leadership in development of the PPP scheme. (3) Advantages of Japanese Companies in this Project (a) Technical Advantages Challenging technically issues in PV-CG and MD-NB Expressways are summarized below together with the proposed countermeasures assuming Japanese contractors participation. xi

24 Table 14 Technical Issues and Proposed Counter Measures Expressway Section Technical Issue Proposed Countermeasure In order to minimize the maintenance cost as well as the toll revenue loss during the maintenance works, carry out the initial pavement works with high Employ a Japanese pavement contractor PV-CG quality. GOV may require permeable pavement. Environmental constraints, such as minimum CO2 emission may be Use Stabilizer Method imposed for repaving works MD-NB Above the railway at the south of Thang Long Bridge the span length of viaduct needs to be significantly long and curved. Safety during erection of deck to be ensured. Use steel girders (b) Economic Advantages Compared with contractors in other countries, Japanese contractors may still have advantages in such fields as quality, safety, scheduling, budgeting, construction planning, financing and immobilizing and integrating strength of the company into maximum capacity). Thus, if they can well organize and incorporate those into the project expressing those in monetary terms to differentiate themselves from foreign contractors, they may be able to show their economic competitiveness. Looking at PV-CG Expressway project from the above point of view, it could be mentioned that Japanese companies have economical advantages in the following points: Using JICA s Private Sector Investment Finance, the project investment plan is prepared without a significant financial burden to GOV and VEC. In case the Japanese investor demands the contractor a full completion guarantee (budget & schedule) and long-term quality guarantee to eliminate the construction risks, Japanese companies could afford to assume these. xii

25 6. Schedule toward the realization of the Project Schedule toward the realization of the Project In response to the request for proposal announced by JICA on 12 th November 2010 for PPP Infrastructure Study, Katahira & Engineers International (KEI) and NEXCO have jointly submitted a proposal for Study on the PPP Program for the Phap Van Cau Gie Expressway Project. In this proposed study, it is aimed to further investigate the results of this METI FS Study on the PPP Program for the Hanoi Urban Expressway Development to lead the project to the actual formulation stage. The proposed study schedule is as follows: Table 15 Proposed Schedule toward the formulation of the Project Preparation Activity Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Survey, Natural Conditions Basic Design (Earthwork, Pavement) Basic Design (Bridge, Structures) Matrial, Planning Cost Estimate Environmental, Social O&M Planning Traffic Analysis Economic Analysis Financial Analysis PPP Scheme, Contract Report Final Report End of Contract xiii

26 Risks Without any financial sources guaranteed by the GOV, the Private Sector (and its lenders) would need to manage complex financial variables (and risks). And based on the financial analysis, these are, among others: Revenues o Toll Rates Rates must be secured in the level that socially accepted at the time operation starts and secured minimum rate to maintain the project, o Traffic volume elasticity Costs o Right-of-Way According to the financial analysis, Right-of-Way acquisition cost and its timing and speed offsets the viability of the project. Thus, in effect, the acquisition of the Right-of-Way presents a major risk and must be covered in the Toll Concession Agreement. It is linked with construction risks. o Construction Observing construction schedule is another key risk for which close management attention shall be paid. o Financing Sources of financing, including guarantees and insurances. o Taxes Tax and incentives Finance o Foreign exchange risks and its compensation o Inflation and its adjustments o Remittances and investment repatriation All of the above risks should be discussed / negotiated between the GOV and the SPC in the course of preparation of the documents indispensable to the project formulation such as Toll Concession Agreement, Shareholders Agreement, Loan Agreements, etc. xiv

27 Phap Van Cau Gie Expressway L=30km Mai Dich Noi Bai Expressway L=20.2km 7. Project Location Map Figure 1 Project Location xv

28 Figure 2 Phap Van Cau Gie Expressway Figure 3 Mai Dich Noi Bai Expressway Section A Section B Section C xvi

29 CHAPTER 1 OVERVIEW OF VIETNAM AND ROAD SECTOR

30 billion VND ( price of 1994) 1.1 Economic and Financial Condition of Vietnam GDP of Vietnam GNI per Capita of Vietnam is USD 1,010 in Vietnam has moved from low-income group to middle-income group in GDP of Vietnam has continuously been growing in this decade from 2000 to Although the global recession also affected Vietnam s market, it kept more than 5% of growth rate. In 2009 exports fell nearly 10% from the previous year, and the government took measures for adjusting tariffs to halt the trade deficit. Vietnam joined the WTO in 2007 to integrate into the global market and reinforce the domestic economic reform process. They have undertaken the structural reforms for modernizing the economy and creating more competitive export-driven industries. Figure 1-1 GDP Growth Rate of Vietnam (price of 1994) 600, , , , , , % 11.0% 10.0% 9.0% 8.0% 200, ,000 0 GDP(1994 price) Growth Rate % 6.0% 5.0% 4.0% Note: GDP of 2009 is preliminary. Source: General Statistics of Vietnam Income level The monthly average per capita income has rapidly been growing, especially in urban area. In 2008, the per capita income in urban area was 1.6 million VND (US$80), almost 3times higher than that of in

31 ('000 VND) Figure 1-2 Monthly Average per Capita Income by Residencial Area 1,800 1,600 1,400 1,200 1, Urban Rural Whole Country 1, Source: General Statistics Office of Vietnam The minimum wage for Vietnamese workers working at foreign companies is prescribed by Decree issued by Government as shown in Table 1-1. That in Hanoi and HCMC is 1.55million VND in 2010, which is almost same as actual amount paid for workers in urban area in Thus, it is assumed that wage actually paid is much higher than legal minimum wage. Table 1-1 Monthly Minimum Wage for Vietnamese Working for Foreigners (2010) Zone Area Monthly Wage (mil. VND/month) I Hanoi, HCMC 1.55 II Suburban district of Hanoi and HCMC,Inner Districts of the city of Hai Phong, Ha Long and Bien Hoa, and certain Districts in the province of Binh 1.35 Duong, Dong Nai, Ba Ria-Vung Tau III Suburban Hanoi and HCMC, All towns within Provinces 1.17 VI Other Area 1.10 Source: No. 107/2010/ND-CP The minimum wage for Vietnamese works working for foreign enterprises, foreign organizations, international organizations and foreigners 1-2

32 1.2 Overview of Road Sector Road Administration System and Road Classification The Low on Road Traffic (No.26/2001/QH10) was recently revised and came to effect in July 2010 (No.23/2008/Qh21). The low prescribes roads traffic rules, road infrastructure facilities, vehicles in traffic and road users, road transportation and state management of road traffic. Subsequently, Decree No.186/2004/ND-CP prescribes the management and protection of road traffic infrastructure, including the classification of the road and the responsibilities of the administrative organizations for managing and protecting road traffic infrastructure Road Administration System (1) Ministry of Transport (MOT) The Ministry of Transport (MOT) is a government agency in charge of state management of land transport (highways, railways), inland waterway transport and maritime transport across the country. There are 5 administrations under MOT. Administration Directorate of Road in Vietnam (DRVN) Vietnam Inland Waterway Administration Vietnam National Maritime Bureau Vietnam Register Transport Construction Quality Control and Management Bureau Jurisdiction Road Transport and Traffic Inland Waterway Maritime Vehicle and Vessel Registration Construction Management (2) Vietnam Expressway Cooperation (VEC) The Vietnam Expressway Cooperation (VEC) was established as State-owned Company under MOT in 2004 for investment, development and management, maintenance of national expressway system. After reorganized as a holding company in June 2010, VEC at present is a one-member Ltd. Company owned by MOT. VEC is executing agency for the Cau Gie-Ninh Binh and Noi Bai-Lao Cai expressway projects and prepares the HCMC-Long Thanh-Dau Guay, Ben Luc- Long Thanh, Ha Noi-Lang Son and Ha Long-Mong Cai expressway projects. The first task assigned to VEC by MOT is Cau Gie - Ninh Binh expressway project using project bonds guaranteed by government. VEC has arranged funds from ADB (USD 1,548 million), JICA (USD 517million),Local Bond (USD 166million) and Investment Co-operation (USD 97million). (3) Directorate of Road in Vietnam (DRVN) Former Vietnam Road Administration (VRA) changed its name to the Directorate of Road in Vietnam (DRVN) in April DRVN is the administration under MOT for the tasks of directly managing, maintaining and exploiting the national highway system; providing the local governments throughout the country with professional instructions on road management, maintenance and exploitation. For BOT, BTO, BT and other projects which are assigned or delegated by MOT, DRVN can act as a state agency. (4) The Provincial People s Committee The Provincial People s Committee shall manage the systems of provincial roads and urban roads within their respective jurisdiction and assign Provincial Transport Services (PDOT: Provincial Department of Transportation) and Provincial Traffic / Public Work Services the tasks of directly managing and maintaining provincial roads and provincial urban roads. 1-3

33 (5) The District and Commune People s Committee The District and Commune People s Committee shall manage, maintain and exploit district and commune roads upon receiving regulations issued by the Provincial People s Committee. (6) Ministry of Planning and Investment (MPI) In evaluation of planning projects, the Ministry of Planning and Investment (MPI) shall ensure that such projects comply with the regulations on management and protection of road traffic infrastructures. (7) Ministry of Construction (MOC) Constructing new urban road, Ministry of Construction (MOC) branch standard shall be complied as well as Vietnamese Standard. MOC shall direct and guide the formulation and management of construction plannings within this competence; guide the management of construction outside the road safety corridors; coordinate with the Transport Ministry and the provincial-level People's Committees in directing and guiding the formulation and implementation of urban traffic infrastructure plannings. (8) Ministry of Agriculture and Rural Development (MARD) The Ministry of Agriculture and Rural Development (MARD) shall direct and guide the planning and construction of the system of irrigation works related to road works; coordinate with the Transport Ministry in directing and guiding the use of land in the road safety corridors for cultivation purpose, while ensuring the technical requirements and traffic safety. (9) Ministry of Natural Resources and Environment (MONRE) The Ministry of Natural Resources and Environment (MONRE) shall assume the prime responsibility for guiding the surveys, measurement, classification and use of land in the road safety corridors according to law provisions and coordinate with the provincial/municipal People's Committees and the Transport Ministry in. 1-4

34 Road Classification The six administrative classifications of roads are defined as shown in Table 1-2. The Road Length by management Category and Pavement Type is shown in Table 1-3. Table 1-2 Administrative Road Classification Class National Highway Provincial Road District Road Commune Road Urban Road Exclusive Road Definition The main axial roads of the nationwide land road network, which are of particularly important effect in service of national or regional socio-economic development, defense and security, including: Roads linking Hanoi capital and the centrally-run cities; and administrative centers of the provinces; Roads linking administrative centers of three or more provinces or centrally-run cities (hereinafter called provinces); Roads linking international seaports and international border gates and main land border gates. Axial roads within one province or two provinces, including roads linking a province s administrative center and districts administrative centers or with adjacent provinces administrative centers; roads linking national highways and districts administrative centers. Roads linking districts administrative centers and the administrative centers of communes or commune clusters or adjacent districts administrative centers; roads linking provincial roads and administrative centers of communes or centers of commune clusters. Roads linking the communes administrative centers and hamlets and villages, or roads linking communes together. Roads lying within the administrative boundaries of inner cities or urban centers. Roads used exclusively for transport and communication by one or a number of agencies, enterprises and/or individuals. 1-5 Agency Responsible MOT (DRVN) Provincial People's Committee (PDOT) District People's Committee Commune People's Committee Provincial People's Committee Total Length as of 2008 (km) 17,228 23,520 49, ,187 8,492 (Investor) 6,434 Total 256,684 Source: Decree No.186/2004/ND-CP, Prescribing the management and Protection of Road Traffic Infrastructure, Nov. 5,2010 Table 1-3 Road Length by management Category and Pavement Type (2006) Management Category Total Length (km) Asphalt Concrete Length by Pavement Type (km) Cement Asphalt Gravel Earth Concrete National Road 17,295 7, ,447 1,030 2,454 Provincial Road 21,840 2, ,505 4,345 3,645 District Road 45,250 1,328 1,146 6,742 20,057 15,977 Commune Road 124, ,185 6,244 2, ,947 Urban Road 7,476 2, ,647 1,246 0 Exclusive Road 7, ,357 3, Total (%) Source: DRVN 224,482 (100) 14,376 (6.4) 11,006 (4.9) 36,942 (16.4) 32,285 (14.3) 130,504 (58.0)

35 Figure 1-3 Road Network in Vietnam Source: VITRANSS2 1-6

36 (tons km) (mill. Persons km) Modal Share of Vietnam Volume of passenger transport by transport mode is shown in Figure 1-4 and that of freight is shown in Figure 1-5. For passenger transport, road has been dominant and rapidly grown in For freight transport, Inland Waterway had been majority until 2004, but share of Road service increased rapidly from 2000 and overtook that of Inland Waterway in Figure 1-4 Passneger Transport 60,000 50,000 Railway Inland Waterway Road Aviation 40,000 30,000 20,000 10,000 0 Source: General Statistics Office of Vietnam Figure 1-5 Freight Transport (Land Surface) 30,000 25,000 Railway Inland Waterway Road Aviation 20,000 15,000 10,000 5,000 0 Source: General Statistics Office of Vietnam Toll Collection The regime of Toll Collection is stipulated in Circular No. 90/2004/TT-BTC. Notable aspects of tolling regime are: The conditions to be referred before toll fees applied on specific roads, 1-7

37 The toll fee levels and toll management applied to road in each category, Capital recovery of roads built by the Government and those built through joint-venture capital, or on BOT approach, The toll collection vouchers and responsibilities of road toll-collecting organizations, and Seven (7) major classifications of vehicles with their corresponding toll fees. Table 1-4 Toll Rates for Roads Invested with State Budget Capital No. Road toll-liable means Single-trip ticket (VND/ticket/ trip) Par value Monthly ticket (VND/ticket/ month) Quarterly ticket (VND/ticket/ quarter) 1 Two wheelers, three wheelers, mopeds and 1,000 10,000 the like 2 Lambretta, rudimentary trucks, tractors 4, , ,000 3 Cars of under 12 seats, trucks of a tonnage of under 2 tons and mass transit buses 10, , ,000 4 Cars of between 12 and 30 seats, trucks of a tonnage of between 2 tons and under 4 tons 5 Cars of 31 seats or more; trucks of a tonnage of between 4 and under 10 tons 6 Trucks of a tonnage of between 10 and under 18 tons and 20ft-container lorries 7 Trucks of a tonnage of 18 tons or over and 40 ft-container lorries 15, ,000 1,200,000 22, ,000 1,800,000 40,000 1,200,000 3,200,000 80,000 2,400,000 6,500,000 Source: Circular No. 90/2004/TT-BTC Current Status of Expressway Development in Vietnam (1) Expressway Networks Based on the forecasted transport volume, national socio-economic development strategy until 2020, policies on the development of 3 main economic zones and transport development strategy until 2020 and prospected future growth, the Vietnam expressway networks with total length of 6,313 km were established. 1-8

38 Table 1-5 Expressway Network Section 1) North to South Expressway Axis North to South (eastern wing) Expressway Lang Son Vinh La Son (around km 858 in NH 1A) - Ca Mau Western wing North to South Expressway Doan Hung- La Son Ngoc Hoi- Chon Thanh- Rach Gia 2) Northern expressway Ha Noi- Hai Phong Ha Noi- Viet Tri- Lao Cai Ha Noi- Ha Long- Mong Cai Ha Noi- Thai Nguyen Lang- Hoa Lac- Hoa Binh Ninh Binh- Hai Phong- Quang Ninh 3) Regional central and highland expressway Vinh- Huong Son Dong Ha- Lao Bao Da Nang- Ha Nha- Ngoc Hoi Quy Nhon- Pleiku 4) Southern regional expressway Bien Hoa- Vung Tau Dau Giay- Da Lat Ho Chi Minh city- Thu Dau Mot- Chon Thanh Ben Luc- Nhon Trach- Long Thanh Chau Doc- Can Tho- Soc Trang Ha Tien- Rach Gia- Bac Lieu My Tho- Ben Tre- Tra Vinh- Soc Trang Source: VEC Length 380 km 1,373 km 877 km 991 km 105 km 344 km 320 km 65 km 80 km 160 km 51 km 80 km 233 km 160 km 90 km 189 km 90 km 80 km 200 km 225 km 300 km (2) Cau Gie Ninh Binh Expressway The Cau Gie Ninh Binh Expressway is the first expressway that VEC has responsibility from construction to operation & maintenance. Its 56km expressway is under construction. In the first phase, 4 lane expressway with 6 lane subgrade will be constructed and carriage lanes will be widen to 6 in the second phase. Total construction cost is estimated to be 9.1 trillion VND and funding sources are VEC registered capital and Government Guaranteed Bond. The first section of 27.8 km will be opened in 2010; the second 22.5km will be opened by June 30, The whole project including a toll collection system will start its service from the fourth quarter of

39 Table 1-6 Traffic Forecast of Cau Gie Ninh Binh Unit: PCU/day Year Cau Gie Phu Ly Phu Ly Ninh Binh ,809 13, ,194 28, ,023 52, ,959 99, , ,359 Source: VEC (3) Other Expressway Projects Other Expressway Projects concerning VEC is shown in Table 1-7. Table 1-7 Expressway Projects Expressway Length Number of Cost Lanes (mill. US$) Project Progress Noi Bai Lao Cai 245 km Phase 1: 2-4 Phase 2: 6 Phase 1: 1,296 Under Construction, Open on May 2013 Mai Dich Noi Bai 20.2 Km Expressway: Preparing FS final report Urban Road: 4 Hanoi Lang Son 130 km FS and DD preparation Ha Long Mong Cai 128 km Phase 1: FS and DD preparation Phase 2: 6-8 Ninh Binh Thanh Hoa 96 km 4-6 7,500 Pre-FS Da Nang Quang Ngai 139.5km Phase 1: 4 Phase 2: 6 1,570 MOT approved Construction Investment HCMC Long Thanh Dau Giay 54.9 Km 4 (First Phase) 932 Under Construction, Open on May 2012 Ben Luc Long Thanh 45lm Phase 1: Under Detail Design Phase 2: 8 Trung Luong Minh Thuan Can Tho 82km Phase 1: 4 Phase 2: 4-6 Phase 1: 627 Interim report Source: VEC 1-10

40 1.2.5 Capital Investment in Vietnam From 2001 to 2008 Vietnam mobilized capital investment totaling approximately US $ 7,000 million. Table 1-8 and Table 1-9 show the breakdown of the funding by sector and by funding source, respectively 1. Admittedly, the Government of Vietnam is in need of funds for investment to meet the growing demand for road infrastructure to support the development plans up to It is for this reason that the Government of Vietnam embarked on a program of development using Public-Private Partnership. It was figured that PPP will accelerate the pace of development of Vietnam s infrastructure. However, as of the 1st quarter of 2010 State budget contributions are estimated to meet only 35% to 40% of investment requirement. With identified funding sources the sum will cover only 60% of requirement over the period from Yr-2002 to A new source of funding Public-Private Partnership Programs is expected to play an active role in infrastructure financing. (1) In fact, Vietnam s capital market is still underdeveloped, and domestic commercial banks and the bond market are limited in quantity and quality as fund sources; (2) Even if not so, domestic capital market could not substantially participate due to the huge amount required to finance road infrastructure projects in Vietnam. (3) Standard & Poor (S&P) rating was lowered to BB- for foreign currencies and BB for local currency for Vietnam in December 2010, which requires some wise plan to attract long term international investment. (4) Vietnam s public debt amounted to 56% in 2010 and is nearing to the Government s target limit of 60%. Besides, in 2010 Vinashin (state-owned ship builder) went bankrupt, which became a national level problem. Consequently, the Government of Vietnam became very cautious about borrowing and issuance of bond by the Government and state-owned enterprises and strengthening the control. (5) Table 1-8 Investment Capital Mobilization ( ) Unit: Bill. VND No. Sector Capital total Annual average 1 Roads (NH) ( Expressways) Sea ways Rail ways (North-South Express Railways) River Ways Air Ways Urban Transport Rural Transport Total 3, Source: M. Sc. To Hong Anh, MOT, Vietnam s Experience with PPP; PPP s Lesson in Road Sector, October M. Sc. To Hong Anh, MOT, Vietnam s Experience with PPP; PPP s Lesson in Road Sector, October

41 Table 1-9 Funding Source of Capital Investment ( ) Funding Source Composition (%) Budget investment 53.6 Preferable credit 6.5 Government Bond 27.9 Outside budget 12.0 Total 100 Source: M. Sc. To Hong Anh, MOT, Vietnam s Experience with PPP; PPP s Lesson in Road Sector, October Public-Private Partnership (PPP) Projects in Vietnam Except for the Dau Giay Phan Thiet Expressway Project, the rest of the PPP projects were undertaken by the direct participation of state-owned (quasi-government) entities, which represents the Government s interest in the partnership. (1) Dau Giay Phan Thiet Expressway Recently, the Vietnamese government has selected Dau Giay-Phan Thiet expressway as the first public private partnership ("PPP") pilot project in Vietnam. 2 This expressway is one of the important transportation infrastructure projects in southern Vietnam, connecting Ho Chi Minh City and Phan Thiet City in Binh Thuan Province. The investors are Business Limited liability Company (Bitexco) and International Finance Company (IFC - member of the World Bank Group). (2) My Thuan-Can Tho Expressway It was reported that the Vietnamese Ministry of Transport decided to invest My Thuan-Can Tho expressway at a cost of US$338 million as a PPP model project. 3 The 32.3-kilometer road, part of Trung Luong-My Thuan-Can Tho expressway, will connect My Thuan in the southern province of Tien Giang and Can Tho city.cuu Long Traffic Infrastructure Investment Development and Management Corporation (Cuu Long CIPM) under the Ministry of Transport will set up a PPP firm to mobilize capital for the expressway. Cuu Long CIPM will be entitled to fee collection right of Can Tho Bridge to mobilize 30% of the project s total capital. Once operated in 2015, My Thuan-Can Tho expressway is expected to accommodate 40,000 vehicles to travel per day. The Vietnamese prime minister has approved a plan to invest a total of VND350 trillion (US$ billion) to build expressways until the end of In recent news, Cuu Long CIPM was allowed to make use of Vnd833.5 billion in charter capital, mortgaged assets, sale of mortgage rights to collecting Can Tho bridge toll to help the highway project mobilize sufficient investment. The State Bank of Vietnam will co-ordinate with relevant agencies and with the World Bank to commence procedures in accordance with regulations receiving loans for the project during the 2011 fiscal year from IDA (the International Development Association) and IBRD (the International Bank for Reconstruction and Development). The People's Committees of Dong Nai and Binh Thuan provinces were delegated to act as the investors of sub-projects for site clearance and population resettlement within their jurisduction.the 2 Mayer Brown Publications, 10 August 2010, Vietnam s First Trial PPP Project 3 Vietnam Business News, 10 July 2010, Vietnam to Pilot PPP Form for US$338M Expressway 1-12

42 state will finance part of the compensation and site clearance costs. 4 (3) Lach Huyen Port Development The Japan-based Itochu Group has officially proposed to Vietnam's Ministry of Transport about cooperation with Vietnam National Shipping Corp (Vinalines) for investing to Lach Huyen International Port project in Hai Phong City 5. In details, the Japanese investor will cooperate with Vinalines in co-funding for Part B of the project, in which the investors will build two container wharves with total investment capital of $16 million. Previously, Ministry of Transport has assigned Vinalines as the main investor for carrying out Lach Huyen International Port project, dividing it into two parts. The project's Part A includes construction works on infrastructure facilities in Lach Huyen Port with total investment capital of $260 million, using ODA loans offered by JICA and counterpart capital. When project started as planned Lach Huyen International Port will be the largest port in the northern region, having four container wharves with loading capacity of about 35 million tons per year. (4) Rach Mieu Bridge Cienco 1 together with Cienco 5 and Cienco 6 has 51% share in a joint stock company while Rach Mieu Bridge BOT Co. Ltd. builds the Rach Mieu Bridge. Construction officially started in April The project experienced significant delays in the construction period due to difficulties of the investor to mobilize the required capital, as well as due to the lack of local experiences and expertise in the construction of cable-stayed bridge. The project has undergone a history of cost escalation. The price escalated to VND billion in 2004 from an original investment amount of VND billion prompting the Government to raise its share of subsidy up to 40% from25.8% of the total sum. In 2005, the investment amount increased further to VND 988 billion making the state budget contribution run up to 60% of the project cost. Traffic opened in September Vietnam Investment Review, 15 November, 2010, South Getting Connected 5 Uni-Bro s News, 29 January 2010, Itochu Group interested in construction project on Lach Huyen International Port 1-13

43 1.2.7 Issues of Road Sector VITRANSS2 pointed out the key issues facing Road sector as follows; Having received budget priority in the past decade, the focus has shifted away from rapid expansion of the road network into network preservation and improvement of connectivity and quality. Compared to other countries, Vietnam s main deficiency is the low ratio of paved roads and the relative paucity of secondary roads. The road hierarchy is unbalanced and is being further distorted by a huge planned program of expressway development (1,400km by 2010 and 5,753km by 2020). The establishment of the VEC was motivated by good intentions, e.g., to tap private sector funding for toll roads and to establish a commercial structure. Unintentionally, this split in organizational responsibility could give rise to a fragmentation of the road network planning process. The GRA continues to plan the development of national roads, while VEC is supposed to be an investor and operator of BOT expressways. Expressways need to be planned as a subset of national roads network, which means MOT has to grant GRA the primary task of planning the two types of trunk roads. Otherwise, VEC may build more expressways than appropriate. Only a very few expressways are understood to be financially viable, based on current tariffs and projected traffic. The private sector is unlikely to step in, unless the regulations are changed and a Viability Gap Funding is established. A large portion of the capital costs of expressways will continue to require public sector funding. It will therefore have to compete with other priorities for State budget support. Road maintenance is thought to be substantially under-funded, but little is known about quantification of the scale and nature of the problem based on assessment of road conditions, rate of deterioration, and appropriate remedial treatments. It was reported that maintenance of national roads alone will require USD195 million in Anecdotal evidence is that many roads are relatively new and here present maintenance needs are negligible. But in 5 10 years time there will be a step-change in the scale of the problem, and already on older roads problems are becoming obvious. Poor construction apparently has led to premature deterioration in some new roads. Similarly, truck overloading is exacting heavy damage on roads while enforcement and weighbridges are lacking. The answer to the maintenance problem is the creation of a Road Fund earmarked for the purpose. This is known and accepted, but remains on-hold. The 5-year proposal of MOT sought an initial fund of USD790 million to be sourced from fuel levies, tolls on national roads, vehicle registration fees, tax on tires, parking charges, and driving licenses. The proposed fund is about 15 times more than current level of expenditures on road maintenance. Preparation of a 5-year rolling investment program for roads, covering expressways, national primary and secondary roads, provincial and local roads, is recommended. However, this is made difficult by unrealistic project cost estimations, which lead to a wide divergence between planned cost and actual construction cost. In part this is because costs are not based on engineering analysis, or on empirically based unit costs. Source: The Comprehensive Study on the Sustainable Development of Transport System in Vietnam (VITRANSS2), JICA,

44 1.3 Outlines of the Project Area Project Area Project area is Hanoi. Project expressways are crossing through Hanoi from north to south for 50 km and area along the expressways will be the most beneficial area of new construction. Mai Dich Noi Bai Expressway is main corridor between Hanoi city and Noi Bai International Airport and Industrial Zones in Northern Hanoi. Phap Van - Cau Gie Expressway is starting point of North South Expressway bound to south from Hanoi. Figure 1-6 Project Area (Hanoi) Socio-economic Conditions of the Project Area (1) New Hanoi City The Decree No. 15/2008/NQ-QH of the National Assembly-Session 12 dated 29/5/2008, Hanoi Capital became applied to more expanded area as a result of merger between the former Hanoi city and Ha Tay province, Me Linh district of Vinh Phuc province and four (04) communes of Luong Son district in Hoa Binh province. Hanoi locates in the center of the Red River Delta, bordering on eight (08) provinces named: Thai Nguyen (in the North), Bac Giang (in Northwest), Hung Yen (in the East), Ha Nam (in the South), Hoa Binh (in the Southwest), Phu Tho (in the West), and Vinh Phu (in Northwest). 1-15

45 Figure 1-7 New Hanoi Capital (Master Plan) 6 Source: Hanoi City (2) GDP of Hanoi GDP of Hanoi in 2009 was VND65,747 billion (price of 1994), shared 12.7% of that of a wcountry. Hanoi has had a rapid economic development during last ten years from 2000 to Gross domestic products of Hanoi increased 11.0% per year in the period of and 9.9% per year in the period of , 1.5 times higher than that of a country. Table 1-10 GDP growth rate of Hanoi Capital Year Agriculture, forestry and fishery products Industry, construction Unit: billion VND ( price of 1994) Services Total ,238 9,265 13,681 26, ,013 17,373 22,744 44, ,064 20,367 25,081 49, ,183 23,357 28,164 55, ,267 26,170 31,198 61, ,270 27,960 33,517 65,747 Growth rate (%) Growth rate (%) Source: Hanoi Statistical Yearbook Hanoi Construction Master Plan through 2030 with a Vision towards 2050, Hanoi City,

46 Figure 1-8 GDP growth rate of Hanoi Capital in 2000, 2005, Agriculture, Forestry 1.66 Construction and Industry Services Total Growth rate (%) Growth rate (%) Source: Hanoi Statistical Yearbook Population and Land Use The Population of Hanoi was about 6.5 million in 2009 and it shared 7.5% of a country. The average population growth rate was 1.9% per year for the period of Table 1-11 Population and population density by province in Red River Delta Region (As of 1 January 2009) Population ('000 pers.) Area (Km2) Population Density (Person/km2) Hà Nội 6, , ,935 Vĩnh Phúc 1, , Bắc Ninh 1, ,248 Quảng Ninh 1, , Hải Dương 1, , ,034 Hải Phòng 1, , ,210 Hưng Yên 1, ,225 Thái Bình 1, , ,138 Hà Nam Nam Định 1, , ,105 Ninh Bình , Red River Delta 19, , WHOLE COUNTRY 86, , Source: General Statistics Office of Vietnam 1-17

47 Hanoi is the second largest province in Red River Delta. The majority of land use in Hanoi is Agricultural area 46%; and Residential Area 10%. Table 1-12 Land use by province in Red River Delta Region (As of 1 January 2008) Unit: 000 ha Total area Agricultural Area Forestry Area Special Use Area Residential Area Hà Noi % % % % Vĩnh Phúc % % % 7.6 6% Bắc Ninh % 0.6 1% % % Quảng Ninh % % % 9.5 2% Hải Dương % 8.8 5% % % Hải Phòng % 22 14% % % Hưng Yên % 0% % % Thái Bình % 1.4 1% % % Hà Nam % 6.8 8% % 5.3 6% Nam Định % 4.4 3% % % Ninh Bình % % % 5.9 4% Red River Delta 2, % % % % WHOLE COUNTRY 33, , % 14, % 1, % % Source: General Statistics Office of Vietnam Vehicle Registration Registered car number in Hanoi is shown in Table1-13. In 2009, 147 thousand cars are in Hanoi and Annual Average Growth Rate is 23.9% from 2000 to Issues of Project Area Table1-13 Car Registration Number in Hanoi ( ) Year Number of Car , , , , , , , , , ,955 Annual Average Growth Rate ( ) 23.9% Source: Department of Register The Project Area suffers the following problems; Hanoi s spatial growth over the last decade has been rapid and urban sprawl is contributing to increasing travel demand. Heavy traffic congestions in urban area especially in rush hours due to increasing travel demand, inadequate and overload road network.. Booming motorcycles and cars as well as bad fuel quality has caused serious air pollution in Hanoi. The number of traffic accidents and fatalities in Hanoi has constantly increased over the last years. 1-18

48 1.4 Environment for PPP Road Project Formulation and Implementation Collection Procedures Figure 1-9 shows the Toll Collection Regime based on the provisions of Circular No. 90/2004/TT-BTC for the National Roads. These are administered by Directorate of Road in Vietnam (DRVN). A brief run-down of the collection procedure for National Roads follows. Annually, the Ministry of Finance (MOF) circularizes the Toll Rates and send this to the Responsible State-Owned Enterprise (RSOE) which, in this case is the DRVN. The RSOE would review the Toll Rates and incorporate these into its Toll Collection Plan (which includes collection projections, expense budgets, etc.) and returns to the MOF for review and approval. The Toll Collection Plan is forwarded to the Treasury; where, upon receipt will proceed to print the Tickets (under specific denominations and format). These Tickets are sent to the RSOE who in turn issues validated receipts for the Tickets. The RSOE disseminates the Tickets at the Toll Selling Stations for sale to the Users 7. The User, at the point of payment, surrenders the ticket to the Toll Collector. On a specified cycle basis, the Toll Collector returns the user-surrendered Tickets to the RSOE office. Similarly, the Toll Selling Stations endorses the cash to the RSOE office. The RSOE office conducts a reconciliation of the Tickets sold by the Toll Selling Stations and the cash endorsed by the Toll Collectors. Based on specified cycle periods, the RSOE reconciles the number / amount of Tickets delivered to the Toll Selling Stations, the cash received and check inventories. The cash collection is thereafter remitted back to Treasury with reconciliations conducted between the RSOE and Treasury on total cash receipts and Tickets issued, respectively. Circular No. 90/2004/TT/BTC mandates the Treasury to allocate and disburse the cash collection on the following basis: MOF - 80%, RSOE - 5% (for Toll Collection System upgrading), and RSOE - 15% (for Administrative Expenses). Figure 1-9 Toll Collection Regime (National Roads Collection System) Source: Study Team 7 Toll Collectors are not allowed to sell tickets as this would be open to leakages. Effectively, the system is a manual pre-paid system, vis-à-vis manual cash payment. 1-19

49 Figure 1-10 shows the Toll Collection Regime for the Private Enterprise (Sector) or Road Business Enterprise (RBS) which is applicable to the BOT scheme. It should first be noted that VEC has the GoV mandate to determine the Toll Rates on Expressways that VEC builds. Notwithstanding this, the authority to collect is still given by the MOF. The Toll Collection Regime calls for the MOF to provide VEC with a set of Toll Reference Rates the established precedent rates. VEC takes account of these reference rates and submits its Toll Collection Plan to be approved by the MOF. Once the VEC-submitted Toll Collection Plan is approved by MOF, this is relayed to the Treasury and the Tickets (Couc Duong Bo) are printed and released to VEC. VEC then sells the Tickets to the Users at the Toll Selling Stations 8 The User pays the toll by surrendering the Ticket to the Toll Collector who in turn remits the collected cash to the RBS office and after reconciliation with the Tickets, endorses the cash to VEC including the Tickets 9 VEC reconciles and transfers the cash to the Treasury and finally endorses it to the MOF for disbursement to the RBS after reconciliations with the RBS collection accounts 10. Figure 1-10 Toll Collection Regime (Project Enterprise Collection System) Source: Study Team Revenue is the output of Toll Collection. Therefore the Private Sector examines the manner by which it derived. Detailed questions of the following sort are asked: Is it in the stable form of currency - foreign exchange risk, 8 At present, common Toll Selling Stations are the operative mode. However, this could be modified for the Private Enterprise (Sector) to have its Toll Selling Stations for its exclusive use. 9 This is due to the fact that VEC is the custodian and distributor of the Tickets issue by the Treasury. And the RBS (O&M Company) is the cash collection vehicle. 10 It would be noted that the RBS does not handle cash, this is so being that the Tickets are sold by VEC. Cash revenues to the RBS are realized only through disbursements by MOF based on the total amount of Tickets collected. 1-20

50 Does the Toll Collection system provide cash comptrollership and remittance mechanism, Is the Toll Collection set up to maximize revenue inflow technically and systematically, Could the Users adapt to modifications and improvements to the Toll Collection system, How should the rates be applied; proportionate to distance travelled or per ingress-egress, What level of fees will be acceptable to the general public. And; so on. Improvements to the Toll Collection Regime and the system are available, and can be reconstituted into the Toll Concession agreement; these improvements will mitigate Revenue Risk. To emphasize, Toll Collection (Revenue) is the enabling component for any PPP since it represents GOV s offer in exchange for the Private Sector s capital investment Vietnam s Experience with PPP PPP Schemes Most of the PPP models used the Built-Operate-&-Transfer (BOT) scheme. These did not carry any Government guarantee particularly for those projects that were assessed to be financially viable. There were, however, BOT projects where direct Government support were given through capital grants up to 40% of total project costs. The Government is considering the BOT scheme based on a Toll Operating Concession with land development rights along the project alignment 11. Other PPP schemes that are for consideration are the Build-Transfer-&-Operate and the Build-Lease-&-Transfer. These PPP schemes face problems particularly because there are no standard contracts and financing structure that could be used for reference and also because of the inexperience of domestic private investors. The vast majority of road infrastructure BOT project have not been a true private sector party since the Investor has been a State Owned Enterprise (SOE) or a Joint Stock company with majority shareholding by the SOE s essentially quasi government corporations. Most road projects in Vietnam are not built with toll collection as recovery mechanisms. On the average, 50% of the projects require GoV support. The toll levels for any BOT projects are fixed at a maximum of twice the level of tolls for non-bot projects; and these are sparingly low to allow investment recovery. There is no clarity on the Government s policy on toll rate adjustments or the mechanisms to put them into effect. The procurement of BOT contracts is in theory: by either competitive bidding or unsolicited proposals The PPP Episode in Vietnam In theory, PPP has been a much-needed approach for capital investment infusion and infrastructure development in Vietnam. However, its application is hampered with financial obstacles from an underdeveloped capital market; with no immediate availability of substantial long term funding from the international bond and bank market despite a relatively satisfactory country-risk rating. Finding capital outside of Government budgets is difficult due to the low returns offered by toll fees; and projects could not readily look towards direct capital investments from the Government for support. The policies on PPP investments are not sufficiently comprehensive; resulting in protracted and passive choices of investors exacerbated by pressures for early investments to match the rate of economic development. Vietnam is still in its embryonic stages despite its experiences on PPP. And without a clear and comprehensive set of policies, most PPP formation issues are resolved in an ad hoc manner which in turn draws criticism regarding transparency. 11 While the scheme may draw private investments, this arrangement may not work out well because the acquisition of the adjacent lands normally turns out to be excessively expensive. However, a real estate development play may work out as a destination project of sufficient size combined with the expressway development as the link. 1-21

51 The Piloting Approach In view of these difficulties, an empirical approach was taken by the GOV in the form of piloting PPP in a variety of infrastructure projects. The Ministry of Planning and Investment (MPI) sought approval from other ministries and agencies to pilot public-private partnership (PPP) model for two groups of projects particularly on hospitals and waste treatment plants. Earlier, applications of PPP have been proposed to the Prime Minister on seven (7) infrastructure sectors, namely: roads, tunnels and bridges; railways; urban transport systems; seaports, airport and river ports; clean water supply systems and power plants. Weak infrastructure is among Vietnam s bottlenecks in attracting foreign investors, analysts said, emphasizing the necessity and efficiency of the PPP model as state budget and ODA can meet only 40% of the national infrastructure project s total capital demand. With $1 billion, Vietnam can build up to 300 km of expressway under the PPP model, instead of just 100 km using the public investment form, they noted PPP from the Private Sectors (Investors ) Point of View 13 The need for PPP is there. The GOV figured that the use of the BOT investment model will solve Vietnam s infrastructure shortage. As mentioned earlier, projects have been implemented either by state-owned enterprises or official development assistance (ODA). PPP seems to be the obvious solution. But, it is important to assess the Private Sector s general disposition towards undertaking PPP. The Private Sector s concern is that infrastructure projects do not generally offer satisfactory rates of return. On a toll road project, road users are not willing (or able) to pay tolls in the levels that will support the costs of construction of the project. With cost recovery periods running long on an infrastructure project, foreign investors are less at ease to commit to the host country. Based on these, it is a key to get state support of infrastructure projects and to assure commercial viability. On the other hand, the Phap Van - Cau Gie Project levels these shortcomings, namely, it has a mature traffic volume vis-à-vis a green-field project, and the project costs can be programmed to correspond well to the revenue streams with upgrading, toll collection, and then expansion of the toll road. Phap Van Cau Gie Expressway Project could be an effective replicable model of PPP implementation. The Private Sector and its lenders would require absolute certainty with respect to the rights on the project. How concession rights are obtained reflect on the playing field where the Private Sector will engage in. Thus a legal framework is required in order to attract the Private Sector. The participation of the Private Sector in the Vietnamese infrastructure sector in the form of BOT, BTO, and BT was established under Decree No. 77/1997/ND--CP dated June 18, Decree No. 62/1998/ND-CP and Decree No. 02/1999/ND-CP provided additional guidance on direct investments under BOT, BTO and BT for foreign investors. Prior to 2007, notwithstanding the existence of these provisions, project contracts were conventionally negotiated between the project s investors and the relevant state authority, without following a competitive selection process. This resulted in the contents of project contracts varying substantially from project to project in a very inefficient and unpredictable manner that tended to discourage the participation from private investment. In addition, the bureaucratic complexity and opacity of the administrative procedures required were another significant deterrent. There are regulations applicable differently to foreign investing enterprises, from endogenous local enterprises, in relation to their establishment, available forms of investment, and taxation. This provided further discouragement to potential foreign investors in the sector. 12 Vietnam Business News, 31 July 2010, Vietnam seeks to Pilot PPP for more Projects 13 Vision and Associates, PPP to Boost Infrastructure Investment, vision@hn.vnn.vn 1-22

52 1.4.3 Decree 108/2009/ND-CP (BOT Law) On November 27, 2009, Decree 108/2009/ND-CP (Decree 108) was issued. Decree 108 superseded Decree 78/2007/ND-CP (Decree 78) effective from January 15, Decree 78 contained key investor incentives and was implemented with the aim of providing a uniform framework applicable to both Vietnamese and foreign investor. There were notable revisions of Decree 78 that were addressed in Decree 108. Decree 108 continues to retain the 10% equity requirement for projects with investment capital greater than or equal to VND1,500 billion for the portion in excess of the threshold. It also stipulates a required equity ratio equal to 15 per cent in respect of the amount under VND1,500 billion. This would result in an increased overall equity requirement for large-scale projects compared to the position under Decree 78. The 30% equity requirement for projects under VND75 billion has been eliminated. Decree 108 now stipulates a 15 percent equity requirement for all projects under VND1,500 billion. Decree 108 specifies that the state-owned capital used to carry out a project must not exceed 4% of the total investment capital (comprising debt plus equity), of such project, whereas Decree No. 78 specified a limit of 49 per cent or less of the required equity of the investor. This potentially allows the state a greater participation in a project. Decree 108 stipulates that ministries and local people s committees must make an annual announcement, on January 1, of the list of potential projects which require investment. This announcement must appear in three consecutive issues of the bidding process. Decree No. 108 limits a time to be 30 days from the last issued announcement published for investors to register their interest in certain projects. Both Decree 78 and Decree 108 force bidding for projects which are registered for implementation by two or more investors. However, both decrees also contain exceptions to this rule, where an investor may be appointed by the relevant authority without a competitive bid. Significantly, under Decree 108, any project proposed by an investor must in general be publicly tendered out. Under Decree 108, the MPI is clearly authorized to issue investment certificates for projects of national importance, projects for which a ministry, branch or a body delegated with authority by such ministry or branch is the authorized state body to enter into the project contract and projects which are to be implemented on an area covering a number of provinces or cities under central authority. Under Decree 108, all other projects must be licensed by the local people s committees. Investors are required to post a guarantee or security in respect of project performance. The amount of the security depends on the total invested capital of the relevant project. Under Decree 108, a 2 per cent minimum deposit/guarantee is required for projects with investment capital equal to or less than VND1,500 billion. For projects with investment capital greater than VND1,500 billion, 1 per cent is required for the amount above VND1,500 billion and 2 per cent is required for the portion under VND1,500 billion. Decree 108 provides generally that Corporate Income Tax (CIT) incentives for BOT, BTO and BT projects are in accordance with the applicable CIT regulations. This provides, for most infrastructure projects, that the 10 per cent preferential rate is available for only 15 years of operation. In addition, the CIT regulations state that the tax exemption and reductions will be applied from the fourth year of operation regardless of the project s profitability at that time. Figure 1-11 shows the process undertaken from Project Listing (by MPI) to Contract, under Decree

53 Figure 1-11 Process: From Project Listing to Contract Decree 108 (BOT Law) Source: Study Team Decision No. 71/2010/QD-TTg 14 (formerly: Draft PPP Regulation Law) Another step in the evolving process that is taking place in the legal framework for BOT projects, with the GOV gaining more experience; and as piloted projects are actually in being negotiated, is the promulgation of Decision 71. By and large, in comparison to the Decree 108, Decision 71 filled in administrative gaps in the PPP framework, Admittedly, this new law is a bit thin from a lawyer s point of view and will require fleshing out as it is actually implemented. 15 Mr. Boots noted that: the framework will (further) evolve to reflect lessons learned in implementing the first pilot projects. However, certain issues must be addressed up front and cannot wait for the law to catch up, such as the drafting of implementing regulation, the preparation of standardized project documentation and the establishment and capacity building of the PPP unit. These issues particularly pointed out are: Implementing Regulation The lack of detailed provisions upon which during an implementation of a PPP project in Vietnam, the Private Sector and its financiers can bear 16 requires detailed clarification on their matters of special concern. Tight Tendering Schedule The 30-day negotiation schedule does not allow thorough review and resolution of commercial, technical, legal and financial issues; where a specialized PPP unit should effectively provide advice mitigating the number of issues for resolution. Investment Preparation Cost Decision 71 suggests that the preparation costs for proposals be borne by the Private Sector. However, the issue as to the scope and depth to be borne by each party GOV / Private Sector, is subject to protracted negotiations. Foreign Currency Conversion Decision 71 has nearly the same provisions as that of Decree 108. While both offer comfort to the Private Sector and its lenders in that project revenues 14 During this study period, on November 9, 2010, the Prime Minister approved the finalized Draft PPP Regulation into Decision No. 21/2010/QD-TTG that is to take effect on January 15, Stanley Boots, Hogan Lovells, Implementing the PPP Legal Framework, Vietnam Investment Review, November 22-28, It is true that while Vietnamese legislation of the PPP framework sets out broader policies and legal concepts, it misses out on essential detailed provisions which the Private Sector and its financiers normally focus on. 1-24

54 may be converted to hard currency and remitted abroad, current proponents are facing severe issues in respect to interpreting the equivalent provision under Decree 108. In particular, lenders complain that the government has not assured that all of the revenues may be convertible into hard currency, but rather has indicated that only a percentage of revenues can be assured to be convertible a core concern affecting the bankability of large infrastructure projects. Government Guarantee Decision 71 has the same provisions as written in Decree 108 which offers Private Sector is a window for GOV guarantees. However, the provisions could be legally interpreted as rendering watered down support. With the limits being ambiguous, the tendency of the Private Sector is to negotiate for more Government guarantees. International investors have eagerly awaited Decision 71. It has moved the PPP framework a step forward. The task at hand is for MPI to put into place a corridor of a workable program for the Private Sector to take. As shown in Figure 1-12, it is the procedural flow from proposal to contract outlined under Decision 71. In comparing the processes between Decree 108 and Decision 71 the apparent difference lies in the fact that Decree 108 has a window where unsolicited proposal can be accommodated, while there is none in Decision 71. Also, under Decree 108, the intervention of the Prime Minister is sought when investor entered on non-listed projects to be resolved. For Decision 71, the intervention of the Prime Minister comes in two (2) steps: first, for the approval of specialized projects; and second, for the approval of the initialed contract towards issuance of the investment certificate. The tendering process remained essentially the same. Figure 1-12 Process : From Project Proposal to Contract Decision 71 (PPP Regulation Law) Source: Study Team Issues of PPP In the longer term, the overhaul of the legislation governing public-private partnerships (PPPs) is foreseen, and this will focus on developing the separate sectors of infrastructure. There are much discussion and some confusion in the market about the meaning of PPP. This is a broad term encompassing any form of partnership between the public authorities and private sector for the 1-25

55 construction and management of infrastructure. 17 Although BOT, BTO and BT projects are all forms of PPP, other forms of private participation in infrastructure would be covered (such as, for example, a build-own-operate contract and the shorter term Operation and Management agreements for existing infrastructure). Regulation relating to these types of contracts is necessary, not only as a way of mobilizing funds, but also as a way of accessing private sector international standard expertise and technology. Notwithstanding this longer term aim, the priority at this stage seems to develop models to facilitate the initiation of key infrastructure projects through the improvement of the BOT, BTO and BT regulations. This is the intent of this study. However, the attraction of private capital to the infrastructure sector will not depend only on the existence of a good regulatory framework. Most importantly, it will also depend on the practical implementation of the regulations by the relevant authorities in information and efficient manner and the management of the risks it will carry. 17 Vietnam Net, 02 February 2010, Building the Infrastructure Rulebook 1-26

56

57 CHAPTER 2 STUDY METHOD

58 2.1 Objective of the Study A flow chart of the study is shown infigure2-1. Figure2-1 Flow chart of Study Start Data collection 3D map, Satellite photos Development plan, socio-economic trnasport plan, land use land acquisition, resettlement plan Subcontract Traffic survey Field Investigation Environmental & social survey Bridge design Data Analysis Analyse the existing traffic conditions Socio-environmental consideration Preliminary Design Examine Optimum PPP Scheme and Financial Scheme Future socio-economic frame Future transport plan Land acquisition cost Construction Cost Estimate Traffic Demand Forecast Project Cost Estimate Toll Revenue Forecast Economic Analysis Financial Analysis Project Scheme Evaluation and recommendations Discuss with concerned agencies Finish 2-1

59 Figure 2-2, shown below, situates the development of PPP in its proper perspective within the study. In essence, the process tracks the necessary steps that the Private Sector should take - with due diligence; in order to conclude that workable sought-after Toll Concession Agreement. Figure 2-2 Public-Private Partnership from Perspective of the Study Source: Study Team As shown in the above Figure 2-2, the PPP development approach utilized for this study is for: The Consultant, to conduct a project-based financial analysis to determine the Financial Internal Rate of Return (FIRR) - essentially to assess the viability of the project. This requires preliminary design, traffic analysis, and costing information. Should a reasonable PIRR be derived, the Consultant can advise the Private Sector that there is sufficient attractiveness / viability to undertake the project. Subsequent to the Consultant s advice, the Private sector will notify the GOV of such decision to undertake, and a Memorandum of Agreement (MOA) between the GOV and the Private Sector is worked out. At this early stage, the GOV will be largely concerned on the level of economic returns the project will bring about the Economic Return on Investment (EIRR). This will be determined and if sufficiently high (exceeding the set hurdle rates, will validate and reinforce the GOV s decision to undertake the project. Coincidentally, the Consultant will develop a PPP Program where in: Alternative PPP schemes will be examined, and Selection is made from applicable PPP schemes as base-cases. These base-cases are then racked up within an institutional framework to check for fit. With the best-fit (optimum) PPP base-case; and the results of the project-based financial analysis, a Business Case is developed this will be the foundation of the Private Sector s Investment Plan. Subsequently, a Concession Architecture is developed to reflect the Business Case. The Private Sector will present this embodiment of the Business Case of the optimum PPP scheme in its Investment Plan to the GOV for review and concurrence of the project undertaking. Based on the Concession Architecture, the Consultant will undertake a financial analysis to craft a Financial Plan which the Private Sector could consider, accept, apply, and implement. The 2-2

60 question in mind is: what is the most practical manner by which the Project can be financed to increase the returns to the Private Sector while balancing risks. A variety of financial schemes are considered; and will be heuristically analyzed to come out with the most practical and applicable Financial Plan for the Private Sector. Further on, based on the Concession Architecture and the Financial Plan, the Consultant will conduct risk sharing and risk assessment analyses in order to provide the Private Sector a clear understanding of the risk item and risk levels attendant to the project implementation. Mitigating factors will be explored and incorporated into the Financial Plan. These above outputs from the consultant will then allow the Private Sector (after conducting due diligence on the submitted materials) to develop its Investment Plan, finalize it, and submit to the GOV for Approval-to-Proceed. This study will provide further guidance to the Private Sector by developing an outline for the Toll Concession Agreement. This will then be taken up by the Private Sector to be fleshed out in the form of a Draft Concession Agreement; which will be the basic reference for negotiations with the GOV towards the Final Concession Agreement. 2-3

61 2.2 Scope of the Study The study was conducted in Hanoi from 16 th August 2010 to 18 th December 2010, and in Japan from 16 th August 2010 to 15 th February The Interim Report Meeting to JETRO was held on 9 th November 2010, and collection of data, explanation of the study result and discussion/confirmation with the concerned authorities were carried out at need. Table 2-1 Study Team Member Role Name Firm PM Toshio Takebayashi KEI Highwa Design (1) Timothy H. Collett KEI (Contract) Highway Design (2) Nguyen Duc Nam Support Bridge / Structure Ha Manh Cuong Support Geotechnical Masahiro Nakata NEXCO Pavement Jiro Sugiyama KE Cost Estimate Luu Thanh Binh Support Traffic Analysis Seiji Nakatsuhara KE Environmental / Social Yoshinori Miyake KEI Economic Analysis Yoshio Kunimasa KEI Financial Analysis Le Phong Chau KEI (Contract) PPP Scheme Raul J. Villavicencio KEI (Contract) Note1) KEI :Katahira & Engineers International KEI(Contract) :Katahira & Engineers International (Contract) KE :Katahira & Engineers NEXCO-Central :Central Nippon Expressway Company Limited Note2) Subcontracts 3DMap Preparation :MNCC (Vientam) Bridge Design :TDSI (Vientam) Environmental/Social Survey :EPC (Vientam) Financial Plan, Financial Analysis:MRI (Japan) 2-4

62 2.3 Study Schedule Fable2-2 Activity Schedule for Study Jul Aug Sep Oct Nov Dec Jan Feb Study in Hanoi 1st Study 2 nd Study Report Study in Japan Preparation Analysis Report Briefing Session Start Interim 9/Nov Final Reports Inception Draft Final Final 2-5

63 2.3.1 Assignment in Hanoi, Vietnam The assignment of the members in Hanoi is shown below: Table2-3 Assignment in Hanoi Name Position Stage Period Firm 1 st PM 2 nd 3 rd KEI Toshio Takebayashi 4 th 16 th Aug Aug 31 st th Oct 13 th Oct st Nov 8 th Nov 30 th Nov 17 th Dec 2010 Timothy H. Collett Highway 1 st 16 th Aug 30 th Sep 2010 KEI(Contract) Engineer (1) 2 nd 1 st Nov 17 th Dec 2010 Nguyen Duc Nam Highway 1 st 16 th Aug 15 th Support Dec 2010 Engineer (2) Ha Manh Cuong Bridge/ 1 st 16 th Aug 15 th Support Dec 2010 Structure Masahiro Nakata Geotechnical 1 st 22 nd Aug 26 th Aug 2010 NEXCO-Central Jiro Sugiyama 22 nd Aug 28 th Aug 2010 Pavement 1 st KE Engineer 2 nd 17 th Oct 30 th Oct 2010 Luu Thanh Binh Cost Estimator 1 st Support 2 nd 1 st Nov 30 th Nov st Oct 31 st Oct 2010 Siji Nakatsuhara Traffic KE Specialist 2 1 Nov 30 Nov st 22 nd Aug 28 th Aug 2010 Environmental KEI Yoshinori Miyake /Social Specialist 1 st 13 th Sep 30 th Oct 2010 Yoshio Kunimasa 22 nd Aug 4 th Sep 2010 Economic 1 st KEI Specialist 2 nd 1 st Nov 18 th Dec 2010 Le Phong Chau Financial 1 st KEI(Contract) Specialist 2 nd 1 st Dec 15 th Dec st Sep 15 th Sep 2010 Raul J. Villavicencio PPP Specialist KEI(Contract) 2 3 Nov 1 Dec st 16 th Aug 15 th Sep

64 2.4 List of Meeting List of meetings are shown in Table 2-4. Table2-4 List of Meetingss Organization Ministry of Planning and Investment (MPI) Vietnam Expressway Corporation (VEC) Japan External Trade Organization (JETRO), Hanoi Office Japan Bank for International Cooperation (JBIC), Head Quarters Japan International Cooperation Agency (JICA), Head Quarters Vietracimex 8 (operator of Noi Bai tollgate) Thang Long Industrial Park Corporation (Managing Company, Thang Long Industrial Park) BTD Japan (Managing Company, Don Ban II Industrial Park) Department of Natural Resources and Environment (DoNRE), Hanoi City To-be-affected communes subjected to public consultation during this Study (attended by staff of EPC Co., Ltd.) Position Director and 1 Official, Legislature Dept. 1 Official, Dept. of Transportation President, Vice President, Dept. Director and 1 Official Director General and 1 Officer 3 Officers, Dept. of Asia Pacific Finance Director and 1 Officer, Office of Private Sector Partnership (and Officer at Hanoi Office) Tollgate Vice Manager Vice President Representative Deputy Director and 3 Officials Ref. to Opening of public consultations for details of the subjected to-be-affected communes 2-7

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66 CHAPTER 3 CONTENTS AND ITS TECHNOLOGICAL FEASIBILITY

67 3.1 Background and Necessity of the Project Issue of Traffic Condition around Project Area Traffic congestion in Hanoi is getting worse year by year for its growing economy and increasing number of motorcycles and private cars. On March 2010, Hanoi city announced to construct promptly new viaduct roads on the heaviest congested 6 roads, as well as to enforce f traffic regulation. The most important road in 6 congested roads is Mai Dich Noi Bai Expressway, which is main corridor connecting Hanoi city, Noi Bai International Air port and Industrial Zones in Northern Hanoi. According to Hanoi City Master Plan, three satellite cities will be constructed in the north of Noi Bai. Thus the necessity of Mai Dich Noi Bai Expressway will be even greater in future. On the other hand, Master Plan of North South Expressway, which connects Hanoi and Can Tho, was approved by prime minister on 21 st January Phap Van - Cau Gie Expressway, the starting point of North South Expressway and the first road in the standard of expressway in Vietnam, is suffering from pavement deteriorations due to traffic loading and ground sinking. Phap Van - Cau Gie Expressway is supposed to be troubled with shortage of capacity and speed down caused by bad pavement condition after opening to Hanoi Ring Road 3 and Cau Gie Ninh Binh Expressway, which is now under construction and extend to south section of Phap Van - Cau Gie Expressway. At Dong Van II Industrial Zone there are many Japanese firms (handling rare earth, motor bike parts, electronic parts, etc.) who require a road network connecting with Northern Vietnam and the need of Phap Van - Cau Gie Expressway is high. The above two projects was granted to Vietnam Expressway Corporation by Government in 2005 and 2010 respectively, though projects have not started yet because of difficulty of financing. Figure 3-1 Industrial Zone Map Source: Study Team 3-1

68 Phap Van Cau Gie Expressway L=30km Mai Dich Noi Bai Expressway L=20.2km Project Outline The study aims to examine the most suitable financial and risk sharing condition in Public-Private Partnership (PPP) scheme on Mai Dich Noi Bai Expressway and Phap Van - Cau Gie Expressway from the perspective of construction and operation. (1) Phap Van - Cau Gie Expressway Project: Upgrading and operation of the existing expressway through PPP scheme Length: 30km Lane Number: 6 lanes (tentative 4 lanes in the first phase) Interchanges: 7 interchanges (Phap Van, Cau Ngoc Hoi, Ring Road 4, Thuong Tin, Van Diem, Expressway Link to NH5, Cau Gie) (2) Mai Dich Noi Bai Expressway Project: New expressway construction and its operation through PPP scheme Length: 20.2 km Lane Number: 4 lanes Interchanges: 7 interchanges (Mai Dich, Co Nhue, South Thang Long, North Thang Long, Ring Road 3, Noi Bai, Noi Bai Airport) Figure 3-2 Project Location Source: Study Team 3-2

69 3.1.3 Traffic Condition of Project Area Traffic Survey, consisting of traffic count survey and O-D interview survey, is conducted at 15 survey locations around Mai Dich Noi Bai and Phap Van - Cau Gie. As a result, 3,384 sample data was collected at O-D interview survey. Considering annual growth of traffic, Traffic volume at South Thang Long Bridge was calculated from survey result conducted in (1) Outline of Traffic Survey Traffic Count Survey: Weekday 24 hours (6:00 next 6:00), by directions, by vehicle type, by hour Weekday 16 hours (6:00 22:00), by directions, by vehicle type, by hour Interview Survey Weekday 10 hours (7:00 12:00, 13:00 18:00) O-D Interview Survey was conducted under the following conditions: Interviewing drivers of all motor-vehicle types in the traffic flows from both directions in the surveyed roads, except the innercity bus drivers and motorcyclists. Interviewees must fill completely all required information in the O-D Interview Form, especially the origin (O) and destination (D) of each trip must be filled together with name of their district and province. Purpose of the trip and the estimated number of trips in a year or a month or a week must be filled. To conduct Traffic O-D Interview Survey, Survey team liaised closely with Traffic Police and paid attention to traffic safety. Survey Locations are shown in Table 3-1 and Figure 3-3(a),(b). Road Name Mai Dich - Noi Bai Survey Location 1 Table 3-1 Survey Locations Description Near the Ngoc Canh Parking (1.3 km of the Noi Bai Airport towards the Hanoi direction) 2 National Highway 2 ( Km0+500) 3 National Highway 18 (Km9+000) 4 North Thang Long Noi Bai Expressway (Km5+800) 5 National Highway 3 (Km10+200) 6 North Bac Thang Long - Noi Bai Expressway: Km0+500 Phap Van - Cau Gie 7 Phap Van-Cau Gie at Km of new NH1 Source: Study Team 8 Provincial road 71 of Ha Noi (i.e. former Ha Tay province) in front of the gate of general warehouse of the Agriculture and Forestry Product Processing Enpterise 9 Phap Van-Cau Gie at Km (i.e. new NH1) 10 Provincial Road 73 of Hanoi (i.e. former Ha Tay province), No.96 of Cau Van Diem Road 11 Phap Van-Cau Gie, over Van Diem bridge 12 Right-turn of 3-leg junction to go to old NH1 (Km , right-turn) 13 Phap Van - Cau Gie at Km of NH1 14 Provincial road 428 turning to go to Van Dinh 15 NH1 at Km

70 Figure 3-3(a) Survey Locations (Mai Dich - Noi Bai) Source: Study Team 3-4

71 Figure 3-3(b) Survey Locations (Phap Van Cau Gie) Source: Study Team 3-5

72 (2) Traffic Survey Result 1) Daily Traffic Volume The 24-hour traffic Volume by intersection expressed in Passenger Car Unit (PCU) is shown in Table 3-3 for Mai Dich Noi Bai and Table 3-4 for Phap Van Cau Gie. On Mai Dich Noi Bai road section, the highest car traffic volume, without motorcycle, was about 66,300 pcu/24 hours on average at the location of South Thang Long bridge. The car traffic volume is getting smaller towards the direction of Noi Bai Airport. The reasons for such features are that Industrial Zones are extended on the north of Thang long Bridge and access by bridge across the Hong River is limited. On the approaching road section to the Airport, the car traffic volume is only about 23,000 pcu/ 24 hours. On Phap Van Cau Gie road section, change in car traffic volume is slight. The lowest car traffic volume is about 27,100 pcu/24 hours at the location of Phap Van and the car traffic volume varies from 31,800-34,600 pcu/24 hours at other locations. The reason why the nearest section to Hanoi City was the lowest volume is assumed that Interchange of Hanoi Ring Road 3 had been under construction at Phap Van and its construction work prevented car transport. After opening of Ring Road 3, the volume is expected to increase drastically. Motorcycle traffic volume shares fairly high on Mai Dich Noi Bai road section. It occupies 22% of total PCU at the location of North Thang Long but reduces to 14% at Nam Hong intersection. On the approaching road section to Noi Bai Airport, it shares only 5.6% of total PCU. On Phap Van Cau Gie road section,it shares only 6-8% of total PCU. Annual Average Traffic Volume in vehicle and in PCU are shown in Table 3-5 ~ Table 3-8. To convert number of vehicle to PCU, Passenger Car Equivalent (PCE) is used as shown in Table 3-2. Table 3-2 Passenger Car Equivalent(PCE) Passenger Car Equivalent Car Type (PCE) Car/van 1 Bus ( 24 seats) 2 Bus (> 24 seats) wheel truck 1 2-axle, 6-wheel truck (Medium truck) 2 3-axle truck (Heavy truck) 3 Over 4-axle truck (Trailer) 3.5 Source: Study Team 3-6

73 PCU/ day PCU/ day Table 3-3 Daily Traffic Volume of Mai Dich Noi Bai (unit: PCU/24 hours) Road section Motorcycle Car Total Car/Van Bus Truck South Thang Long bridge - North Thang Long bridge North Thang Long bridge - Nam Hong 20,133 66,271 35,649 16,013 14,609 16,795 59,899 29,132 13,620 17,147 Nam Hong Noi Bai 8,829 53,351 22,077 18,320 12,954 Noi Bai - Noi Bai Airport 1,456 22,955 16,052 4,763 2,140 The trafict count on Thang Long Bridge - Noi Bai Ariport 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 South Thang South Thang North Thang Kim No Station Nam Hong Nam Hong Noi Bai Air port Airport Long bridge Long Bridge Long bridge Station Station Car Bus Truck Motobike Source: Study Team Table 3-4 Daily Traffic Volume of Phap Van Cau Gie (unit: PCU/24 hours) Road section Motorbike Car Total Car Bus Truck Phap Van Ngoc Hoi 2,647 27,126 6,095 8,580 12,451 Ngoc Hoi Thuong Tin 2,941 33,200 8,623 10,372 14,205 Thuong Tin Van Diem 2,673 34,551 7,741 11,321 15,489 Van Diem Cau Gie 2,563 31,788 7,535 10,863 13,390 The trafict count on Phap Van - Cau Gie 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Phap Van Ngoc Hoi Ngoc Hoi Thuong Tin Thuong Tin Van DiemVan Diem Gie Bridge Cau Gie Bridge Bridge Bridge Station Source: Study Team Car Bus Truck Motobike 3-7

74 3-8 Survey Location Car/Van Interpro vincial bus 24 seats Interpro vincial bus 25 seats Table 3-5 Annual Average Daily Traffic (Number of Vehicle) Innercity bus 24 seats Innercity bus 25 seats Pick-up & 4W truck Medium truck Heavy truck Unit: Vehicles per 24 hours Trailer Motorcycle Others Total 1(Airport) 16,052 1, , , ,166 1, , ,194 4,262 17, , , ,337 3, ,154 4(MD-NB) 22,077 5,356 2, , , , , , , ,079 6(MD-NB) 29,132 2,406 2, , ,985 1,782 43,352 7(PV-CG) 6,095 1,533 2, , , , , , ,169 9(PV-CG) 8,623 1,702 2, , , , , ,776 1,170 2,229 11(PV-CG) 7,741 1,586 3, ,421 1, , , , ,728 1,510 2,718 13(PV-CG) 7,535 1,591 2, , , , , ,870 2,797 1, ,743 1, , ,229 Source: Study Team Table 3-6 Annual Average Daily Traffic (Number of Vehicle) :South Thang Long bridge Unit: Vehicles per 24 hours Survey Location Car/Van/Bus Car/Van/Bus Car/Van/Bus Pick-up & Medium Heavy 7 seats 7 seats seats 4W truck truck truck Trailer Others Total South Thang Long bridge 34,003 7,391 4,835 8,418 4,010 1, ,161 Source: Study Team

75 3-9 Survey Location Car/Van Interpro incial bus 24 seats nterpro incial bus 25 seats Table 3-7 Annual Average Daily Traffic (PCU) Innecity bus 24 seats Innecity bus 25 seats Pick-up & 4W truck Medium truck Heavy truck Unit: PCU/24 hours Trailer Motorcycle Total 1(Airport) 16,052 3,138 1, , ,456 24, ,166 2,788 1, ,700 1,392 1,037 8,458 35, ,800 1,325 1, , ,012 1,095 19,476 4(MD-NB) 22,077 10,713 5, , ,034 1,204 1,048 8,829 62, , , , ,217 9,537 29,218 6(MD-NB) 29,132 4,812 6, , ,463 1,331 1,485 16,796 76,446 7(PV-CG) 6,095 3,067 5, ,841 2,122 1,943 2,647 29, , ,014 6,811 9(PV-CG) 8,623 3,404 6, ,745 2,627 2,114 2,941 35, , ,333 6,246 11(PV-CG) 7,741 3,172 7, ,842 3,046 2,783 2,673 36, , ,119 9,116 13(PV-CG) 7,535 3,182 7, ,271 2,441 2,153 2,563 33, , ,870 5,593 4, ,486 3,061 2,677 3,956 37,175 Source: Study Team Table 3-8 Annual Average Daily Traffic (PCU) :South Thang Long bridge Unit: Vehicles per 24 hours Survey Location Car/Van/Bus Car/Van/Bus Car/Van/Bus Pick-up & Medium Heavy 7 seats 7 seats seats 4W truck truck truck Trailer Total South Thang Long bridge 34,003 14,781 12,088 8,418 8,020 4,770 2,501 84,581 Source: Study Team

76 2) Peak Hour Traffic Volume Volume of Passenger car in peak hours is about 1.5 times larger than average. However, volume of truck is rather stable. * 4 peak hours are 7:00, 8:00, 17:00, 18:00 ** 16 hours in daytime is from 6:00 22:00 Source: Study Team Table 3-9 Peak Hour Traffic Volume Ratio per Average Hourly Volume No. Survey location/ Studied road section Car Bus Truck Motorcycle I Mai Dich - Noi Bai 1 Location Location Location II Phap Van - Cau Gie 4 Location Location Location Location Table 3-10 Average Hourly Traffic Volume No. Survey location/ Studied Average hourly traffic road section volume Car Bus Truck Motorcycle I Mai Dich Noi Bai 1 Location 1 Peak hour (4 hours) Daytime (16 hours) Day&night (24 hours) Location 4 Peak hour (4 hours) Daytime (16 hours) Day&night (24 hours) Location 6 Peak hour (4 hours) Daytime (16 hours) Day&night (24 hours) II North Phap Van - Cau Gie 4 Location 7 Peak hour (4 hours) Daytime (16 hours) Day&night (24 hours) Location 9 Peak hour (4 hours) Daytime (16 hours) Day&night (24 hours) Location 11 Peak hour (4 hours) Daytime (16 hours) Day&night (24 hours) Location 13 Peak hour (4 hours) Daytime (16 hours) Day&night (24 hours) Location 15 Peak hour (4 hours) Daytime (16 hours) Day&night (24 hours) * 4 peak hours are 7:00, 8:00, 17:00, 18:00 ** 16 hours in daytime is from 6:00 22:00 Source: Study Team 3-10

77 No. 3) Analysis of O-D Interview Result The O-D interview results relating to two project roads are analyzed. Firstly, categories to clarify traffic characteristics are defined as follows, Inner-provincial is traffic that both Origin and Destination are in Hanoi, Interprovincial is traffic that Origin or Destination is between Hanoi and other province, and Through is traffic that both Origin or Destination are not Hanoi. Compositions of the above defined category by car type are shown in Table3-11 and Table Transport demand in the Mai Dich-Noi Bai area: in the passenger transport, 55% was Interprovincial trip and 45% was Inner-provincial trip. Over 90% of bus passengers was Interprovincial trip and 10% was Inner-provincial trip. In the freight transport, almost 100% was transported by light trucks (i.e. 4-wheel trucks) in which, less than 10% was Inner-provincial freight transport. Over 87% of freight transport by heavy truck (2-axles and more than 6 wheels) was Interprovincial trip while Inner-provincial freight transport shared about 15%. Transport demand in the Phap Van-Cau Gie area: for passenger transport, Interprovincial trip shared 63% and Inner-provincial trip shared only 37%. Over 95% bus and mini-bus trip was Interprovincial trip, but less than 5% was Inner-provincial trip. In the freight transport: over 40% of freight transport by light truck was Inner-provincial commodities and 60% was Interprovincial commodities. 55% of freight transport by medium truck (i.e. 2-axle and 6 wheel trucks) was Inner-provincial commodities and 45% was Interprovincial commodities. Over 80% of freight transport by heavy truck was Interprovincial commodities and less than 20% was Inner-provincial commodities. Table 3-11 Composition of Inner-provincial, Interprovincial and Through traffic volumes (by PCU) Unit: % Type of Car/van Mini Bus Large Bus Pick-up & Medium Heavy truck Trailer transport <= 10 seats <= 24 seats > 25 seats 4W truck truck I. Mai Dich Noi Bai (location No. 1 to 6) 1 Inner-province Inter-province Through traffic Total II. Phap Van Cau Gie (location No. 7 to 15) 1 Inner-province Inter-province Through traffic Total Source: Study Team No. Table 3-12 Composition of Inner-provincial, Interprovincial and Through traffic volumes (by Passenger/ton) Type of transport Car/van <= 10 seats I. Mai Dich Noi Bai (location No. 1 to 6) Mini Bus <= 24 seats Large Bus > 25 seats Pick-up & 4W truck Medium truck Heavy truck 1 Inner-province Inter-province Through traffic Total II. Phap Van Cau Gie (location No. 7 to 15) 1 Inner-province Inter-province Through traffic Total Source: Study Team Trailer 3-11

78 In the Inner-provincial passenger transport, 26.7% of passenger car trip and 33.3% of bus trip were from/ to Noi Bai Airport; 41.7% of bus trip was from/ to interprovincial terminals; there was no trip from/to river ports and railway stations. Because the share of trips from/ to Noi Bai Airport on the studied roads was high, the Study Team added the traffic zone number 30 to it to forecast accurately the passenger transport demand. In the Inner-provincial freight transport, there was no trip from/ to the airport, riverports nor railway stations. Only 1.7% of volume from Inner-provincial freight transport had origin or destination from/ to freight terminal. Type of vehicles Table 3-13 Composition of Origin and Destination of Inner-provincial Trip Origin or destination Airport River port Interprovincial terminal (freight yard) Railway station Other Car/van (< 10 seats) 26.7% 0.0% 0.0% 0.0% 73.3% 100.0% Mini bus (<= 24 seats) 44.4% 0.0% 22.2% 0.0% 33.3% 100.0% Large bus (> 24 seats) 0.0% 0.0% 100.0% 0.0% 0.0% 100.0% Bus 33.3% 0.0% 41.7% 0.0% 25.0% 100.0% 2-axle and 4-wheel truck 0.0% 0.0% 0.0% 0.0% 100.0% 100.0% Medium truck 0.0% 0.0% 2.3% 0.0% 97.7% 100.0% Heavy truck 0.0% 0.0% 0.0% 0.0% 100.0% 100.0% Trailer 0.0% 0.0% 0.0% 0.0% 100.0% 100.0% Truck 0.0% 0.0% 1.7% 0.0% 98.3% 100.0% Source: Study Team In the Interprovincial passenger transport, only 9.1% of passenger car trip and 2.4% of bus trip were from/ to Noi Bai Airport. Up to 9.1% of passenger car trip and 78% of bus trip was Interprovincial terminal. There was no passenger trip from / to river ports and railway stations. In the Interprovincial freight transport, 16.7% of trailer trip was from/ to river ports and 33.3% was Interprovincial Terminals. 3.8% of truck transportation and 5.2% of medium truck transportation were from/ to railway stations. Table 3-14 Composition of Origin and Destination of Interprovincial Trip Origin or destination (in Hanoi area) Type of vehicles Interprovincial Railway Airport River port terminal Other (freight yard) station Car/van (< 10 seats) 9.1% 0.0% 9.1% 0.0% 81.8% 100.0% Mini bus (<= 24 seats) 12.5% 0.0% 62.5% 0.0% 25.0% 100.0% Large bus (> 24 seats) 0.0% 0.0% 81.8% 0.0% 18.2% 100.0% Bus 2.4% 0.0% 78.0% 0.0% 19.5% 100.0% 2-axle and 4-wheel truck 0.0% 0.0% 16.7% 0.0% 83.3% 100.0% Medium truck 0.0% 0.0% 6.9% 5.2% 87.9% 100.0% Heavy truck 0.0% 10.0% 10.0% 0.0% 80.0% 100.0% Trailer 0.0% 16.7% 33.3% 0.0% 50.0% 100.0% Truck 0.0% 2.5% 10.0% 3.8% 83.8% 100.0% Source: Study Team Total Total 3-12

79 4) Occupancy and Loading on average The number of seats was 5.2 for Car/van, from 18.2 (mini bus) to 36.2 (large bus) for bus. Loading for trucks were from 1.2 to 26.5 by truck type. Average seat occupancy coefficients were 56.7% for Car/van, 76.6% for minibus and 70.6% for large bus. Average loading coefficient for truck was from 77.3% to 89.0% by truck type. Table 3-15 Number of Seats (passenger vehicle) and Loading (truck) on average Number of seats, loading on No. Type of vehicles Unit average 1 Car/van (< 10 seats) 5.2 seat 2 Mini bus (<= 24 seats) 18.2 seat 3 Large bus (> 24 seats) 36.2 seat 4 2-axle and 4-wheel truck 1.2 ton 5 Medium truck 3.4 ton 6 Heavy truck 12.6 ton 7 Trailer 26.5 ton Source: Study Team Table 3-16 Average Seat Occupancy Coefficient and Average Loading Coefficient Average seat occupancy coefficient (%) Average loading coefficient (%) Type of transport Car/van Mini Bus Large Bus Pick-up Medium Heavy <= 10 <= 24 > 25 & 4W truck truck seats seats seats truck Trailer Innerprovincial transport Interprovincial transport Through transport General Source: Study Team 5) Commodity Type Commodities for industrial production shares nearly 60% of total freight transport volume, general consumption goods shares about 30% and import and export shares about 10%. The most common commodities are Construction materials, Cement, Container, Ore and steel and Manufacturing products in order. Table 3-17 Transport share by Type of Commodity by Truck Type Transport share by commodity type Type of Commodity Pick-up & Medium Heavy Trailer 4W truck truck truck Total tonnage Industry production and construction 28.4% 48.9% 85.2% 53.6% 58.5% General consumption goods 67.1% 45.1% 11.1% 16.8% 27.9% Agriculture production 4.2% 5.0% 1.2% 1.5% 2.9% Exports 0.0% 0.6% 0.0% 14.9% 5.4% Imports 0.3% 0.4% 2.5% 13.3% 5.4% Total 100.0% 100.0% 100.0% 100.0% 100.0% Source: Study Team 3-13

80 Table 3-18 Transport share by Commodity by Truck Type Transport share by commodity type Commodity Pick-up & Medium Heavy Trailer 4W truck truck truck Total tonnage Container 0.0% 2.7% 1.6% 41.6% 16.8% Paddy and rice 12.7% 3.7% 0.9% 1.0% 2.1% Sugar 1.4% 2.5% 0.0% 0.0% 1.0% Timber 1.6% 2.1% 1.2% 2.7% 2.1% Ore and steel 3.9% 5.5% 12.4% 4.2% 6.6% Construction materials 46.1% 54.3% 45.2% 15.5% 37.8% Cement 0.0% 3.0% 25.4% 14.9% 12.4% Fertilizer 1.2% 3.4% 1.3% 1.3% 2.1% Coal 0.0% 1.4% 1.8% 3.0% 2.1% Petrolume 0.0% 2.1% 3.4% 0.3% 1.7% Industrial crops 0.0% 0.3% 0.4% 0.0% 0.2% Manufacturing products 8.5% 8.3% 2.3% 4.1% 5.4% Fishery products 3.7% 1.0% 0.6% 0.0% 0.6% Meat 0.0% 2.6% 1.4% 0.0% 1.3% Others 20.9% 7.2% 2.3% 11.3% 7.7% Total 100.0% 100.0% 100.0% 100.0% 100.0% Source: Study Team 3-14

81 3.2 Basic Studies to Determine Scope of Work of the Project Traffic Demand Forecast (1) Methodology for Traffic Demand forecast Traffic demand forecast was done in the following way: <OD Matrix> Build the regression model from Socio Economic Indices until 2010 and volume of Generation and Attraction of Passengers and Freight in Estimate volume of Generation and Attraction of Passenger and Freight in 2020 and 2030 by Regression model and Socio Economic frame in 2020 and Build the Trip Assignment Model based on Generation and Attraction of Passenger and Freight in 2010 and their distribution. VITRANSS2 was comprehensive transport master plan covering from road, railway, aviation, inland waterway and to seaway. OD matrices developed in VITRANSS2 are passenger based on passenger OD and tonnage based on freight OD. Modal share was considered at the same time. In this regards, Study Team also developed OD based on passenger and OD based on tonnage, respectively, and then calculated OD based on trip by car type from share of car type and average occupancy for passenger car or average of loading for truck. <Road Network> Establish road networks in 2020 and 2030 were based on Hanoi City Master Plan 1 Based on the above, traffic forecast was done by conducting traffic assignment using OD matrices based on VITRANSS2and Networks in 2020 and Hanoi Construction Master Plan through 2030 with a Vision towards 2050, Hanoi City,

82 Figure 3-4 Flow of Estimating Future Traffic Demand Forecast ~Future OD Matrix~ Socio Economic Indices until 2010 Generation and Attraction of Passengers and Freight in 2010 Passenger and Freight OD Matrices in 2010 Regression Model Trip Assignment Model Socio Economic Frame in 2020, 2030 Generation and Attraction of Passengers and Freight in 2020, 2030 Passenger and Freight OD Matrices by passenger/ton in 2020, 2030 Share of Car type and Average Occupancy and Average Loading (Car/Bus/Motorcycle)in 2020, 2030 Road Network in 2020, 2030 Traffic Assignment (STRADA Model) Vehicle OD Matrix by trip in 2020, 2030 Traffic Volume on Road Section in 2020, 2030 Source: Study Team (2) Road Network and Zoning Mai Dich - Noi Bai and Phap Van - Cau Gie are two existing roads. In the future, these two roads will be developed as expressway. In this Study, the traffic demand on two expressways in the targeted years of 2020 and 2030 was forecasted. Mai Dich - Noi Bai will be an expressway connecting Hanoi City with Noi Bai International Airport which is the biggest airport in the northern part of Vietnam. This road currently intersects National Roads 2& 18, Ring Road 3 of Hanoi. The section from Mai Dich to Thang Long bridge passes through high-populated urban areas of Hanoi, traffic demand on this road currently includes Interprovincial traffic, Inner-provincial traffic and short-distance urban traffic. The section from Mai Dich to Thang Long is at present an urban road section, heavy trucks (two axles and more than 6 wheels) are prohibited to run on this section in daytime. Major traffic on this section is urban traffic (i.e daily commune trips and short-distance trips). In the future, this section will be developed as an expressway. Toll will be applied on the expressway and thus the urban traffic will not run on the expressway but urban roads. Phap Van - Cau Gie is a link originating from the Ring Road 3 of Hanoi going parallel with NH1 and joining with NH1 at Cau Gie. Traffic demand on this road is mainly Interprovincial transport, which is very small and mainly long-distance trips. Cau Gie Ninh Binh Expressway is under construction and expected to open in 2011.Urban traffic demand includes daily commune trips and short-distance trips useing the NH1. Traffic demand on two future expressways will consist of interprovincial traffic and through traffic of Hanoi and long-distance Inner-provincial traffic (i.e. interdistrict trips). 3-16

83 In order to forecast the traffic demand on these two expressways, the Study Team divides whole Hanoi city area into 29 traffic zones in accordance with 29 districts of Hanoi and added Noi Bai International Airport area. As a result, 30 zones were finally studied. On Mai Dich - Noi Bai, passenger of Interprovincial trip was 43% and freight of it was 51% according to the traffic survey result. It is estimated that most Through and Interprovincial traffic use Mai Dich Noi Bai Expressway and short traffic and short distance Inner-provincial traffic use frontage road. According to the preliminary design study report, Mai Dich Noi Bai Expressway has a viaduct and frontage roads. To examine required capacity of each part of road, fine network and small traffic zone is required around Mai Dich Noi Bai Expressway. For that purpose, surrounding traffic zone of Mai Dich Noi Bai Expressway is divided into small zone and the number of traffic zones is increased from 70 to

84 3-18 Figure 3-5 Traffic Zones Source: Study Team

85 3-19 (3) Modal Share Settings According to the transport development plan of Hanoi Capital to 2020, Hanoi will have a railway network with 5 lines, in which line 2 from Noi Bai to the city center is competing against Mai Dich - Noi Bai. On the other hand, there is no railway line competing against Phap Van - Cau Gie. Therefore, modal share of railway was set for Mai Dich Noi Bai but was not set for Phap Van - Cau Gie. Modal Share of Railway for Mai Dich Noi Bai Hanoi City Urban Railway Line 2 Airport Extension is assumed to be opened before Based on this, relating to Mai Dich Noi Bai trips assumed by railway share 10 % in 2020 and 20 % in Hanoi Noi Bai Connecting Railway is not considered taking account of its uncertainty. Share of Passenger Vehicle Share of passenger vehicles consisting of passenger car, bus and motorcycle are show in,which are applied traffic survey result of locations 7, 9, 11, 13 and 15. Though share of motorcycle is 6.64%, future share had assumption to be decreased gradually. Table 3-19 Share of Passenger Vehicle Unit : % of trips/ day Year Car Bus Motorcycle % 45.34% 5.99% % 41.26% 4.96% Source: Study Team (4) Conditions of Traffic Demand Forecast 1) Traffic Demand Forecast Procedure In this study, capacity restraint assignment method, which was the most commonly used in network models, was applied. This assignment technique is based on the speed flow relationship, and the flow chart of the applied methodology is shown in Figure 3-6. In this assignment technique, and by calculating the required travel time for each link according to its travel speed and road conditions, the program determines the fastest routes between each origin and destination by evaluating the consuming time on links, and assigns the trips between the given origin and destination to these routes starting to the destination and working back to the origins. As congestion increases till a certain level, alternative routes are introduced to handle the unassigned traffic. Zone-to-zone routing is built, which is the fastest path from each zone to any other, and all trips are assigned to these optimum routes.

86 3-20 Figure 3-6 Traffic Assignment Flowchart Road and public network Speed-flow relationship Re-estimate speed on links Vitranss2 Inter-Zone OD Matrix (Year 2008, 64 zones) # For Hanoi city Inner-zone OD is produced based on interviews to drivers in one zone Initial speed on link Search for shortest route Assignment on shortest route for each iteration Vitranss2 Inter-Zone OD Matrix (Year 2008, 64 zones) Toll rate Iteration by divided OD table No Last iteration Yes Assigned traffic volume on network Source: Study Team 2) Speed Flow Relationship The speed flow relationship used in the traffic assignment procedure is shown in Figure 3-7. When the traffic volumes are over the maximum capacity 0.3*Qmax, it is assumed that vehicle speed drastically reduces. Figure 3-7 Speed Flow Relationship Vmax 0.1V 0.3Q Q Source:JICA STRADA

87 3-21 3) Time Evaluation Value Time evaluation values are set as follows: Following the methodology applied to Ben Luc - Long Than Expressway Project FS (2010,ADB) 2 Car and Bus: Based on time evaluation value used invitranss2, price was updated with annual growth of socio economic framework. (Car:2.63/4.34/6.61 USD/h Bus:1.32/2.17/3.30 USD/h) Truck : Applied truck ratio against private car of HOUTRANS, which is Urban transport 4) Toll Rate master plan and FS in Ho Chi Minh (Car:11.4 Truck:19.1) Table 3-20 Time evaluation Value by Vehicle Type (unit:usd/h) Vehicle Type Car Bus Truck Source: Study Team Toll rates are set as follows: Motor cycle is excluded as it is prohibited to run on expressway. Toll rate ratio by vehicle type follows existing toll collection system as shown in Table Table 3-21Car type for traffic assignment is 3 (car,bus and truck) but existing toll collection system has 7 car types, thus, toll rate and traffic volume by 7 car type was weighted average into 3 types. Commuter ticket is not considered. Closed toll system is applied Toll Rate Ratio (General Road) Car Bus 24 Seats Table 3-21 Toll Rate Ratio Bus Bus 25 Seats Pick-up & 4WD Medium Truck Truck Heavy Truck Truck & Trailor PV-CG Traffic Volume 100% 40.0% 60.0% 4.5% 59.0% 20.5% 16.0% Toll Rate Ratio MD-NB Traffic Volume 100% 50.0% 50.0% 4.0% 80.0% 8.0% 8.0% Toll Rate Ratio Source:Circular No.90/2004/TT-BTC (as of September 7, 2004, Guiding the Regime of Road Toll Collection, Payment, Management and Use, MOF) prepared by Study Team 2 TA 7155-VIE Preparing the Ben Luc - Long Than Expressway Project(ADB,2010)

88 Revenue (mil. VND/year) Traffic Volume (pcu/day) 5) Study of Toll Rate Level Toll rate level by car is specified by toll rate ratio defined in Table Toll rate level was studied for 500, 800, 1000, 1500, 1800, 2000 and 2500 VND/km of Private car. The toll revenue recorded highest at 2,000 VND/km but its traffic volume was about 70,000 pcu /day that means 6lane expressway was being used in efficiently. The toll rate level whose traffic volume is near the capacity, 105,000pcu/day, was 800 VND/km. Toll rate level is determined to be 800 VND/km for private car from the Social and Financial view point. Figure 3-8 Toll Rate Level and Traffic Volume 1,800,000 1,600,000 1,400,000 Revenue (2030) Traffic Volume (2030) 多項式 (Revenue (2030)) 多項式 (Traffic Volume (2030)) 180, , ,000 1,200,000 1,000, , , , , , ,000 80,000 60,000 40,000 20,000 0 (5) Creating OD Matrix in 2010 Toll Rate (VND/km) Note: Traffic Volume is weighted average of inter sections Source: Study Team Interprovincial OD matrix was derived from VITRANSS 2. Because Hanoi is considered one zone in VITRANSS 2, Hanoi was divided into 29 traffic zone based on urban population for passenger OD and industrial land area and its population for freight OD. Inner-provincial OD was created using O-D interview result into 29 traffic zones in Hanoi. JICA STRADA, the package software concerning traffic demand forecast, was used for traffic assignment of present condition to examine its reliability. The procedure is shown in Figure 3-9.

89 3-23 ~ Interprovincial OD ~ Figure 3-9 Flowchart of creating OD Matrix in 2010 Interprovincial OD in 2008 of VITRANSS2 (64 provinces, Hanoi is 1 Zone) ~ Inner-provincial OD ~ Formulation of Inner-provincial OD from O-D Interview Survey Result Indicator such as population, land use in 2008 Adjusted Interprovincial OD in 2008 in Accordance with revised 70 Zones (Hanoi Consists from 30 Zones) Inner-provincial OD in 2010 (Around Study Roads) Data from Traffic Counts Growth Rate from VITRANSS2 Inner-provincial OD of Hanoi in 2010 Tentative OD Matrix in 2010 (Around Study Roads) Traffic Assignment Present Road Network Validation Traffic Assignment Result with Traffic Survey Result OD Matrix in 2010 (Around Study Roads) Source: Study Team

90 3-24 Assigned (pcu/day) 配分結果 (pcu/day) (6) Validation of Present Traffic Assignment in 2010 OD in 2010 applied this time was validated whether it has enough reliability as the basis for calculating future OD. Differences between traffic Survey result and traffic assignment is shown in Table 3-22 and Figure As shown in Figure 3-10, its result was proved that OD was adequate to become basis of future OD Table 3-22 Difference between Conducted Traffic Survey Result and Assigned Traffic Unit:PCU/24 hours Location Total PCU in accordance with the Total PCU assigned on the counted traffic of two types of bus network and dour types of truck Difference Location 01 23,185 23, Location 02 27,463 27, Location 03 18,927 17, Location 04 54,653 50, Location 05 20,254 18, Location 06 60,888 55, Location 07 27,886 29, Location 08 4,499 4, Location 09 34,114 36, Location 10 4,494 4, Location 11 34,808 33, Location 12 4,917 4, Location 13 32,034 33, Location 14 1,361 2, Location 15 34,414 43, Note: Busses excludes inner-city public bus (serving for daily commune trips, short-distance trips) Source: Study Team Figure 3-10 Comparison between Observed and Assigned Traffic at Individual Sites 70,000 60,000 50,000 40,000 30,000 20,000 10, ,000 20,000 30,000 40,000 50,000 60,000 70,000 Observed (pcu/day) 交通量調査結果 (pcu/day) Source: Study Team

91 3-25 (7) Future Socio Economic Framework Hanoi Construction Master Plan (2010) includes future socio economic framework of Hanoi as shown in Table The population of Hanoi is estimated to be 7.1 million in 2020 and 9.1 million in The urban population is estimated to be 4.6 million in 2020 and 6.2 million in 2030, hence urbanized rate will be 65.5 % in 2020 and 68.1 % in The GDP growth rate is estimated to be % during 2011 to 2020 and % during 2021 to The GDP/capita at present price is estimated at 5,959 US$ in 2020 and 12,738 US$ in Table 3-23 Future Socio Economic Framework of Hanoi Indicator Unit Population Thousand people 7, , Urban Population Thousand people 4, , Urbanization rate % GDP growth rate % ( ) ( ) 4. Total GDP (current price) Billion VND 1,063,645 3,617, GDP/capita US$ 5,958 12,738 Source: Hanoi Construction Master Plan through 2030 with a Vision towards 2050, Hanoi City, 2010 (8) Future Traffic Volume Total volume of future OD is shown in Table 3-24 and Figure Average growth rate shows to be 7.0 % during 2010 to 2020 and 6.3 % during 2021 to 2030, and Car and Truck show steep growth rate until 2030/. Table 3-24 Result of Future Traffic Volume Vehicle/day Average Growth Rate Year Car 150, , , % 6.4% Bus 24,923 51,063 81, % 4.8% Truck 141, , , % 6.5% Total 548,692 1,074,844 1,972, % 6.3% Source: Study Team

92 3-26 (vehicle/day) Figure 3-11 Estimated Volume of Traffic by Vehicle Type 600, ,000 Car Bus Truck 450, , , , , ,000 GRDP(Hanoi) 300, , , ,000 GRDP(Billion VND) 100, ,000 50, Source: Study Team (9) Future Transport Network Settings Future transport network for 2020 and 2030 are set as shown in Table Road Table 3-25 Future transport Network Relating Study Roads For the year 2020 For the year 2030 Nhat Tan Noi Bai already completed already completed RR 3 already completed already completed RR 4 already completed Thuong Cat bridge available Tu Lien bridge available available Hong Ha bridge available Vinh Thinh not yet available not yet available Ngoc Hoi bridge available Me So bridge available Van Diem bridge The lick connecting NR5 and PV CG already completed already completed RR5 Railway No.1 Ngoc Hoi Yen Vien, Nhu Quynh available available No.2 Noi Bai Thuong Dinh available available No.3 Nhon Hanoi Hoang Mai available available No.4 Connecting No.1,2 and 3 available available No.5 Nam Ho Tay Ngoc Khanh Thang Long Source: Study Team available available

93 3-27 Traffic Volume (pcu/day) Traffic Volume (pcu/day) (10) Traffic Demand The traffic volume of each IC sections of Phap Van Cau Gie is shown in Table 3-26 ~ Table 3-27 and that of Mai Dich Noi Bai is shown in Table 3-28 ~ Table Table 3-26 Traffic Volume of Phap Van Cau Gie Expressway in 2020 (unit: pcu / day) Car Bus Truck Sub Total Mortocycle Total Phap Van ~ Cau Ngoc Hoi 23,659 18,688 13,653 56,000 6,167 62,167 Cau Ngoc Hoi ~ Ring Road 4 25,552 18,838 11,932 56,322 7,035 63,357 Ring Road 4 ~ Thuong Tin 27,532 20,710 26,198 74,440 7,342 81,782 Thuong Tin ~ Van Diem 24,109 19,957 25,697 69,763 6,309 76,072 Van Diem ~ Connect to QL5 11,836 15,957 24,907 52,700 2,538 55,238 Connect to QL5 ~ Cau Gie 10,448 18,041 60,686 89,175 1,359 90,534 Note : Toll Rate level is800 VND/km for Passenger Car Source: Study Team Table 3-27 Traffic Volume of Phap Van Cau Gie Expressway in 2030 (unit: pcu / day) Car Bus Truck Sub Total Mortocycle Total Phap Van ~ Cau Ngoc Hoi 29,347 17,497 48,226 95,070 9, ,290 Cau Ngoc Hoi ~ Ring Road 4 25,835 16,755 41,494 84,084 9,322 93,406 Ring Road 4 ~ Thuong Tin 25,595 17,019 59, ,484 9, ,204 Thuong Tin ~ Van Diem 21,542 16,758 67, ,925 7, ,922 Van Diem ~ Connect to QL5 15,159 17,340 73, ,553 2, ,977 Connect to QL5 ~ Cau Gie 9,092 15,725 91, ,351 1, ,199 Note : Toll Rate level is800 VND/km for Passenger Car Source: Study Team Figure 3-12 Traffic Volume of Phap Van Cau Gie Expressway 140, , ,000 80,000 60,000 40,000 20,000 0 Traffic Volume :2020 Mortocycle Truck Bus Car 140, , ,000 80,000 60,000 40,000 20,000 0 Traffic Volume:2030 Mortocycle Truck Bus Car Source: Study Team

94 3-28 Traffic Volume (pcu/day) Traffic Volume (pcu/day) Table 3-28 Traffic Volume of Mai Dich Noi Bai Expressway in 2020 (unit: pcu / day) Car Bus Truck Total Mai Dich ~ Co Nhue 9,644 5,651 23,167 38,462 Co Nhue ~ South Thang Long 12,391 6,890 26,953 46,234 South Thang Long North Thang Long ~ North Thang Long 17,226 14,088 19,825 51,139 ~ Ring Road 3 14,528 11,206 9,809 35,543 Ring Road 3 ~ Noi Bai 9,062 11,570 6,770 27,402 Noi Bai ~ Ending Point 3,644 7,120 1,952 12,716 Note : Toll Rate level is800 VND/km for Passenger Car Source: Study Team Table 3-29 Traffic Volume of Mai Dich Noi Bai Expressway in 2030 (unit: pcu / day) Car Bus Truck Total Mai Dich ~ Co Nhue 21,021 9,332 37,535 67,888 Co Nhue ~ South Thang Long 19,600 9,462 31,032 60,094 South Thang Long North Thang Long ~ North Thang Long ~ Ring Road 3 22,527 11,868 17,540 51,935 26,163 12,137 23,955 62,255 Ring Road 3 ~ Noi Bai 22,647 10,170 15,376 48,193 Noi Bai ~ Ending Point 17,587 6,771 4,582 28,940 Note : Toll Rate level is800 VND/km for Passenger Car Source: Study Team Figure 3-13 Traffic Volume of Mai Dich Noi Bai Expressway Traffic Volume :2020 Traffic Volume : ,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Truck Bus 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Truck Bus Car Car Source: Study Team

95 Issues of Projects Implementation (1) Motorcycle and Bus The mixture of motorcycle traffic into the normal multi-wheeled expressway traffic is undesirable indeed from a safety aspect and so motorcycle traffic needs to be removed from the expressway. There are two ways to handle motorcycles: Ban the long distance motorcycle traffic from the expressway. Those motorcycles currently using the expressway would be required to use NH1A which runs parallel and one to one and half kilometres to the PV-CG Expressway. As all local access is now being handled by the existing frontage road system this would only slightly inconvenienced by this restriction. The average trip distances would not be affected. If the motorcycles are to use the frontage roads along the PV-CG these frontage roads will have to be both moved and widened. By 2020 the traffic forecast estimates that there will be in excess of 20,000 motorcycles a day using these frontage roads. Great care will have to be exercised in the design of these highly travel frontage roads. There are numerous buses that stop along the expressway at every underpass illegally obstructing traffic on the expressway and causing dangerous conditions. There is a proposal to solve this issue as follows: (2) Frontage road Ban the bus stops on the expressway and facilitate at interchanges. Bus users should use motorcycle taxis or car taxis from the house to the new bus stops. There are currently narrow non-continuous frontage roads on both sides of road. It is the intent of the Ministry of Transport to provide continuous 5.5-metre frontage roads on both sides along the whole length of the expressway. Figure 3-14 Existing Cross Section of the Phap Van-Cau Gie Source: Study Team (3) Soft Ground When the sub soil is judged soft for the target structures, the soft ground improvement design will be carried out. The judgment on the softness of the sub soil will be dependent mainly on two design criteria such as whether the sub soil can support the target structures safely with required factor of Safety, FS, and whether residual settlement, Sr, or post construction settlements are economically and technically acceptable associated with possible maintenance procedures.

96 3-30 (4) Competitive Roads affecting future traffic volume and revenue 1) Mai Dich - Noi Bai Expressway Nhat tan Noi Bai Expressway will be a competitive expressway with Noi Bai - Mai Dich Expressway, which is planned to be parallel 4 km east to Mai Dich Noi Bai Expressway. That expressway is new access road connecting Noi Bai International Airport and Hanoi City, constructing by Japanese ODA. Nhat Tan Bridge which will connect to Nhat tan Noi Bai Expressway is under construction by Japanese ODA. Figure 3-16 Road Network around MD-NB Toll rate of Nhat Tan Noi Bai Expressway is not revealed yet. In this study, the toll rate was assumed to be same as Mai Dich Noi Bai Expressway, 800 VND/km, in chapter Traffic Demand Forecast. To analyze its sensitivity, traffic forecast was conducted that Nhat Tan Noi Bai Expressway was free of charge. As a result, the traffic volume and revenue of Mai Dich Noi Bai Expressway was reduced by 10%. It should be carefully considered about progress of the Nhat Tan Noi Bai Expressway project and coordinate its plan. Local road which will be constructed along Mai Dich Noi Bai Expressway might deprive traffic of Mai Dich Noi Bai especially at initial stage.3 Source: Study Team MD-NB 2) Phap Van Cau Gie Expressway New bypass planned connecting Cau Gie Ninh Vinh Expressway to Hanoi Hai Phong expressway might be a competitive expressway with Phap Van Cau Gie Expressway. The bypass will connect Hai Phong and South of Hanoi passing through Hanoi Center. At present, NH 38 and NH 39 are used by trucks and trailers from Dong Van II industrial zone to Hai Phong4.From this condition, it would not shift so many traffic from Phap Van Cau Gie Expressway when the bypass is completed. In addition, because the bypass is completely new construction and too long, 48 km, it is assumed taking time to construct the bypass and almost impossible to be built in project period of Phap Van Cau Gie Expressway project. On Phap Van Cau Gie Expresway, new junctions between Ring Road No.4 and No.3.5 are planned. These connections between ring roads form network and traffic flow will change. Special attention to proceeding of connecting expressway projects should be paid. Figure 3-15 Road Network around PV-CG Source: Study Team 3 According to the interview with Thag Long Industrial Park, drivers tend to use local roads but avoiding toll roads. 4 Result of the interview with administrator of Dong Van II industrial Zone.

97 3-31 3) Ring Road No. 4 Ministry of transport (MOT) submitted to the prime minister about the detailed plan of building Ring Road No.4 on December Figure 3-17 Constructing Plan of Ring Road 4 Ring Road No.4 has total length of 136.5km with 6 lanes and ROW of 120m. The total investment cost will be around 72 trillion VND, of which 38.4 trillion VND for construction, 12.4 trillion VND for site clearance and other. South section, from NH 1a to NH32, will start work from 2011 and be completed in 2015 and will be fully opened by South west section, from NH6 to NH 32, is constructing under BT contract. West section, from NH 6 to NH 32, has been studied by METI FS in Source: Study Team (5) ITS System 1) Phap Van Cau Gie Expressway Cau Gie Ninh Binh Expressway, located at the south of Phap Van Cau Gie Expressway, is the 1st expressway constructed and operated by VEC. This expressway will be opened in 2012 ahead of the other expressways under VEC. Cau Gie Ninh Binh Expressway and Phap Van Cau Gie Expressway have one integrated toll collection system (closed system). The length of the expressways (Cau Gie Ninh Binh Expressway: 50km, Phap Van Cau Gie Expressway: 30km) and the number of interchanges (8 at the opening) make the application closed toll system more reasonable than the open system from a viewpoint of fair (distance-related) charge. However, the closed system has a more complicated tolling method than the open system, which results in longer time for the transaction at the toll plaza to cause traffic jam if manual toll collection is adopted. In this regard, ETC which enables accurate transaction has a big advantage of time saving. ETC can also bring cost saving for the toll plaza management by its cashless transaction. Taking account of the above, VEC has concluded that introduction of ETC is indispensable. The detailed design of ITS (including ETC, CCTV and Variable Message Sign) for Cau Gie Ninh Binh Expressway and Phap Van Cau Gie Expressway is ongoing. A typical social problem caused by introduction of ETC to a tolled expressway in developing countries is that manual toll collectors lose their job being replaced by ETC. Such problem will not occur in Cau Gie Ninh Binh Expressway and Phap Van Cau Gie Expressway both of which are newly constructed/tolled. 2) Mai Dich Noi Bai Expressway There are a number of problems in installation of toll plazas: (i) Hanoi City People s Committee has a plan to construct an elevated road to mitigate the traffic congestion in the Mai Dich Thang Long South section, which makes it politically difficult to toll the elevated road. Furthermore, the limited Right-of-Way width does not provide sufficient space for toll plaza installation.

98 3-32 (ii) (iii) Installation of a toll plaza on the new Thang Long Bridge is technically possible, but very expensive due to the necessity of substantial widening of the bridge width. In Thang Long North Noi Bai section the expressway will be constructed on the ground side-by side with the ordinary road, which causes the toll plaza installation problem due to the limited space. Though installation of a toll plaza at the northern end (Noi Bai) can avoid the above problems, it will duplicate with the existing operator s toll operation, and require coordination with the existing operator. He has been operating the Noi Bai toll plaza manually without any major problems, it would be difficult to introduce ITS/ETC which requires additional investment.

99 Existing Structural Condition (1) Phap Van Cau Gie Design consultant has carefully examined the previous documents 5. The informations has been updated by using related data sources and overall plannings of the related provinces along the route. The project area was surveyed, using digital 3D maps and satellite maps. The most important thing about the technical elements of the expressway has been : to study alignment on the 3-D map; the alignment adjustment should have agreement with local government. Based on studies of satellite images, topographical and geological maps, local planning and the suitability of the proposed road corridor will be reviewed with other alternatives if it is appropriate. 1) Alignment condition: Phap Van Cau Gie route was constructed and put into use in Starting point at Phap Van Km and ending point at Cau Gie Km The route was designed according to specification for road class I flat (TCVN ), design speed is 100km/h, scope of cross section Bn = 25m (4 carriage ways: 15m; 2 emergency lanes: 6m; roadsides at both sides: 1m; 2 safety strip: 1m, medium strip: 2m). 2) Horizontal alignment Horizontal alignment is suitable with specification for road class I flat, there are 12 circular curves without continuous curve, the minimum radius is R=1000m. 3) Longitudinal profile At present, there are many break points because of settlement and settlement compensation, especially at transition sections between roadbed and construction works on the alignment. The minimum crowned vertical curve radius is Rmin = 8000m at locations of Van Diem bridge and residential underpass on the alignment with total crowned vertical curve is 12. 4) Roadbed The alignment passes through soft soil area, the roadbed is settled depressed during exploitation time, and it causes the deformation of geometric factor, affecting esthetic and exploitation condition. 5) Existing Pavement As traffic flow rapidly increases, there are so many heavy vehicles, that, pavement became cracked, harsh and warp. Warp compensation has been implemented for many times. The structure of the existing road is as follow. Total thick: 59 cm with Eyc=1,490 dan/cm 2 Asphalt concrete surface: t = 5cm. Adhesive asphalt: 0.5kg/m2. Asphalt concrete binder: t = 10cm. Penetration bitumen: 1.5kg/m 2. Aggregate base course: t = 20cm. Aggregate sub-base course: t = 24cm. 5 Phap Van Cau Gie Expressway Project Preliminary Design Study Report, NEXCO Central, 2010

100 3-34 6) Interchanges: Phap Van Interchange: Starting point of interchange: In the past, this was an intersection at grade crossing Third ring road and traffic flow is high. At present, Third ring road project and this intersection are being constructed to become connected grade-separated intersection. So, traffic jam happening frequently now will be solved in the near future. As no further construction or work is required. Thuong Tin interchange: This is a completed grade-separated intersection (half cloverleaf). Crossing location is provided on access road but merging lane and diverging lane are missing. Van Diem interchange: This is a Diamond shaped completed grade-separated intersection, which is in good condition. Geometric factors meet exploitation demand. Cau Gie Interchange: Just beyond the end point of the Phap Van Cau Gie Expressway there is a NH1A interchange that has been designed and constructed as a part of the Cau Gie Ninh Binh project. It is not necessary to upgrade this interchange in Phase 1. 7) Frontage road There are currently narrow non-continuous frontage roads on both sides of road. As these roads are intermittent, only local traffic uses these frontage roads. Currently there are 21.4 km along the left and 15.8 km along right side over the total of 30 km. There are a few problems with these frontage roads The pavement is narrow (less than 2-metres wide) and has degraded They are too close to the edge of the expressway to widened into 6-lanes and it will need more space at their location. 8) Road Furniture The existing guardrail is very obsolete, rusted and missing a number of bolts. The existing median curb has settled along with the road, so any revised vertical alignment will require to be reset or replaced. Road marking and signs show wear and need to be replaced. 9) Underpasses There are fifty-one small vehicle underpasses with openings from 2.5-metres by 2.5-metres to double 5.0-metres by 3.5-metres. These are used by small trucks, cars and motorcycles as well as bicycles and pedestrians. The total length of these underpasses is 1,400m. 10) Traffic safety The posted maximum speed is 100km/h and the minimum speed is 60km/h. As the road has settled it is difficult and dangerous to maintain upon this posted speed. There are numerous buses that stop along the expressway illegally causing dangerous conditions because they often occupy the travelled way and blocking one of the lanes. These unofficial bus stops are made at every underpass where motorcycles and taxis wait for passengers at service road. Though road marking and sign are compatible with scope of road class I, road users are not aware of it. The traffic vehicles can only turn back at Thuong Tin and Van Diem interchange.

101 3-35 Figure3-18 Busses stop on the carriageway all along the existing road Source: Study Team (2) Mai Dich Noi Bai Mai Dich South Thang Long is being exploited with 4 motorized vehicle lanes, 2 non-motorized vehicle lanes, and median strip with the width of 0.7m. Total width of cross section B is 24.7m. All intersections are at grade. Construction works on the road are only draining across the road. In the recent years, this alignment often gets traffic jam in the peak hours due to large traffic volume and insufficient traffic control. North Thang Long Bridge to NH2 has scope of 4 motorized vehicle lanes and 2 non-motorized vehicle lanes, the width of embankment is 23m, medium strip is 1.0m. At present, there are 2 interchanges on the alignment: Kim Chung interchange and NH18 interchange. The rest are intersection at grade. 1) Alignment Condition Total length of the project is about 20 km, it is divided into 3 sections: + Mai Dich South Thang Long Bridge: Km km5+500 (L= 5.5km) + South Thang Long Bridge North Thang Long Bridge: Km Km9+100 (L = 3,6 km) + North Thang Long Bridge NH2 intersection: Km Km (L = 11.1km) The alignment runs across following districts: Cau Giay, Tu Liem, Dong Anh, Soc Son district under Ha Noi city and Me linh district under Vinh Phuc province. 2) Pavement Design The pavement was designed with Eyc=980 dan/cm 2 (has only 1 base course of 25 cm thick) and there are seen much local damages and degradations. According to pavement survey, existing pavement at section Km8+600-Km has Eo=150MPa, section Km Km has Eo=175MPa. The existing pavement strength still ensures traffic capacity on the road. However, during operation time, pavement structure is expected to reduce strength of about 5-:-10%. 3) Interchanges: Mai Dich Interchange: Starting point interchange: Open in Interchange between Mai Dich Phap Van route and Mai Dich Noi Bai route, includes disconnected flyover on the Mai Dich Noi

102 3-36 Bai route with length of L=300m and at grade intersection below. At present, ramps of interchange are being constructed. Hoang Quoc Viet Interchange (Km1+056): Presently, this is at grade intersection, there is splitter island and traffic organization by signal light. Because traffic flow at this location is relatively large, it often causes traffic congestion at this location. Tan Xuan Interchange (Km4+630): This intersection is crossing with Tan Xuan road with width of roadbed B=6-9m. This is densely populated area and signal lights and splitter island have not been provided yet. Nguyen Hoang Ton Interchange (Km4+810): Crossing with Nguyen Hoang Ton road, it is on the right side of the route. This is urban road with roadbed width B=12m. This is densely populated area and signal lights and splitter island have not been provided yet. South Thang Long Interchange (Km5+050): These are complex of at grade intersection and interchange, connecting to Thang Long Bridge, Cinputra urban area and Huu Hong dike, etc. This is densely populated area and the railway runs parallel to Thang Long Bridge. This is complicated intersection. North Thang Long Interchange (Km6+500): Integrated and separated ramps were arranged at this intersection. Ramps connect Mai Dich Noi Bai and road under Thang Long Bridge. Several industrial zones were constructed in this area. Kim Chung Interchange (Km10+075): It was completed in 2007 in diamond shaped interchange. Disconnected flyover on the Mai Dich Noi Bai route with B=25m, traffic organization by splitter island and completed connections are provided. This interchange was constructed by North Thang Long Van Tri urban infrastructure development project. Nam Hong Interchange (Km13+875): Crossing with existing provincial road No.23. This is at grade intersection and traffic organization by road marking is provided at this location. Quang Minh Interchange (Km16+000): At grade intersection to Quang Minh industrial zone with width of roadbed Bn=24m, there is completed medium strip. Traffic organization by road marking is provided. On the top is Me Linh plaza, here roadbed on Mai Dich Noi Bai were arranged right turning lanes and widening roadbed 2 more carriageways on the both sides of the route. NH18 Interchange (Km19+100): This is double trumpet shaped interchange. This interchange is in good condition which allows to turn direction easily. There are toll plaza and management office on the route. NH2 Interchange (Km20+200): Ending point interchange. At grade interchange with NH2. The left side of the route was widened and improved. Medium strip and traffic organization by splitter island and road marking are provided. The right side of the route is remained Existing Structural Works Existing structural works such as bridges, underpasses and drainage culverts are surveyed on Phap Van Cau Gie and Mai Dich Noi Bai. (1) Phap Van Cau Gie 1) Bridge There are six existing bridges on Phap Van Cau Gie in which there are 3 bridges on the route and 3 bridges on the cross-road. The existing bridges were designed of concrete structure and pre-stressed concrete structure with design load H30-XB80 and pedestrian 300kg/cm 2 used in Quality and capacity of all bridges are still in good condition.

103 3-37 Figure 3-19 Phap Van Interchange of Ring Road 3 (under construction) 2) Underpass Source: Study Team The existing underpass culverts and drainage culverts are designed of reinforced concrete with design load H30 XB80, pedestrian 300kg/cm 2. In general, the structure of culvert is in good condition. Load capacity is still ensured. However, several culverts have depressed at location back and forth underpass. The length of culverts are designed corresponding to road width B=25m. Figure 3-20 Underpass Source: Study Team (2) Mai Dich Noi Bai On Mai Dich Noi Bai, There are 6 bridges cross the river, 9 underpasses and 1 railway flyover (Ha Noi Lao Cai railway). The width of bridges is 24m and total length is 390m. Bridge at Kim Chung interchange is constructed with the width of 25m in particullar. All bridges are in good condition. The bridges are designed with load of H30 XB80.

104 3-38 No Name of bridge Station Table 3-30 List of Bridge and Culverts on Mai Dich Noi Bai Span arrangement (m) Width (m) Total length (m) 1 Viet Thang Km x Underpass Km x Underpass Km x Underpass Km x Kenh Giua Km x Underpass Km x Van Tri Km x Underpass Km x Quang Minh Km x Underpass Km x Underpass Km x Gia Tan Km x Underpass Km x Den Km x Underpass Km x Source: Study Team Figure 3-21 Thang Long Bridge Construction year Source: Study Team

105 Outline of Phap Van Cau Gie Expressway Project Basic Policy Detailed Master Plan for North South Expressway easternside includes the upgrade of the Phap Van Cau Gie Expressway to a 6-lane expressway and to provide for continuous 5.5-metre wide frontage roads and along the whole route land acquisition and resettlement is required. The traffic forecast predicts that traffic will exceed 90,000 pcu per day by This number is well in excess of the capacity of the existing 4-lane road, even if motorcycles are removed. This confirms the MOT master-plan and the requirement for eventual construction of 6-lane expressway. Land acquisition at outside of the existing Right-of-Way is required for widening to 6-lanes and providing 5.5-metre continuous frontage roads. Project approval procedures and land acquisition take time as a number of steps are required. Each of these steps will be time consuming. Please see the Project Implementation Schedule Phase 1 has already started after the MOT had prepared a TOR for the upgrading of the 4-lane within the existing ROW so that this work can be started at the earliest time. Because the work within the ROW needs no resettlement required procedures and Project Implementation steps would be much shorter and earlier than there were ROW and resettlement issues. Phase 2, however, does require it at outside of the existing ROW, these steps will have to be taken. For completing 6-lane expressway with frontage roads, Phase 2 preparation will have to be done in parallel with the Phase 1 work. Once the basic upgrading design is approved, the tender documents for the upgrading works can be issued. Then construction work can start in the first quarter of 2012 as part of the Cau Gie to Ninh Binh Expressway Project and be completed by the end of The design of facilities is as follows: Km , Mainline toll plaza across the expressway, Km toll plazas on the ramps of Thuong Tin Interchange, Km toll plazas on the ramps of Van Diem Interchange and, Km toll plazas on the ramps of Dai Xuyen Interchange. These toll plazas are within the Phap Van Cau Gie Expressway and should be constructed before the end of 2012 so that revenue collection become possible once the upgrading of the project is completed Technical Studies Design Criteria (1) Geometric Specifications The design specification is applied following TCVN Geometric data table applied for various design speed from V=100km/h to V=120km/h are follow

106 3-40 Criteria Table 3-31 Geometric Design Criteria from data TCVN Unit Scope, technical specification CG NB route (phase I) existing PV CG route Proposed scope, technical specification 6 lanes alternative (Phase 2) 4 lanes alternative (Phase 1) Road class Expressway Road class t Expressway Expressway Design speed km/h Maximum super elevation slope Minimum horizontal curve radius Radius without super elevation One-way stopping sight distance % m m m Maximum gradient (up-grade) % Maximum gradient (down-grade) Minimum crowned vertical curve radius Minimum vertical curve radius % m m 5,5 5,5 5,5 5, Roadbed width, in which m Carriage way m 2x7,5 2x7,5 3x7,5 2x7,5 - Emergency lane m 2x3 2x3 2x3 2x3 - Roadside m 2x1 2x0,5 2x1 2x0.5 - Safety strip m 2x1 2x0,5 2x1 2x0.5 - Medium strip m 3 2, Reserved strip m 2x3, Cross slope % Protective shoulder % Embankment slope 1:2 1:2 1:2 1:2 Cross section of bridge Cross over the road Cross over the road Cross over the road Cross over the road Intersection Source: Study Team Grade-separated intersection Grade-separated intersection Grade-separated intersection Grade-separated intersection

107 3-41 (2) Existing Alignment Data There are total 16 curves on the route. The minimum radius is R=1,000m, the maximum radius is R=7,738. Table 3-32 Curves on Phap Van Cau Gie No Radius (m) Quantity Length (m) Rate (%) 1 R < 1000 m % m < R < 4000 m 8 7, % m < R < m 8 10, % m < R % 5 Tangent Section 11, % Total 16 29, % Source: Study Team (3) Longitudinal profile The finished grades of the highway having medians will be defined at centerlines of the pavement as follows: The finished grade is defined based on height of structures. For flyover bridges crossing existing roads, the finished grade is defined by required clearance of crossing roads plus height of structure. For bridges crossing rivers or channels, the finished grade is defined by navigation clearance plus height of structure (clearance of crossing roads and navigation clearances shall be agreed by local authorities or authorized management units). The finished grade must enable the arrangement of underpass and horizontal drainage system. Table 3-33 Vertical Alignment of Phap Van Cau Gie route No Longitudinal grade (%) Length (m) Rate (%) 1 0.0% < i < 0,5% 6,581m 22.18% 2 0,5% < i < 2,0% 23,097m 77.82% 3 2.0% < i 0 m 0% Total 29,700 m 100.0% Source: Study Team (4) Countermeasures against soft ground problems When the sub soil is judged to be soft for the target structures, improvement of the soft ground will be carried out. Its judgment will be dependent mainly on: whether the sub soil can support the target structures safely meeting with required Factor of Safety (FS) and residual settlement (Sr), or whether treatment of settlement after construction is required and maintenance is possible in a manner economical and technically feasible. Based on the Vietnamese Standard 22TCN , following the design criteria regarding geotechnical engineering study for roadbed are applied for this project: Minimum factor of safety for roadbed against sliding failure is 1.3 or higher during construction phase and 1.4 or higher at roadbed completion time due to Bishop method, and Allowable post construction settlements are 10 cm or lower between piled abutments and approach embankments, and 20 cm or lower for culvert sections and 30 cm or lower for carriageway. If roadbed can satisfy the above design criteria, normal construction procedures will be selected. If not, several countermeasures meeting design criteria are combined.

108 3-42 No Countermeasures against Soft Ground problems Excavation and replacement Modification of embankment geometry and counterweight berms Granular Drainage Blanket Table 3-34 Counter Measures against Soft Soil Problems Stability Effective Effective Effective 4 Stage of Construction Effective 5 Reinforcement of embankment using geosyntheics Rather Effective Settlement Effective Effective Description of method Part of the soft layer is excavated and poor soil is replaced with good quality material (compacted sand or suitable fill) where the very soft compressible is not very deep Modification of embankment geometry through reduction of slope angle or construction of counterweight berm to one side of the main embankment as a stabilizer A granular drainage blanket between 0.5m and 1.2m is placed on the soft clay ground surface where embankment is constructed. This blanket act as horizontal drainage for the pore water flowing out from the sub-ground. If a sliding failure might occur if the embankment is built quickly, then the embankment should be built slowly while increasing its strength by consolidating the ground. Use to improve the stability of the embankment over soft soil by placing it at the base of embankment. Act as separator and also filter between the clayey ground and a granular drainage. Increase bearing capacity of the ground and reduce deflections under wheeled traffic Classifications (Commonly/ specially applied in Vietnam) Commonly used Commonly used Commonly used Commonly used Commonly used 6 Vertical Drain Effective Effective 7 Surcharge/preload (Filling load, ground water lowering, vacuum consolidation) Source: Study Team Effective Vertical drain columns mad of sand or prefabricated vertical drain are placed at proper intervals in the soft layer, and consolidation is accelerated by reducing the consolidation drainage distance in the horizontal direction Surcharging is subject the ground to higher pressure than that during the service life in order to achieve a higher initial rat of settlement thus reducing long term settlement Commonly used Commonly used The classification of countermeasure, commonly used or specially used, was evaluated by the geotechnical team from taking into account to following factors availability of local materials, local experiences in skill and equipment, environmental restrictions and economy A countermeasure classified as commonly used was firstly studied and then whether requirement of design criteria can be satisfied or not was checked, when not, countermeasures for latter were studied.

109 3-43 (5) Stability and Protection Measures for Cut Slopes It is important to differentiate between methods of slope protection and the ones of slope stabilization, as the former are designed specifically to solved slope erosion and shallow slope failure up to a depth of about 0.5m, while the latter are designed to solve problems of deeper slope movement. Methods employed for slope protection from erosion or weathering are drainage control and surface treatments that include masonry revetments, the use of vegetation and less conventional slope coverings including geo-textiles and bituminous fabric. Vegetation is frequently used, where possible, due to relatively low cost in most cases. Methods of slope stabilization normally involve more extensive engineering works, for slope angles, retaining walls and drainage works. Slope protection works with such structures as retaining walls, pile works and slope anchor works are used for slopes requiring protection against failures or rock falls. However, it is normally appropriate to combine works of protection and stabilization in order to achieve complete success and to prevent from long term slope deterioration. Toe walls, localized slope grading, shallow drainage and the use of vegetation are the measures most commonly employed in such a system. In general, the cut slopes will be following the guideline of the TCVN described in Table 3-35 Types and condition of soil/rock Cohesive soil or cohesionless soil having medium dense to dense state Table 3-35 Cut Slope guidelines Rate of cut slope when height of slope is (m) 12m 12m 1 : : 1.25 Granular soil 1 : 1.50 : 1.75 Lightly weathered rock 1 : : 0.50 Highly weathered rock 1 : : 1.25 Lightly weathered soft rock 1 : : 1.00 Highly weathered soft rock 1 : : 1.25 Note: As for soil excavation, height of the slope should not be over 20m. As for soft rock excavation, if the surface of the rock layer slopes outward with the slope angle above 250, the design slope should be as steep as the rock layer surface and the height of the slope should be limited less than 30m. Source: Study Team (6) Pavement Structure Pavement Structure of Phap Van Cau Gie are stated by each phase of construction in Construction Work. (7) Frontage road Pavement Structure Frontage roads are designed in the following specification for rural road type A, Bn=5.5m; Bm=3.5. Pavement structure is expected as follows: Double bituminous surface treatment t=4,5cm Aggregate base course: t=15cm Aggregate sub-base course: t=20cm

110 3-44 (8) Toll plaza pavement structure Figure 3-22 Toll Plaza Pavement Structure Source: Study Team (9) Interchange design Phap Van Cau Gie expressway is designed according to A Type Expressway standard (speed level 120km/h), used on the all the interchange projects. There are 4 interchanges: Phap Van interchange (Km ) ; Thuong Tin interchange ( Km ) ; Van Diem interchange (Km ) and Fouth ring road interchange ( it is expected at Km190). Table 3-36 Interchanges on Phap Van Cau Gie Expressway No Name of interchange Station Type of interchange Name Cross road 1 Phap Van interchange Km Double trumpet Third Ring Road 80 2 Fourth ring road interchange Km Double trumpet Fourth Ring Road 80 3 Thuong Tin interchange Km Double trumpet PR.No Van Diem interchange Km Half cloverleaf PR.No Source: Study Team Interchanges design is based on the following criteria: Speed Economic impact Surrounding areas Efficiency of traffic management Traffic volume on access road Traffic safety Easy management Standardized design of intersections Standard applied in interchange design Phap Van Cau Gie expressway project Viet Nam standard 22 TCN Viet Nam standard TCVN 4054;2005 Viet Nam standard TCVN 5729;1997 AASHTO 2004 standard. Japan standard (reference) Basically, Vietnamese Criteria was applied. In the cases that Vietnamese standards were not appropriate, Japanese and AASHTO standard were compared and appropriate standard was proposed. Proposed design Standards for Interchange are as shown in Table 3-37.

111 3-45 Item Table 3-37 Proposed design standard for interchanges TCVN TCVN 22TCN 5729; ; Japan standard AASHTO 2004 Design speed Direct Km/h Loops Km/h Maximum super-elevation (%) 6% 8% 8% 8% 8% Min. Radius (m) Min. Length of curve (m) Min. Length of spiral (m) Stopping sight distance (m) Maximum grades (%) Min. Length of VC (m) Min. K of VC Min. Acceleration length (m) Min. Deceleration length (m) Min. Taper length (m) Spacing (m) Toll plaza Proposal V=40 km/h 60 m 50 m 50 m 41 m 50 m V=50 km/h 80 m 80 m 73 m 80 m V=60 km/h 125 m 125 m 130 m 113 m 125 m V=40 km/h 50 m 50 m =1.67xV =3 x V V=50 km/h 60 m 60 m (km/h) (km/h) V=60 km/h 70 m 70 m V=40 km/h 25 m 22 m 25 m V=50 km/h L=R/9 30 m 28 m 30 m V=60 km/h 35 m 33 m 35 m V=40 km/h 40 m 44.4 m 40 m as 44.4 m V=50 km/h 62.8 m 55 m Horizontal 62.8 m V=60 km/h 75 m 75 m 84.6 m 75 m sight line 84.6 m V=40 km/h 7% 11% 7% V=50 km/h 6% -11% 6% 10% 8% 6% V=60 km/h 6% 10% 6% V=40 km/h 35 m 24 m 35 m 24 m V=50 km/h 30 m 40 m 30 m V=60 km/h 50 m 50 m 36 m 50 m 36 m Crest Sag V=120 km/h V=80 km/h V=120 km/h V=80 km/h V=40 km/h V=50 km/h V=60 km/h V=40 km/h V=50 km/h V=60 km/h V=40 km/h 200 m 470 m 470 m 490 m 200 m V=50 km/h 200 m 445 m 445 m 460 m 200 m V=60 km/h 200 m 400 m 400 m 410 m 200 m V=40 km/h 160 m 135 m 135 m 145 m 160 m V=50 km/h 160 m 100 m 100 m 115 m 160 m V=60 km/h 160 m 55 m 55 m 65 m 160 m V=40 km/h 100 m 175 m 175 m 175 m 100 m V=50 km/h 100 m 170 m 170 m 170 m 100 m V=60 km/h 100 m 155 m 155 m 155 m 100 m V=40 km/h 80 m 100 m 100 m 100 m 80 m V=50 km/h 80 m 90 m 90 m 90 m 80 m V=60 km/h 80 m 80 m 80 m 80 m 80 m V=120 km/h 75 m 75 m V=100 km/h 60 m m 60 m V=80 km/h 50 m 50 m Successive exists 350 m 300 m 300 m 300 m Successive exits ramp 300 m 240 m 240 m 240 m Exit followed by entrance 200 m 150 m 150 m 150 m Successive entrance expressway 350 m 300 m 300 m 350 m Successive entrance ramp 300 m 240 m 240 m 300 m Minimum radius 200 m 200 m Maximum grade (%) < 2 < 2 Minimum K for crest Normal crown Connection to taper 1:5 1:5 Length of entrance section to expressway Length of exit to expressway 90 m 90 m 60 m 60 m Source: Study Team

112 3-46 Figure 3-23 Cross Section of Interchange Ramps Cross section of 1 way 1 lane: Interchange Ramp Two way two lane interchange Ramps Two way four lanes interchange Ramp Source: Study Team (10) Toll plaza designs The toll plazas of Phap Van Cau Gie expressway is designed according to standard TCVN and Japanese design standard. It is expected that it will be an opened system in the first place but will become eventually a closed system in the future. The toll plazas are designed to allow these two systems to be operated. On the main line arranged 1 toll plaza at the station : KM Interchanges have got 6 toll plaza. Toll plaza includes official toll plaza and toll gate.

113 3-47 Figure 3-24 Toll plaza at beginning and end of project Source: Study Team Figure 3-25 Cross section of toll plaza Source: Study Team

114 3-48 Figure 3-26 Plan of toll plaza Source: Study Team (11) Signs and road marking The signage and road marking requirements of the expressway will be designed in the detail design phase. The signing and markings at the interchanges and local road connecting to network will be studied and designed. Where local roads are to be over or under the expressway, the required signs and markings are to be designed in the detail design phase. (12) Intelligent transport system - ITS The ITS design will follow the system of Cau Gie Ninh Binh project Construction Work Phase 1 Construction Work: Upgrading 4-Lanes within the Existing ROW (1) Improving the Mainline Road Works Phase 1 In preparing this report the Consultants did a number of surveys and site visits to estimate the amount of work that would be required to successfully upgrade the 4-lanes. NEXCO Central conducted 482 Benkelman Beam tests in At this phase of Phase 1, the first option is to reconstruct 4-lanes with a simple overlay for most of the distance. That is from Km to Km (length = 28,850-metres on both sides of a total of 57,700-metres of carriageway). These Benkelman results show soundness of pavement as shown in Figure 3-27 and Figure Although the existing pavement characteristic modulus varied from 1,034 MPa to 1,932 MPa, its indicates adequate pavement strength. Hence the main problem with the existing expressway is not the residual strength but the differential settlement. This problem is most evident near the drainage structures. These areas are the ones approaching to the bridges, box culverts and underpasses where the settlement should be ceased. It has been assumed to fix 100-metres on either side of the structures which will be reconstructed in a total length of 8,762-metres as shown in Table Phap Van Cau Gie Expressway Project Preliminary Benkelman Survey Report, NEXCO Central, 2010

115 3-49 Figure 3-27 Benkelman Bean Results Right Carriageway Phap Van to Cau Gie Source: NEXCO Central Figure 3-28 Benkelman Bean Results Left Carriageway Cau Gie to Phap Van Source: NEXCO Central

116 3-50 Figure3-29 Proposed Overlay Source: Study Team Structure No. Table 3-38 C/L Station Length for reconstruction on Phap Van Cau Gie Overlay Option Culvert Type Height (m) Structure Width (m) Design Length (m) From Station To Station Length (m) BR Bridge m m BC Box Culverts 1.50 m 1.50 m m m BX Box Culvert Underpass 3.20 m 4.00 m m m BXS Box Culvert Underpass 2.50 m 2.50 m m m BC Box Culverts 1.50 m 1.50 m m m BXS Box Culvert Underpass 2.50 m 2.50 m m m DBC Double Cell Box 3.00 m 3.00 m m m BX Box Culvert Underpass 3.20 m 4.00 m m m DBC Double Cell Box 3.00 m 3.00 m m m BXS Box Culvert Underpass 2.50 m 2.50 m m m BC Box Culverts 1.50 m 1.50 m m m DBC Double Cell Box 2.00 m 2.00 m m m BX Box Culvert Underpass 3.20 m 4.00 m m m DBC Double Cell Box 3.00 m 3.00 m m m BXS Box Culvert Underpass 2.50 m 2.50 m m m BC Box Culverts 1.50 m 1.50 m m m BXS Box Culvert Underpass 2.50 m 2.50 m m m BC Box Culverts 1.50 m 1.50 m m m BC Box Culverts 1.50 m 1.50 m m m BC Box Culverts 1.50 m 1.50 m m m BXS Box Culvert Underpass 2.50 m 2.50 m m m DBC Double Cell Box 2.50 m 2.50 m m m BXS Box Culvert Underpass 2.50 m 2.50 m m m BC Box Culverts 1.50 m 1.50 m m m BXS Box Culvert Underpass 2.50 m 2.50 m m m BC Box Culverts 1.50 m 1.50 m m m BX Box Culvert Underpass 3.20 m 4.00 m m m BXS Box Culvert Underpass 2.50 m 2.50 m m m DBC Double Cell Box 3.00 m 3.00 m m m

117 3-51 Structure No. C/L Station Culvert Type Height (m) Structure Width (m) Design Length (m) From Station To Station Length (m) BC Box Culverts 1.50 m 1.50 m m m BXS Box Culvert Underpass 2.50 m 2.50 m m m BX Box Culvert Underpass 3.20 m 4.00 m m m BXS Box Culvert Underpass 2.50 m 2.50 m m m BXS Box Culvert Underpass 2.50 m 2.50 m m m BXS Box Culvert Underpass 2.50 m 2.50 m m m BC Box Culverts 2.00 m 2.00 m m m DBC Double Cell Box 2.50 m 2.50 m m m BXS Box Culvert Underpass 2.50 m 2.50 m m m BXS Box Culvert Underpass 2.50 m 2.50 m m m BC Box Culverts 1.50 m 1.50 m m m BC Box Culverts 1.50 m 1.50 m m m BXS Box Culvert Underpass 2.50 m 2.50 m m m BC Box Culverts 1.50 m 1.50 m m m BX Box Culvert Underpass 3.20 m 4.00 m m m DBC Double Cell Box 2.50 m 2.50 m m m BX Box Culvert Underpass 3.20 m 4.00 m m m BC Box Culverts 1.50 m 1.50 m m m BX Box Culvert Underpass 3.20 m 4.00 m m m DBC Double Cell Box 3.00 m 3.00 m m m DBC Double Cell Box 2.50 m 2.50 m m m BXS Box Culvert Underpass 2.50 m 2.50 m m m BXS Box Culvert Underpass 2.50 m 2.50 m m m DBC Double Cell Box 1.50 m 1.50 m m m BX Box Culvert Underpass 3.20 m 4.00 m m m BX Box Culvert Underpass 3.20 m 4.00 m m m DBC Double Cell Box 2.00 m 2.00 m m m BXS Box Culvert Underpass 2.50 m 2.50 m m m Source: Study Team Total Length for reconstruction 8,762 m The total length to be modified and reconstructed is estimated to be 8,762-metres on both sides of the expressway or 30% of the total length. Please note that this reconstruction length is only estimation and should be refined during the basic upgrading design stage. It is estimated at this stage that 30% of the road to be reconstructed and 70% to be overlaid. The reconstruction could proceed using the following methods. To maintain the existing traffic only one carriageway can be reconstructed at that one be for contra-flow traffic. The existing asphalt pavement should then be pulverized, removed and then stored at a central plant. After the existing gravel pavement are removed, and also stockpiled at the plant. These materials will be processed and reused. In the reconstruction areas the average depth to be excavated is estimated at 1-metre depth. Once the excavation is completed the ground will be investigated and a solution to the settlement will be determined. There will be a menu solutions including replacing any in-situ soft materials with light weight fill, placing of PVD vertical drains or installing piles in more extreme areas to support the embankment. The pavement layers is shown below.

118 3-52 Table 3-39 Thickness of the Pavement Layers Design thickness (cm) Section Asphalt concrete ATB Base Sub-base Total Anti-skid Surface Binder All 3 cm 5 cm 7 cm 10 cm 18 cm 27 cm 70 cm Source: Study Team Figure 3-30 Pavement Design for New Pavements Source: Study Team The road markings for Phase 1 will be done according to the following figure. Guardrail and curbs will be refurbished and replaced where required. The signs and light standards will be also be replaced where required.

119 3-53 Figure 3-31 Road Markings for Phase 1: 4-Lane Upgrading Source: Study Team

120 3-54 (2) Phase 1: Improving the Frontage Road Works All works in Phase 1 must be within the existing right of way to avoid any land acquisition and resettlement. This means that in Phase 1 the existing frontage will only be rehabilitated. The existing pavements will be repaired where required. As the existing frontage roads are discontinuous, the existing motorcycle traffic that uses the expressway cannot be transferred to them. This raises the question as to what to do with this traffic. The traffic forecast predicts that its demand will reach capacity in the next few years. Mixed transportation of motorcycles and traffic in a high probability might be very dangerous. For safety the motorcycle traffic should be restricted from using the expressway and be diverted to NH1A which runs parallel to the expressway and is approximately one and half kilometers to the west. (3) Phase 1: Improving the Structural Works As no widening of any structures is required in Phase 1, all the works will be done within the existing width. Structural works will consist of repairs and rehabilitation of the existing structures through replacing expansion joints, patching cracks, painting parapets and other required repairs. Drainage structures will be cleaned and the waterways cleared. Ditches will be re-profiled and cleaned. Any damages are repaired and cracks are sealed to ensure that they can operate properly. Table 3-40 Summary of Phase 1 and Phase 2 Work Item Phase 1 Phase 2 Work Upgrading 4-lane expressway within the existing road ROW Widening of 4-lane expressway to 6-Lanes. Frontage Roads Land Acquisition Motorcycle Traffic Rehabilitation of the existing frontage roads. No land acquisition or resettlement required. Restrict motorcycle traffic. They must use existing NH 1A. Toll Facilities Toll facilities at Km 188 and 2 Interchanges by Cau Gie to Ninh Binh Project Bus Stops Provide Bust Stops at the Interchanges so restrict bus stops to within the interchanges. Provide continuous 5.5-metre wide frontage roads. Full land acquisition and resettlement required. Motorcycle traffic allowed on frontage roads As per phase 1 As per phase 1 Cost phase $35.2 million US $282.8 million US Total Cost $318.0 million US Time Start and complete in 2012 Start in 2014 complete end of 2016 Source: Study Team

121 Phase 2: Upgrading to 6-lanes and construction of continuous frontage roads (1) Preparation Work for the Phase 2. The Project Go Ahead is expected to be sent out before mid As stated above the preparations for the Basic upgrading design for Phase 1 has already started. The next preparation step will be to start the work on Phase 2 by preparing the feasibility study, basic design, resettlement plan and EIA for the Phase 2 work. This work will consist of 6-lane widening and the constructing continuous frontage roads. The Phase 2 Basic design could be completed and approved by mid Next, detail design should be approved by mid During these designs the Resettlement Plan and the EIA should be completed and approved. Land Acquisition and resettlement can only start after these steps done in mid Land acquisition and resettlement will take approximately 18-months until the end of (2) Phase 2 Construction Work: Road Works Upgrading to 6-Lanes The extent of the Phase 2 depends on the amount of reconstruction work done in Phase 1. We have assumed 30% of the length will be reconstructed in Phase 1. The rest of the road will be reconstructed in Phase 2. Whether or not the pavement design should follow the new pavement design procedures were discussed earlier and the proposed pavement layer is shown below. Table 3-41 Thickness of the Pavement Layers Design thickness (cm) Section Asphalt concrete ATB Base Sub-base Total Anti-skid Surface Binder All 3 cm 5 cm 7 cm 10 cm 18 cm 27 cm 70 cm Source: Study Team Figure 3-32 Pavement Design for New Pavements Source: Study Team An alternative method using in place cold recycling was considered because at least 15-centimetres of existing asphalt concrete pavement could be used. As the main problem of the existing pavement is differential settlement, recycle may be a method of reestablishing a proper vertical alignment and reducing the amount of leveling course needed. This method of recycling would use equipment such as Sakai PM550 as shown in Figure3-33.

122 3-56 Figure3-33 Typical Road Recycling Equipment Sakai PM 550 Source: SAKAI HEAVY INDUSTRIES, LTD Figure 3-34 Typical Recycling Method Source: SAKAI HEAVY INDUSTRIES, LTD The work also includes an additional lane so that the expressway becomes a 6-lane facility with the cross-section shown in Figure3-35 as below.

123 3-57 Figure3-35 PV-CG Expressway 6-lane cross-section in Phase 2 Source: Study Team Figure 3-36 PV-CG Expressway Close-up of Expressway Source: Study Team (3) Phase 2 Construction Work: Frontage Road Works Upgrading Continuous and wider frontage system will be built. As stated previously, in order to accomplish this work, land acquisition and resettlement are necessary. In the area for the new frontage there are a number of progressing irrigation works that must be moved far away from the road. The soil for the new frontage road embankment is mostly from wet areas. The width of the new frontage roads will allow the flow of motorcycle traffic along these roads. Please refer to two studies done in Malaysia, (TRB ) Estimating Capacity for Uninterrupted Motorcycle Path in Malaysia 7 and Determination of Comfortable Safe Width in an Exclusive Motorcycle Lane TRB Estimating Capacity for Uninterrupted Motorcycle Path in Malaysia, by Hussain H., Radin Umar R.S., Ahmad Faran M.S., Dadang M.M., Revised on 15 November Determination of Comfortable Safe Width in an Exclusive Motorcycle Lane by Teik Hua Law and Radin Umar Radin Sohadi, 2005

124 3-58 Figure 3-37 Phase 2 Frontage Roads after widening Source: Study Team The ditch between the frontage road and the mainline embankment must be drained under the frontage roads using catch basins and cross pipes by every 25-metres. The pavement on the frontage roads should follow the following pavement design and figure. Figure 3-38 Pavement Structure of the new proposed Frontage Roads Source: Study Team

125 3-59 (4) Phase 2 Construction Work: Bridge Works Upgrading to 6-Lanes Width of cross section: The cross section of bridges on the route is recommended to design corresponding to recommended width of the expressway for each investment phase. For bridges on the cross road or frontage road, the cross section of bridges is designed corresponding to width of existing road and plan (if any). Table 3-42 Width of bridges for each phase: No. Name of bridge Station Phase 1 Phase 2 1 Phap Van Interchange Overpass Sta No work off Project No work off Project 2 Van Dien Bridge Sta Rehabilitation only Widening existing bridge from 4 lanes into 6 lanes Bridge width B=33.5m 3 Ngoc Hoi Overpass Sta Rehabilitation only Remaining as phase 1 4 Thuong Tin Overpass Sta Rehabilitation only Remaining as phase 1 5 Van Diem Bridge Sta Rehabilitation only Widening existing bridge from 4 lanes into 6 lanes bridge width B=33.5m 6 Railway flyover Sta No work off project No work off project Source: Study Team Figure 3-39 The cross section of bridge widening on the expressway Phase 2 Source: Study Team

126 3-60 Principles of selecting structure: Based on assessment, analysis of scope and structure condition of existing construction works on the route. The permanent structures are designed, corresponding to scope, specification of road class and the height, which is suitable for existing construction work. Designed structure must satisfy the planned requirements of the road, environment, hydrological data, and cross section of channel. The solutions of structure must keep consistency on whole route. Utilization and development of existing construction capacity, priority on using domestic and regional materials and easiness of maintenance. Corresponding to topographical, geological condition at each structure location. Cost of construction work must be reasonable ensuring the investment efficiency of the project. Structure alternatives to bridges on the expressway Substructure: Base on local geological characteristic, loaded soil layer is relatively deep in comparison with natural ground (around 50m), so design consultant recommended to use bored piles with diameter D=1,2m for foundation of abutments and piers of bridges. Superstructure: Base on foregoing principles, there are 2 alternatives of superstructure. Alternative I: PCI girder. The length and height of girder are various corresponding to location of bridges. Alternative II: Super T girder. The length and height of girder are various corresponding to location of bridges. Table 3-43 The structure alternative of each bridge Span No. Name of bridge Alternative Length(m) Superstructure Substructure arrangement(m) 1 2 Van Dien Bridge Sta Van Diem bridge Sta I 2@ II 2@ I 5@ II 5@ PCI girder, L=33m, Hd=1.65m Super T girder, L=33m, Hd=1.75m PCI girder, L=33m, Hd=1.65m Super T girder, L=33m, Hd=1.75m Bored piles, D=1.2m Bored piles, D=1.2m Bored piles, D=1.2m Bored piles, D=1.2m Source: Study Team

127 3-61 No Name of bridge Alternative 1 2 Van Dien bridge Sta Van Diem bridge Sta Source: Study Team Alternative Alternative I PCI girder Alternative II Super T girder Table 3-44 Amount and major construction cost Length (m) Bridge width new construction part Unit price /1m2 bridge (million VNĐ/m2) Total major construction cost (billion VNĐ) I @ II @ I @ II @ Table 3-45 Alternative comparison and applied priority Advantage and disadvantage The structure is suitable with existing bridge condition, the construction height of bridge is appropriate, easy to linking between existing bridge and new bridge Easy to construction, maintenance. especially, The girders is constructed according to post-tension method will save the cost of casting bed The major construction cost of this alternative is at average level. The construction height of bridge is relatively suitable with existing bridge condition. Due to the structures are different, thus, linking between existing bridge and new bridge is more difficult. Casting bed must be constructed while constructing main girder, so the cost will be increase. The major construction cost of work is high. Conclusion: Base on economic, scope, work architecture and construction technology, the construction investment alternative is recommended according to alternative I PCI girder. Source: Study Team (5) Phase 2 Construction Work: Underpass and Drainage Works The existing culverts are designed in Reinforced Concrete. Load capacity and drainage aperture are still ensured. The length of culverts are designed corresponding to roadbed width B=25m. The consultant recommend specification of remaining existing culvert, removing retaining wall structure, culvert apron and lengthening culvert body, new retaining wall and culvert apron. Table 3-46 Lengthening of Underpasses No. Station Quantity of box B (m) H (m) Skew angle (o) Lengthening (m) 1 km km km km Km km km km km km km km

128 3-62 No. Station Quantity of box B (m) H (m) Skew angle (o) Lengthening (m) 13 km km km km km km Km km Km km km km km km km km km km km km km km km km km km km km km km km Km km km km km km km km Total Quantity 51 culverts Lengthening m

129 3-63 Table 3-47 Lengthening of Drainage Culverts Length of existing No. Station Culvert Type Size (m) culverts (m) Lengthening (m) 1 Km Pipe ф Km Box 1.5x Km Box 1.5x Km Pipe ф Km Pipe ф Km Pipe ф Km Pipe ф Km Pipe ф Km Box 2x3.0x Km Pipe ф Km Pipe ф Km Pipe ф Km Pipe ф Km Pipe ф Km Pipe ф Km Box 2x3.0x Km Box 1.5x Km Box 2x2.0x Km Pipe 2xф Km Box 2x3.0x Km Pipe 2xф Km Box 1.5x Km Box 1.5x Km Pipe ф Km Pipe ф Km Box 1.5x Km Pipe ф Km Box 1.5x Km Box 2x2.5x Km Pipe ф Km Pipe ф Km Box 1.5x Km Pipe ф Km Box 1.5x Km Pipe ф Km Pipe ф Km Pipe ф Km Pipe ф Km Box 2x3.0x Km Pipe ф Km Pipe ф

130 3-64 No. Station Culvert Type Size (m) Length of existing culverts (m) Lengthening (m) 42 Km Pipe ф Km Pipe ф Km Pipe ф Km Box 1.5x Km Pipe ф Km Pipe ф Km Pipe ф Km Pipe ф Km Pipe ф Km Pipe ф Km Pipe ф Km Pipe ф Km Pipe ф Km Pipe ф Km Box 2.0x Km Box 2x2.5x Km Pipe ф Km Pipe ф Km Pipe ф Km Box 1.5x Km Box 1.5x Km Pipe ф Km Pipe ф Km Pipe ф Km Pipe ф Km Box 1.5x Km Pipe ф Km Pipe ф Km Box 2x2.5x Km Pipe ф Km Pipe ф Km Pipe ф Km Box 1.5x Km Box 2x3.0x Km Pipe ф Km Box 2x2.5x Km Pipe ф Km Pipe ф Km Box 2x1.5x Km Pipe ф Km Pipe ф Km Box 2x2.0x

131 3-65 No. Station Culvert Type Size (m) Length of existing culverts (m) Lengthening (m) 84 Km Pipe ф Total Source: Study Team Quantity 84 culverts Lengthening m No. Name of bridge Table 3-48 Station Summary of Bridge, Underpass and Drainage Works Span arrangement (m) Length (m) Superstructure Substructure Bridges on expressway 1 Van Dien bridge Sta @ PCI girder, L=33m, Hd=1.65m Bored piles, D=1.2m 2 Van Diem bridge Sta @ PCI girder, L=33m, Hd=1.65m Bored piles, D=1.2m Underpass culverts Quantity: 51 culverts The length of lengthening section: 484,50 m Drainage culverts Quantity: 84 culverts The length of lengthening section: 798,00 m Source: Study Team (6) Phase 2 Construction Work: Roadway traffic safety: For the alignment coinciding with existing road, traffic safety measures must be provide to avoide traffic accident and traffic jam during construction. At site of bridge construction, barrier, signal board, signal light system must be provided to ensure traffic safety. For underpasses: Temporary road must be provided. Traffic directional distribution to the nearest culvert and its construction work must be implemented culvert by culvert reasonably to avoid traffic obstacle during construction process. For Drainage culverts: Temporary channels should be provided or construction solution should be implemented section by section to ensure drainage for existing culvert Issue on Implementing Project and Measures to Solve (1) Land Acquisition and Population Condition along the Route According to Decree No. 11/2010/ND-CP, which was promulgate on March 2010, requires land acquisition following a fixed trip of about 40m as safety corridor, as this requirement is unreal and no case has been applied this decree yet, previous standard that require 7m safety corridor assumed to be applied in this study. At site of low backfill, the reserve strip is 5-10m and at site of high backfill sections run across residential area, but there is no reserved strip, slope of some sections must be changed from 1:1 to 1:1.5 in land acquisition area. There are mainly agricultural lands on both sides of the route; only small population lives nearby roadsides. According to preliminary statistic, there are 3.05km/30km runs nearly residential areas where land acquisition must be implemented the roadbed and about 13km/30km road on the alignment where there is reserve strip needs widening. Particularly, at section Km Km , L=300m on the right and section Km Km , L=220m it is necessary to construct slope retaining wall to avoid land acquisition in the Phap Van urban area and patriotic-war-dead memorial area and in temple site in Ngu Hiep commune Thanh Tri Ha Noi.

132 Outline of Mai Dich Noi Bai Expressway Project Basic Policy Based on study result of previous phases, planning of Ha Noi city at Correspondence No.76/QĐ-UB dated 20/5/2005 and No.70/2005/QĐ-UB dated 13/5/2005 and Announcement No.397/TB-BGTVT dated 11/09/2009 of Ministry of Transport, the Consultant studied and proposed some solutions as follow: The project shall be invested dividing in the following 2 phases. Phase 1: Improving and rehabilitating Mai Dich Noi Bai route, widening cross section of roadbed to Bn=29m. Design speed V= 60-80km/h. Intersections at grade will be provided with traffic organization by signal lights and splitter island. Widening bridges corresponding to roadbed width B=29m. Improving pavement, drainage works, underpasses. Phase 2: Mai Dich Noi Bai shall be designed into expressway with design speed of 100km/h. The roadbed width follows planning of Ha Noi city. Interchange to ring road no.3, Nam Hong and Co Nhue will be constructed. Viaduct system to Mai Dich South Thang Long Bridge will be constructed. At present, Phase 1 is under proceeding. In this study, Mai Dich Noi Bai Expressway project focuses on Phase Technical Studies Design Criteria (1) Design Specifications Design specification of the project follows specification for expressway design TCVN based on design speed V=100km/h and specification for urban road design TCXDVN based on design speed V=60km/h.

133 3-67 Table 3-49 Design Specifications of Mai Dich Noi Bai Criteria Unit TCVN TCXDVN Road class Expressway Urban road Design speed km/h Maximum gradient % 7 6 Minimum horizontal curve radius m Radius without super elevation m Stopping sight distance m Maximum gradient (up-grade) % 5 6 Maximum gradient (down-grade) % 5,5 6 Minimum radius of convex curve m Minimum radius of concave curve m Roadbed width, in which m Carriage way m 4x3,50 4x3,50 - Urgent lane m 2x3,0 - - Roadside m 2x1,0 2x0,5 - Safety strip m 2x0,5 2x0,5 - Medium strip m 0,5-2,0 2,0 - Reserve strip m Cross slope % 2 2 Sodding % 6 6 Embankment slope 1:2 1:2 Cross section of bridge Suitable with cross section of road Intersection Interchange Intersection Source: Study Team Suitable with cross section of road (2) Alignment aspect The existing alignment of Mai Dich Noi Bai is basically followed. Some curves will be improved to meet specification for expressway design with design speed V=100Km/h. Presently, starting point of project is at Km0+000 Mai Dich intersection. The scope of Mai Dich intersection is from Km0+000 to Km The tangent of 2 projects are not coinciding, section Km0+000 Km0+405 is located on the curve with radius R= 4000m, section Km0+510 Km1+600 is located on the straight section therefore, middle section from Km0+405 Km0+510 will be provided 2 tangent reserve curves with radius R1= 530m, R2=450m to remain center-line of existing road. So, in phase 2, Design Consultant proposes to select starting point of Mai Dich Noi Bai expressway at Km From Km4+620 to Km9+036, in phase 2, 1 new alignment shall be designed to serve for construction of New Thang Long bridge in parallel with existing Thang Long bridge, and 42m far on the left side of existing Thang Long bridge. The alignment design results are as follow:

134 3-68 Table 3-50 Curves of Mai Dich Noi Bai phase 1 (Km0+000 Km20+200) No Radius (m) Quantity Length (m) Ratio (%) 1 R < 450 m % m < R < 1000 m 6 1, % m < R < 4000 m 4 2, % m < R % 5 Tangent Section 16, % Total 11 20, % Source: Study Team Table 3-51 Curves of Mai Dich Noi Bai phase 2 (Km0+510 Km ) No Radius (m) Quantity Length (m) Ratio (%) 1 R < 450 m % m < R < 1000 m 4 1, % m < R < 4000 m 5 2, % m < R % 5 Tangent Section 14, % Total 10 19, % Source: Study Team (3) Longitudinal profile: The profile grade line is determined following the height of structure. For bridges crossing over cross road, the profile grade line is determined following the height of required clearance for cross road and structure height. For bridges crossing river or channel, profile grade line is determined by the height of navigational clearance and structure height. (Clearance of cross road and navigational clearance must be agreed by local authorities or management agencies). Profile grade line must also ensure the clearance to arrange underpasses as well as drainages. Mai Dich Noi Bai expressway has large percentage of good trucks, so it is important to restrict the use of longitudinal grade to avoid slope climbing. As the alignment is relatively straight, there is no large grade. The results are as follow: Table 3-52 Length and Design Grade of Mai Dich Noi Bai Route (phase 1) No Design grade (%) Length (m) Ratio (%) 1 0.0% < i < 1,0% 14,809m 73.31% 2 1,0% < i < 2,5% 3,621m 17.93% 3 2.5% < i 1,770 m 8.77% Total 20,200 m 100.0% Source: Study Team Table 3-53 Length and Design Grade of Mai Dich Noi Bai Route (phase 2) No Design grade (%) Length (m) Ratio (%) 1 0.0% < i < 1,0% 14,791m 73.29% 2 1,0% < i < 2,5% 3,221m 17.94% 3 2,5% < i 1,770 m 8.77% Total 20,182 m 100.0% Source: Study Team Table 3-54 Longitudinal profile of viaduct: No Design grade (%) Length (m) Ratio (%) 1 0.0% < i < 0,5% 15,131 m % 2 1,0% < i < 2,5% 2,891 m 14.33% 3 2.5% < i 2,160 m 11.19% Total 20,182 m 100.0% Source: Study Team

135 3-69 (4) Typical cross section: The width of typical cross section is shown in the following table. Table 3-55 Width of Typical Cross Section of Mai Dich - Noi Bai No Item Existing road Phase 1 Phase 2 Mai Dich South Thang Long bridge Km0-Km Motorized vehicle lane 2x(2x3.5) = 14m (2x2x3.5) = 14m 2x(2x3.5) = 14m 2 Bus lane - - 4m 3 Medium strip 0.70m 0.50m 5m 4 Separator between motorized - 2x1.0 = 2m 2x4.0 = 8m vehicle lane and non-motorized vehicle lane 5 Non-motorized vehicle lane 2X4.5m = 9m 2x5.0 = 10m 2x5m=10m 6 Safety strip 2x0.5 = 1m 2x0.5 = 1m 2x(0,5+0,5) = 2m 7 Side ditch - 2x0.75 = 1.5m - 8 Pavement - - 2x10.5 = 21m Total 24.70m 29.0m 68.0m Viaduct Km0+510-km Motorized vehicle lane - - 2x(2x3.75) = 15m 10 Medium strip m 11 Urgent lane - - 2x2.5 = 5m 12 Safety strip 2x( )=2.5m Total Thang Long bridge Km5+500 Km Motorized vehicle lane 2x(2x3.75)= 15m 2x(2x3.75)= 15m 2x(2x3.75) = 15m 2 Medium strip 0.5m 0.5m 1.5m 3 Urgent lane 2x1.5 = 3m 2x1.5 = 3m 2x2.5 = 5m 4 Safety strip 2x0.5= 1.0m 2x0.5= 1.0m 2x0.75=1.5m 5 Guarrail 2x0.75= 1.5m 2x0.75= 1.5m 2x0.5=1.0m Total 21.0m 21.0m (remaining) 24m 24m (New Thang Long bridge) North Thang Long bridge to Noi Bai Km9+100 Km Motorized vehicle lane 2x(2x3.5) = 14m (2x2x3.5) = 14m 2x(2x3.75) = 15m 2 Medium strip 1.00m 0.50m 0.5m 3 Separator between motorized - 2x0.5 = 1.0m 2x0.5 = 1m vehicle lane and non-motorized vehicle lane 4 Non-motorized vehicle lane 2X3.5 = 7m 2x5.25 = 10.5m 2x6.25m=12.5m 5 Safety strip 2x0.5 = 1.0m 2x( ) = 2m 2x( ) = 2m 6 Side ditch - 2x0.5 = 1.0m - 7 Urgent lane - - 2x3.00=6m 8 Pavement 0.75x2=1.5m 9 Reserve strip 14,75x2= 29.5m Total 23.0m 29.0m 68m Source: Study Team

136 Figure 3-40 Typical Cross Section of Existing Mai Dich South Thang Long bridge B=24.7m ex is it n g o f mai d ic h s o u t h t h an g l o n g br id g e s ec t io n Exist ing Ro a d B =24.70m % 2% Rig ht o f w a y f r o m Figure 3-41 Typical Cross Section of Mai Dich South Thang Long Phase 1 B=29m t y pic al c r o s s s ec t io n ph as e I % 2% MÆt êng cò Rig ht o f w a y f r o m Source: Study Team Figure 3-42 Typical Cross Section of Mai Dich South Thang Long Phase 2 B=68m t y pic al c r o s s s ec t io n ph as e II Source: Study Team Rig ht o f w a y f r o m

137 % 2% 2% MÆt êng cò 2% 6.50 Figure 3-43 Typical Cross Section of New Thang Long Bridge B=24m (PhÇn xe ch¹ y) 2.50 (D i dõng xe khèn cêp) Borepile D2000mm Cäc khoan nhåi D2000mm Source: Study Team Figure 3-44 Typical Cross Section of North Thang Long Noi Bai Phase 1 B=29m ex is it n g o f n o r t h er n t h an g l o n g br id g e t o n o i bai s ec t io n Exist ing Ro a d B =230m Rig ht o f w a y f r o m t y pic al c r o s s s ec t io n ph as e I Rig ht o f w a y f r o m Source: Study Team

138 3-72 In phase 2, according to planning of Ha Noi city, land acquisition scope is divided to small sections. Table 3-56 Land Acquisition Scope of Mai Dich - Noi Bai Section 1 Km Km ,0 Section 2 Km Km Kim Chung Interchange Section 3 Km Km ,0 Section 4 Km Km South Van Tri intersection Section 5 Km Km ,0 Section 6 Km Km Nam Hong intersection Section 7 Km Km ,0 Section 8 Km Km ,0 ~ 120,0 Section 9 Km Km ,0 Section 10 Km Km The Third Ring Road IC Section 11 Km Km ,0 Section 12 Km Km ,0 ~ 120,0 Section 13 Km Km ,0 Section 14 Km Km Dong Do Section 15 Km Km ,0 Section 16 Km Km ,0 ~ 120,0 Section 17 Km Km ,0 Section 18 Km Km NH18 IC Section 19 Km Km ,0 Source: Study Team (5) Roadbed: The roadbed is extended to planned finished grade line scope; the roadbed slope will be filled by temporary soil outside of finished grade line. At the positions which the slope cannot backfill, the retaining wall will be constructed. The slope of existing road is excavated with the width of 2m, to dredge organic soil in the scope of expanded area. It is recommended that roadbed section running across the field is excavated for replacement of soil with depth of 0.5m in average. North Thang Long bridge Noi Bai: The alignment runs completely on the existing road and geological condition is relatively stable. The common roadbed is expanded 3m more at each side to get the width. Mixed lanes at 2 sides are 5.25m. The scope of cross section is 29m. The gradation and organic soil dredge must be implemented before backfill. The width of gradation in B=2m and the thickness of organic soil dredge at commom sections is 30cm but at field is 50 cm. The embankment has slope 1/2 with excavated roadbed with slope 1/1. The roadbed under pavement is scarified and compacted reaching the closeness K98 with the thickness of 30m before pavement construction. Soils to fill the embankment are transported from borrow. Soils to fill the embankment are laid and compacted layer by layer to the thickness corresponding to regulation. Embankment slope is reinforced by sodding. (6) Soft soil treatment: Special embankment: according to previous geological survey data, there are some sections with soft soil to be treated: Km8+600-Km9+600, Km9+930-Km10+180, Km Km It is expected to change the soil by excavation (Km9+930-Km10+180) and sand pile (Km8+600-Km9+600, Km Km13+200). If the ground base is judged to be soft for structure, the treatment will be carried out. Degree of the softness of ground base will be determined based on two design criteria: whether ground base can support structures with Factor of Safety (FS), residual settlement (Sr), or settlement after construction, or whether it can meet economic and technical requirements, and possible maintenance process.

139 3-73 (7) Stability and Protection Measures for Cut Slopes It is important to distinguished methods of slope protection from methods of slope stabilization, as the former are designed specifically to solved slope erosion and shallow slope failure up to a depth of about 0.5m, while the latter are designed to solve problems of deeper slope movement. Methods of slope protection from erosion or weathering comprise of drainage control and surface treatments for soils and weathered rock that include masonry revetments, the use of vegetation and less conventional slope coverings such as geotextiles and bituminous fabric. Vegetation is frequently used, where possible, due to relatively low cost in most cases. Methods of slope stabilization normally involve more extensive engineering works, including reduction of slope angles, retaining walls and drainage works. Slope protection works with structures (retaining walls, pile works and slope anchor works) are used for slopes requiring protection against failures or rock falls. Usually, however, it is appropriate to combine both elements of protection and stabilization in order to make it successful and to prevent from long term slope deterioration. Toe walls, localized slope grading, shallow drainage and the use of sodding are the measures most commonly employed in a combined system. In general, slope grading will follow Vietnam Standard TCVN (8) Pavement Pavement Design Standards: Specification for design Pavement Structure: a) Pavement Design Standards (22TCN211-06), b) Pavement Design Standards (22TCN274-01), 2001 (for reference). 1) Existing motorized vehicle pavement structure: According to design document of Mai Dich South Thang Long, the strength of existing pavement is Eo=178 MPa. In this phase, the pavement is only reinforced by an asphalt concrete course with 7cm thickness, to ensure the elastic modulus of urban road Eyc=190 MPa. The thickness of pavement structures is determined by audit result as follows: Table 3-57 Thickness of Pavement of Mai Dich Noi Bai Total thickness 110cm with Eyc=175Mpa Asphalt concrete surface 7cm Tack coat 0.5kg/m2 Asphalt concrete binder 7cm Prime coat 1kg/m2 Aggregate base course 45 cm Aggregate sub-base course 51 cm Source: Study Team (9) Interchange: 1) Standard to design interchanges (1) Viet Nam standard TCN TCVN 5729;1997 (2) AASHTO 2004 standard. (3) Japan standard (reference)

140 3-74 2) Standard to design ramps of interchange Same as Phap Van Cau Gie 3) Phase 1: Intersection There are 21 existing intersections on the route. Along with widening and improving roadbed B=29m, its crossing locations will be designed at grade (except for Mai Dich, Kim Chung, NH18 interchange). The intersections will be improved by suitable splitter islands and signal light system. 4) Phase 2: Interchange There are 10 interchanges shown in Table Table 3-58 Interchanges of Mai Dich Noi Bai : phase 2 No Name of Interchange Type of Intersection Cross Road 1 Mai Dich (Km0+000) Diamond Xuan Thuy Road 2 Co Nhue (Km2+900) Diamond Co Nhue road 3 South Thang Long bridge (Km5+000) Complex Huu Hong Dike Road 4 North Thang Long bridge (Km8+600) Complex 5 Kim Chung (Km10+050) Diamond Urban road 6 South Van Tri (Km12+325) Diamond Urban road 7 Nam Hong (Km13+870) Diamond Provincial road 23 8 Third ring road (Km14+850) Clover leaf Third ring road 9 Dong Do (Km17+700) Diamond South Ca Lo river 10 National Highway (Km19+100) Double trumpet NH18 Source: Study Team 5) Intersection Intersections at grade will be remained in phase 1, but the crossings with planned roads will be added in the future.

141 3-75 Table 3-59 Summary table of intersections at grade No Station Name of intersection Note 1 Km0+500 Crossing with concrete road 6.5m width (L) 2 Km0+700 Crossing with concrete road 6.5m width (R) 3 Km1+056 Hoang Quoc Viet Crossing with Hoang Quoc Viet road (L+R) 4 Km1+345 Opening separator 5 Km1+507 Planned Crossing with planned road 6 Km1+887 Planned Crossing with planned road 7 Km2+123 Planned Crossing with planned road 8 Km2+200 Crossing with access to INTERGEO league 7.5m width (L) 9 Km2+350 Crossing with access to armored service area (L) 10 Km2+500 Road No.69 Crossing with road No.69 (L+R) 12 Km3+008 Crossing with access to urban area (L) 13 Km3+590 Crossing with access to domestic service (R) 14 Km3+950 Crossing with concrete road to residential area (L) 15 Km4+485 Planned Crossing with planned road 16 Km4+630 Tan Xuan Crossing with Tan Xuan road (L+R) 17 Km4+810 Nguyen Hoang Ton Crossing with Nguyen Hoang Ton road (R) 18 Km Quang Minh Crossing with access to Quang Minh urban area 19 Km NH2 Crossing with NH2 Source: Study Team NH2 intersection: Traffic organization shall be carried out by construction of a ramp way from NH 2 at Km5+300 to the nearby NH 18 intersection, that was constructed with a length of 900m. To provide a median towards Mai Dich Noi Bai and open ramps for turning right, vehicles cross Mai Dich Noi Bai road, shall run through NH 18 intersection (motorized vehicles) and underpass No. 17. (The ramp ways from Mai Dich Noi Bai road to Underpass 17 for non-motorized vehicle shall be constructed.) (10) Drainage system design 1) Existing drainage system Drainage system crossing Mai Dich Noi Bai alignment has been constructed completely. However, rainwater collection system on the road has not been constructed yet. Rainwater still flow to 2 sides of road, field and drainage channel. Since the alignment has been completed to now, along 2 side of the alignment has been urbanized. Urbanization is implemented spontaneously instead of not simultaneously. So it affected the surface water drainage significantly. At present, along the road there are many concrete longitudinal slits to

142 3-76 drainage surface water and household sewage. These longitudinal slits are not forming a system, aperture is missing, the spillages usually deposit in the slit and are not dredged, all of which lead to occasional flood. 2) Drainage requirements when widening the road For expanding alignment, the rainwater collection system must be designed (drainage along the road) and linked to across drainage system. The current ditch with dual purpose is only suitable for agriculture production. Its system must be relocated to accommodate new cross section. 3) Drainage system arrangement Design principles South Thang Long Mai Dich has been put its operation for many years. Across drainage system is basically suited to scope and specification of construction work. Thus, road improvement process has to observe a number of following principles: Drainage system along the road has to be suited to urban planning. Rain water drainage and waste water drainage system must be separated. Basically, when widening the road, drainage system will be elongated and connected to longitudinal drainage system. The changing of aperture of existing drainage system, excluding special cases. Longitudinal drainage system Rainwater on the road surface will flow to longitudinal ditch and culvert system. After that the water will flow to across culverts and escape to outside of alignment. The dimension of longitudinal culverts and distance between manholes are calculated based on the following factors: Rainfall rate, The width of cross section (include sidewalk and behind sidewalk scope), The slope along the road and slope on the cross section, Dimension and kind of manhole. Based on primary calculations, the distance between catches is 30m. Catch basin will be connecting to longitudinal drainage system by manholes. Quantity and location of manholes and catch basins will be based on plan and profile of alignment. To make manhole dredging work easy, longitudinal drainage system will be provided on the sidewalk of collector road. However, in some cases, longitudinal drainage will be provided under carriageway of collector road because: Widening carriageway at the site of bus stop makes sidewalk narrow, To avoid engineering works (tuynen, electric post, etc.) in urban area, In the scope of intersection. Aperture of longitudinal culverts is designed as requirement of planning but not >1,00m to make dredge work and maintenance easy. In order to expand the road into 29m in phased development, emergency longitudinal drainage system by site at 2 sides of road will be provided. Drainage system across the road When expanding the road, the current drainage system will be extended and linked to longitudinal

143 3-77 drainage system. Outlet along the road Outlets along the road have to be suited to drainage planning and defined based on longitudinal drainage requirements. The outlet should be provided at location of existing across culverts. It is expected to have 6 locations of outlet: Outlet 1: Km1+440 Outlet 2: Km2+135 Outlet 3: Km3+070 Outlet 4: Km3+490 Outlet 5: Km3+660 Outlet 6: Km4+850 (11) Technical Tuy Nen Design Technical tuy nen system includes longitudinal tuy nen (technical trench) and cross tuy nen. The cross tuy nen is considered to provide in association with pedestrian tunnel. Longitudinal tuy nen is provided on the sidewalk.

144 Chapter 4 ENVIRONMENTAL AND SOCIAL CONSIDERATION ASPECT

145 4.1 Environmental Improvement Effect and Impact toward Environmental and Social Aspects due to Implementation of the Projects Current Condition Analysis (1) Baseline Study Result on baseline study of Vietnam, Hanoi City and of subjected road route (partial) are as shown in below Table 4-1. Table 4-1 Current situation in Vietnam, Hanoi City and subjected road route (partial) No. Baseline study item Outline of current condition 1 2 Climate (Climate in Hanoi City) Humidity Consisting of high terrain (1,000 meters above sea level) areas to coastal plains and delta area, Vietnam has various climates. In Hanoi, there are two major seasons, a cold dry season (October - March) and a hot rainy season (April - September). The average annual temperature is 24. Hanoi is located in the North-Eastern Tropical Monsoon region. The climate differs according to the four seasons, whereby winter is cold, summer is hot with high humidity, and spring and fall relatively cool. The average annual temperature is 22~23. Hanoi Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec City ( ) National average is 83~84%, therefore relatively high (Humidity in Hanoi) Humidity in Hanoi City is annually 83% in average (Monthly-wise: Mar. - Apr. 87%, Dec. 81%) 3 Amount of rainfall Average of approx. 1,700mm. 70~80% of amount of rainfall occurs during June to September's rainy season, but according to climate data, at times of rainstorms, the amount of rainfall could reach up to 200mm - 700mm daily, and there are uneven distribution of rainfall according to location. Rainfall Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec in Hanoi (mm) Water evaporation (Hanoi) 75mm per month in average 4 Wind direction, wind force 5 Air quality (Air quality in Hanoi) The major wind direction is North East during winter season and South East during summer season. On the other hand, the annual average wind force excluding Ha Tay Province, was 2.53m/s (monthly difference of m/s) according to MVA Asia's survey in In Hanoi City, storms normally occur during June to October, and most of all in August. Wind force could reach up to 20m/s during that period. Air quality in urban centers throughout Vietnam has been deteriorating in recent years in line with increasing urbanization and industrialization. Air quality in Hanoi: (i) The main issue of concern in relation to air quality is particular matter (PM), particularly PM 10 and fine particular matter with an aerodynamic diameter less than 2.5 microns (PM 2.5). PM2.5 results from combustion of fossil fuels in transport and industry. Measured PM concentrations in Vietnamese cities are one to five times higher than allowed by TCVN (Vietnam standards) and recent monitoring in Hanoi suggests TCVN are exceeded by six to seven times over the majority of the road network. Particulate matter levels are elevated in the dry season when there is less 4-1

146 No. Baseline study item Outline of current condition rain. 6 Water quality (contamination) (ii) Sulfur dioxide (SO 2 ) levels are usually below the relevant TCVN criteria in urban areas, although levels exceeding TCVN criteria by two to three times can occur near major intersections (Hanoi DoNRE, 2005). Diesel powered vehicles are the major source of SO 2 in urban areas, together with coal burning for domestic use. (iii) Nitrogen oxides (NO X ) result from fuel combustion and are usually found at levels below TCVN criteria in urban areas. Elevated levels, however, are increasingly observed at major urban intersections (Hanoi DoNRE, 2005). (iv) Carbon monoxide (CO) levels commonly exceed TCVN at major intersections in urban areas and along major thoroughfares, but are generally within standards in other areas. Mobile emission sources such as vehicles are the main generators of CO. (v) Benzene levels are above EU recommended levels in many locations with the highest levels found at traffic intersections and along major roads. (vi) Soil from construction activities and road surfaces are the major sources of total suspended particulates (TSP). During 2005, Hanoi DoNRE conducted monitoring for TSP along side of major roads in a number of districts. Those that indicated concentration exceeding permitted levels of 300 ig/ m3 regulated by TSVN:QCVN (National Technical Regulation) 05:2009/BTNMT, came up to 83% of that of samples taken from six monitoring points (Ex. Hoan Kiem district 77.7%, Ba Dinh district 61%, Dong Da district 80.5%, Cau Gie district 66.8%, Tu Liem district 66.7%). Water quality of Hanoi, Ho Chi Minh and Hi Pong are very bad and contaminated. Since Vietnam does not have any drainage treatment facilities, and industrial wastewater and household wastewater are discharged directly into surrounding waters (rivers, lakes and coast). In rainy seasons, drainage systems are filled with water, and with mixture of industrial wastewater and household wastewaters, overflows by inundation occur in the cities. 7 Solid waste Soid wastes of urban areas are also a cause of pollution. There are two plants in Hanoi and Ho Chi Minh respectively, that were constructed as pilot plants for composting solid wastes, but both are still relatively small in scale. 8 Geographic feature The city of Hanoi is located in the southwest side of the Red River. The surface is covered by a complex sequence of alluvial delta deposits. The geographic feature at the Phap Van - Cau Gie road route, is majorly a plain with agricultural land and fish pond land at both sides of the road route. The elevation is 4m - 10m. The longitudinal slope of the expressway is 1-2% 9 Topography, geology Overview of geological settings in Hanoi (excluding Ha Tay Province) (from new to old formation) Holocene: 1. (Formation) Thai Binh 3-4: Alluvial clay, clayey silt (approx. thickness: 5-6m): Aquitard 2. Thai Binh 1-2: Loose to medium dense alluvial sand and silty sand (6-15m): Unconfined aquifer recharged by surface water infiltration. Only supplies small scale wells. Low to medium permeability. 3. Hai Hung 2-3: Marine clay, silty clay (6-15m): Low permeability 4. Hai Hung 1: Lacunstrine - swamp silty caly (2-4m): Low permeability Pleistocene: 5. Vinh Phuc 4: Unknown (-): Low permeability 6. Vinh Phuc 3: Complex alluvial and lacustrine silty caly (7-12m): Low permeability (Note: not present in Hanoi) 7. Vinh Phuc 2(*): Alluvial clayey/silty sand with gravel lenses (15-30m) 8. Vinh Phuc 1(*): Alluvial sand gravel and cobbles with some clayey silt 4-2

147 No. Baseline study item Outline of current condition 10 Hydrogeology and Groundwater (usage in Hanoi) thin layers (30 - > 50m) 9. Ha Noi (*): Alluvial cobble and gravel with lenses and thin layers of silty sand and occasional stiff sand clay, known to be up to 65m thick in Hanoi (2->50m) 10. Le Chi: Sandstone, conglomerate with lenses and thin layers of mudstone (35-70m): Bedrock, low to medium permeability * Primary aquifer for municipal water supply in Hanoi. Recharged mainly by Red River in the upstream where the formations directly expose to the surface. Highly permeable (Source) Almec Corporation, 2006 In Hanoi, most of the groundwater is contained in two Quaternary aquifers, the upper aquifer (part of the Holocene Thai Vinh Formation) and the lower aquifer (Lower Vinh Phuc and Hanoi formations of Pleistocene). The upper aquifer consists of a series of non-continuous silty fine to medium sand lenses and thin layers of low to medium permeability. The aquifer is unconfined or semi-confined. The average thickness of the aquifer is 9.2m in the north and 13.3 m in the southern part of the Red River Delta. The permeability of the aquifer is 20 to 800 m 2 /day. The source of groundwater of the upper aquifer is mainly from direct surface infiltration, including precipitation and surface water bodies. Due to its relatively low transmissibility and limited water-bearing capacity, the upper aquifer is only used for small-scale water supply. The upper aquifer does not exist along the project alignment. The lower aquifer is separated from the upper aquifer by a Pleistocene clay layer. Where the upper aquifer is absent, the Pleistocene clay layer is combined with recent clay deposits to form a top confining layer. The depth to the top of the confined aquifer increases from north to south in Hanoi. The top of the aquifer is at depth of about 12 to 40 m bgs, and the bottom of the aquifer is about 45 to 90m deep. The permeability of this aquifer ranges from 200 to 1,600 m2/day. Direct surface recharge is not likely to be the groundwater source of the lower aquifer in Hanoi because the thick top confining layer forms a barrier for surface percolation. The main source of the groundwater is the lower aquifer is through recharge in the outcrop area where the aquifer formation is directly exposed to the surface. The recharge area is upstream in the headwaters of the Red River Delta where the top clay layer pinches out. The groundwater moves laterally downstream to Hanoi. The lower aquifer has been used as the main water supply for Hanoi since In the past decade groundwater of the lower aquifer has been over-pumped, mainly as a municipal water supply. As a result, depression of the groundwater table has occurred in most of Hanoi city. The three well fields that the metro rail system traverses all have a water level more than 20m deep, and yet declining at a rate of 0.4 to 0.7 m/year (NDWRPI, 2009). The water demand is expected to rise with an increase inn population of Hanoi, in turn; it will accelerate the depletion rate of the aquifer. Major crossing rivers of the subjected road route (Phap Van - Cau Gie) are Lich River (182Km+915) (width 20m) and Nhue River (211Km+249). However, regular data on inundation and flood of the subjected rivers and surrounding major waterways are not disclosed to public. The characteristic of the subjected road route are that agricultural land, reservoirs and ponds (mostly, fish ponds) can be spotted in some areas. Groundwater exists in all stratums and land surface. Its depth differs according to season, climate and river and lake districts. The quantity of water level also differs according to irrigation and drainage human activity. The groundwater level are often less than 1m, at the Red Delta district, where the subjected road 4-3

148 No. Baseline study item Outline of current condition route crosses. 11 Land subsidence In Hanoi, land subsidence has occurred due to the decline of groundwater table. A subsidence rate of 30 to 40 mm/year was observed near the Tuong Mai and Thuong Dinh well fields located in southern Hanoi (World bank, 2003) (i) Groundwater extraction is the main cause of land subsidence. (ii) The highest rate of land subsidence occurs in areas where large volumes of groundwater have been depleted and the existence of the thick soft clay layer. In the absence of soft strata, land subsidence is insignificant. (iii) Land subsidence rate reduces with time when the soft layers become more condensed. (earthquake) Earthquake occurrence in Vietnam is strongly related to active deep faults especially to lateral strike slip faults. Earthquakes related to volcanic activity are moderate and occur in the off shore of centre part of Vietnam. Earthquakes in Vietnam are crustal ones with the depth less than 30km. According to 2007 data of Institute of Geophysics over magnitude 4(MS), large fault lines lie along Dien Bien, Lai Chau, Son La, Red River, Chay River, Ca River, Ma River, Con River, Ca River (109 30'E meridian) and the mountains in western Lai Chau Province. Earthquakes with a magnitude of are frequently recorded in these areas. The railway section Hanoi - Lao Chai - Dong Dang, and national road 1A, 1B, 2, 4D, 6, 7, 8, 12, 15, 32, 70 and No.279 road route, are within a high sensitive earthquake zone, or located relatively far from the zone. During the period from 1900 to 2006, in Vietnam, earthquake with Magnitude class of , occurred more than 450 times, and those with Magnitude class of 8-9, twice. Among those earthquakes below maximum Magnitude of 7.0, occurred within the land territory, erupted due to diastrophism at less than 30km in depth. Epicenter and seismic intensity (class) in Hanoi City: 1. Magnitude 7.0 class: Cong Vi prefecture, Ba Dinh district; Tho Quan prefecture, Dong Da district; Le Dai Hanh prefecture, Hai Ba Trung district; Hang Trong prefecture, Hoan Kiem district; Ngoc Thuy prefecture, Long Bien district; Nhat Tan prefecture, Tay Ho district; Dong Anh prefecture, Dong Anh district; Trau Quy prefecture Gia Lam district; Soc Son prefecture, Soc Son district 2. Magnitude 8.0 class: Phuong Mai prefecture, Hoang Mai district; Phuong Mai prefecture, Hoang Mai district; Thanh Xuan prefecture, Thanh Xuan district; Van Dien prefecture, Thah Tri district; Cau Dien prefecture, Tu Liem district (Source) Institute of Geophysics, Noise and vibration The acoustic environment in Hanoi is characterized by high noise levels arising from transport movements, construction activities, industry and daily activities. Noise levels are elevated throughout the day and night. Typical daytime noise levels in residential areas are 75-78dB (A), and can reach 80-85dB(A) in the vicinity of major road corridors. Noise monitoring results at 16 locations on major roads in Hanoi in 2006 indicate that average noise levels during the daytime vary from db(a), and during the evening from db(a). Most locations had noise levels exceeding the maximum TCVN limits for mixed development areas (the most noise tolerant category) during the daytime and night time. 13 Local economy In the past ten years during , there were rapid economic growth in Hanoi, and the economic structure have been modernized, and efficient. The GDP of Hanoi City during , grew at a level of annual 10.7%, and 9.91% during , thus showing 1.48 times more economic growth than the nationwide level. The real GDP of Hanoi city in 2009 reached to 205 trillion 890 billion Vietnam Don, with share of 12.4% of the real GDP 4-4

149 No. Baseline study item Outline of current condition industrial trend 14 Population and ethnic groups nationwide. Industrial sectors' growth rate in Hanoi City: Agriculture, fishery and forestry showed 4.39% growth during , but reduced its growth to 1.66% during On the other hand, the construction and industrial sector showed rapid growth of 13.4% in , while in slightly reduced its growth, but still kept a strong growth of 11.14%. Likewise, share among the total industrial sectors were, in terms of agriculture, fishery and forestry was 10.4% in 2000, 6.9% in 2005 and 6.3% in 2009, thereby declined its share. Whereas in terms of the construction and industrial sector, it recorded 36.5% in 2000, 40.8% in 2005 and reached to 41.3% in 2009, thereby grew its share. (1) Population (as of 2008): Total pop. in Hanoi City, 6.36 million people (Urban Population has share of 41% among its total, counting up to 2.58 million people). Ref. Phap Van - Cau Gie Expressway route area (District): (i) Thanh Tri district 0.19 mil., (ii) Thuong Tin district 0.22 mil. (iii) Phu Xuyen district 0.18 mil. (2) Ethnic Groups: 54 ethnic groups exist in Vietnam, however, 86.2% of total national population belong to the Viet (or Kinh) majority ethnic group, and other ethnic minorities in need of special consideration, resides in Southern or Nothern mountainous areas or plain areas, outside of Hanoi City. (3) No indigenous people or minorities were confirmed to reside in the subjected project (Phap Van Cau Gie and Mai Dich Noi Bai) route areas. 15 HIV/AIDS According to "The Fourth Country Progress Report on Following up on the Declaration of Commitment on HIV/AIDS (UNGASS)" issued in June 2010 by "AIDS, Drugs, Prostitution Prevention and Control National Committee", in Vietnam, there exists 160,019 HIV patients as of December 31, 2009, and there were 15,713 newly infected HIV patients among the total. According to a report on VietNam HIV/AIDS Estimates and Projections , the infection rate of HIV, during years of age, will reach up to 0.44%. 16 Traffic accidents In 2006, the number of road traffic accidents in Vietnam nationwide, reached up to 14,727 cases, with 12,757 deaths and 11,288 wounded (likewise in 2007: road traffic accidents 13,985 cases with 12,800 deaths and 10,266 wounded) (according to NTSC: National Traffic Safety Committee survey). Incidentally, the number of traffic accidents tended to increase by an annual 13.5% during , but from 2003, reduced its tendancy of growth. However, there are other reportings that traffic accidents in Vietnam are more or less growing and becoming more serious, in comparison with other ASEAN countries. According to districts, likewise in 2006, in the Red Delta district including Hanoi City, there were 2,716 cases of road traffic accidents, with 2,156 deaths and 1,832 wounded (Road Railway Transportation Div., MOPS). Source: The Study on National Road Traffic Safety Master Plan in the Socialist Republic of Vietnam until Final Report Vol 1: Analysis-, March 2009, National Traffic Safety Committee (NTSC), Vietnam JICA (ALMEC Corporation, Nippon KOEI Co., Ltd.) 17 Flora, fauna (1) Vietnam is the world's 16th richest nation of biodiversity (biodiversity index: 6.5% share in the world). (2) According to recent statistics, among terretrial species, in Vietnam, there are 15,986 plant species (including 4,528 lower plants and 11,458 vascular plants) 10% of these are endemic species, and in terms of fauna, 307 speicies of roundworm (Nematoda), 161 tapeworm species,

150 No. Baseline study item Outline of current condition earthworm species (Oligochaeta), 145 Arcartia species (Arcartia), 113 springtail species (Collembolla), 7,750 insect species (Insecta), 260 reptiles species (Reptilia), 120 amphibian species (Amphibia), 840 bird species (Aves), 310 mammal species and sub-species. (3) According to IUCN Red list of Endangered Species (IUCN, 2004), Vietnam has 289 globally endangered animal and plant species. Vietnam Red Data Book (MONRE) lists 1,056 threatened wildlife species at national level. In comparison with records of the first version of Vietnam's Red Data Book (1996 version), the current number of such species increased considerablely, 1056 species against 721 species. (4) Incidentally, the subjected road routes (Phap Van - Cau Gie, Mai Dich - Noi Bai) are not to mention already existing road districts, (and although reconfirmation is considered necessary) according to result of interview and confirmation to DoNRE, Hanoi City, both of the districts in question are assumed that they are not of any vegetation or inhabited area of endangered or rare species enlisted in the Red Data Book. 18 Protected area (1) In Vietnam, there are 129 protected areas, in which 27 are national parks; 60 are natural and habitat reservation areas, 37 cultural - historical - environmental reservation areas, and 5 world heritage areas. (2) Incidentally, the subjected road routes (Phap Van - Cau Gie, Mai Dich - Noi Bai) are not to mention already existing road districts, and according to result of interview and confirmation to DoNRE, Hanoi City, both of the districts in question are considered not within any protected areas. Source: 1. The METI Study Team; or quoted or in reference to, 2. The Comprehensive Study on the Sustainable Development of Transportation System in Vietnam (VITRANSS 2), JICA/ TDSI, MOT, Vietnam, 3. EA Report, Ha Noi Pilot Metro Light Line, section Nhon Ha Noi Railway Station (MRT 3), prepared by PC of Ha Noi for the Asian Development Bank, 4. Others shown within the table. (2) Stakeholder Analysis Analysis on stakeholders was conducted at an initial stage of the Study. With regard to identification of stakeholders, (a) first, through discussion with a local environmental consulting firm, very familiar with environmental and social consideration issues in Hanoi, namely EPC Co., Ltd., prospective stakeholders were enlisted. (b) Secondly, the list was revised based upon result of public consultations, held at to-be-affected districts along the subjected road routes. (c) Then, the study team consulted with Department of Natural Resources and Environment (DoNRE) officials of Hanoi City, to receive any advice for its revision, and finally, (d) presented the content to persons in charge at Vietnam Expressway Corporation (VEC) for unofficial comments. Therefore, the finally enlisted stakeholders can be regarded, as selected through most appropriate process. For enlisting, affected legitimate stakeholders and resident related bodies ( Communes, considered as executive authorities representing the residents at the ward level) were prioritized first. The finalized stakeholders list is shown in Table

151 Table 4-2 Presumed stakeholders No. Stakeholder Legitimate Beneficiaries or Stakeholder Affected 1 Road users (people in general, carriers & businesses) both beneficiary Yes and affected 2 Nearby legal residents & legal businesses, land owners Yes Affected 3 Nearby private/public enterprises Yes Affected Residential Organs (commune): Affected districts and Wards/Communes authorities Phap Van - Cau Gie route: - Hoang Mai District including Hoang Liet ward; - Thanh Tri district, including communes: (i)tu Hiep; (ii) Ngu Hiep; (iii) Lien Ninh; - Thuong Tin district, including communes: (i) Lien Phuong; (ii) Quat Dong; (iii) Thang Loi; (iv) To Hieu; (v) Van Tu; (vi) Van Diem; (vii) Minh Cuong; (viii) Duyen Thai; (ix) Van Binh; (x) Ha Hoi 4 - Phu Xuyen district, including (i) Phu Tien; (ii) Phu Xuyen town; (iii) Nam Phong; (iv) Nam Trieu; (v) Dai Xuyen; Mai Dich - Noi Bai route: - Cau Giay district, including Mai Dich ward - Tu Liem district, including communes: (i) Co Nhue; (ii) Xuan Dinh; (iii) Dong Ngac. - Dong Anh district, including communes: (i) Vong La; (ii) Hai Boi; (iii) Kim Chung; (iv) Kim No; (v) Nam Hong. - Soc Son district, including communes: (i) Phu Cuong; (ii) Thanh Xuan. - Me Linh district, Vinh Phuc province, including communes: (i) Quang Minh. Yes Both 5 District Compensation, Assistance and Resettlement Committees Yes Related Authority Ha Noi City (People s Committee), including below departments: (1) Department of Natural Resources and Environment (DoNRE) (2) Department of Land Acquisition, Compensation (3) Department of Planning and investment (4) Department of Finance 6 (5) Department of Urban Traffic (6) Department of Urban Architecture (7) Department of Civil Engineering (8) Department of Transport (9) Department of Agriculture and Rural Development (DARD) (10) Department of Aquaculture No Related Authority 7 IUCN (International Union for Conservation of Nature), Vietnam No Affected 8 Ha Noi Power Company Yes Affected 9 Japanese Ministry of Economy, Trade and Industry (METI) Yes Beneficiary 10 Central Nippon Expressway Company Limited (NEXCO), Japan Yes Beneficiary 11 Japan International Cooperation Agency (JICA) Yes Beneficiary 12 Department of Natural Resources and Environment (DoNRE) (general office) Yes Affected 13 Affected Districts : Compensation, Assistance, Resettlement Committee Yes Related Authority 14 District/Ward Women Council Yes Related Authority 15 District Farmer Council Yes Related Authority 16 Vocational Training Center Yes Beneficiary 17 Affected People Committee of Communes/Wards Yes both beneficiary and affected 18 Affected People Committee of Districts Yes both beneficiary and affected Ministry of National Defense Force, including below public companies under the Ministry: (i) Construction Company No. 99, 19 (ii) Vietel Company Yes Affected * Companies within ROW of the Phap Van - Cau Gie route, presumed to be affected. (Source) METI Study Team, reflecting opinion by DoNRE, Hanoi City 4-7

152 4.1.2 Legislative ground for implementation of project & Relationship between Upper level Plan Legislative ground for implementation of project at both road route are as follows: (1) Phap Van Cau Gie Expressway Route: (a) Prime Minister Decision No. 140/QD-TTg dated January 21, 2010, approving the Detailed Master Plan for North-South Expressway Eastern Side, including the subjected road route. (b) Announcement No. 66/TB-BGTVT dated January 26, 2010 by Ministry of Transport (MOT) s ministerial conclusion at meeting of key projects implementation review (c) Decision No.929/QD-BGTVT dated April 6, 2010 by MOT on approval of project formation of upgrading Phap Van Cau Gie section (2) Mai Dich Noi bai Expressway route: (a) Prime Minister Decision No. 90/2008/QD-TTg dated June 9, 2008, approving the Hanoi City Communication and Transport Infrastructure Development Plan, including the subjected road route (b) Prime Minister Decision No. 1327/QD-TTg dated August 24, 2009 on approval of Vietnam Road Transportation Development Plan by 2020 and vision toward 2030 (3) Relationship between Upper level Plan 1) Master Plan for North-South Expressway Eastern Side: MOT s Document No.6803/TTr-BGTVT on proposal of Detailed Master Plan for North-South Expressway, submitted in September 30, 2009 was approved by the Prime Minister s Decision No. 140/QD-TTg on January 22, Subjected section: 16 sections between Phap Van intersection - Can Tho (including its first section between Phap Van Cau Gie. Plan to develop 4 lane expressway during phase I, and development into 6 lanes during phase II ). The scope, total investment amount and implementation period (Appendix I of Prime Minister decision No. 140/QD-TTg), indicating each section of North-South Expressway, including the subjected road route is shown in the following table. 4-8

153 No. Road route/ Section 1 Phap Van - Cau Gie 2 Cau Gie - Ninh Binh Ninh Binh - Thanh Hoa (Nghi Son) Thanh Hoa (Nghi Son) - Ha Tinh (Hong Linh) Ha Tinh (Hong Linh) - Quang Binh (Bung) Quang Binh (Bung) - Quang Tri (Cam Lo) Quang Tri (Cam Lo) - Da Nang (Tuy Loan) Table 4-3 Appendix I Starting point Phap Van IC (Hanoi) Cau Gie, Ha Tay Ending point Cau Gie (Hanoi) Ninh Binh City Length (km) Scope (lane) Tot. investment (1Bil. VND) Implementing period , ,650 implement- ing Cau Bo IC Nghi Son , Nghi Son Hong City Hong Linh City 8 Da Nang - Quang Ngai Da Nang City Quang Ngai City 9 Quang Ngai - Binh Dinh 10 Binh Dinh - Nha Trang 11 Nha Trang - Phan Thiet 12 Phan Thiet - Dau Giay , Linh Bung , Bung Cam Lo , Cam Lo Tuy Loan , Quang City Ngai An Nhon, Binh Dinh Dien An Nhon, Khanh, Binh Dinh Khanh Hoa Dien Khanh, Khanh Hoa Phan City 13 Dau Giay - Long Thanh Dau Giay 14 Long Thanh - Ben Luc 15 Ben Luc - Trung Luong 16 Trung Luong - My Thuan - Can Tho Thiet Long Thanh, Dong Nai Phan Thiet City Dau Giay, Dong Nai Long Thanh, Dong Nai Ben Luc, Long An Ben Luc, Trung Long An Luong , , , , , ,340 Phase I, implementing , ,970 Phase I, implementing Trung Luong Can Tho , Total ,323 Source: Prime Minister's Decision No. 140/QD-TTg dated January 21, ) Hanoi City Communication and Transport Infrastructure Development Plan Approved by Prime Minister s Decision No. 90/QD-TTg dated June 9, Its scope of planning covers Hanoi capital and surrounding urban centers of Ha Tay, Bac Ninh Phuc, Hung Yen, Bac Giang and Thai Nguyen provinces, within a radius of 30km and 50km. The objectives of planning were, 4-9

154 (a) To concretize the adjustment of the master plan on Hanoi capital till 2020, which was approved by the Prime Minster in Decision No.108/1998/QD-TTg dated June 20, 1998, on the formation of the planning on development of Hanoi capital s communications and transport till 2020 (b) To identify the contents of investment priority for development of Hanoi capital s communications and transport till 2010 (c) To serve as a basis for implementation of investment projects on development of Hanoi capital s communications and transport till 2020 Among the development plan, with regard to urban road belts, Belt III consisting also of Noi Bai Mai Dich Thanh Xuan Phap Van Thanh Tri Sai Dong Ninh Hiep sections; 65km in total length, mapped during the pre-feasibility study approved by the Prime Minister s Decision No. 945/ CP-KTN dated August 13, 1998 was included. 3) Vietnam Road Transportation Development Plan by 2020 and vision toward 2030 The Prime Minister Decision No.1327/QD-TTg, dated August 24, 2009, approved the Vietnam Road Transportation Development Plan by 2020 and vision toward Its development objective by 2020 and guidance toward 2030 can be viewed as follows: - Development objectives until 2020: (a) 5.5 billion passengers transported; billion passengers circulated (b) 760 million tons (of freight) transported, 35 billion tons circulated (c) Cars of types: million vehicles (d) Construct 24 expressways and sections (including urban ring roads) with total length of 2,381 km (e) 100% of national highways being graded technically (f) Complete construction of major bridges, in replacement of 100% of weak bridges on national highways (g) 100% provincial roads shall be surfaced with asphalt of cement concrete (h) 16-26% of urban construction maland to be adopted for road infrastructure (i) 100% of commune, commune cluster has auto road to the center, except for some communes with difficult terrain. * Incidentally, in column 1, National Expressway system b) Northern side, Other Expressway, of the subjected Development Plan by 2020, North Thang Long -Noi Bai road route is included (part of the subjected road route) - Guidance toward 2030 (a) Satisfy transportation demands of the society with high quality, of international standards, in a fast, smooth, safe manner, integrated with other modes, especially long-distance passenger trips and urban passenger trips (b) Compete and basically modernize road transport system, further perfect routes, expressways, urban 4-10

155 roads, ring roads Cumulative impact, secondary impact, etc. 1 (1) Indirect impact: such possibilities are normally analyzed through Vulnerability Analysis and Feasibility Analysis. For instance, 1) Change of meteorology and climate: (a) due to air pollution and/ or water contamination (b) extreme weather: possibility of exposure to harmful waste in terms of health 2) Change of outer air temperature in urban districts: on probability of interaction with ozone density However, due to limited data, time and budget for investigating enough proof of causation, the METI team decided to exclude above mentioned items, on the assumption that significant impact to the environment would not be caused by the Project. (2) Cumulative impact:possibility of impact to a same environmental element affected by numerous influential sources 1) Cumulative impact: Possibility of items such as ambient air pollution are taken into consideration (if overall impact from numerous projects, may become larger than the sum of individual impacts, the effect could extend to greater impact on human health, due to connection of specific pollutants from different development sources). As mentioned above, both Phap Van Cau Gie and Mai Dich Noi Bai Expressway both have many related development projects enlisted under the upper level plans, and therefore possibility of deeper cumulative impact from ambient air pollution can be assumed. Since in terms of air quality, such cumulative impacts presumably will cause additional impact on top of the individual projects impacts themselves, it can be stated that this item may be enlisted as one of the top priority environmental and social impact items in need of detailed investigation at the F/S stage. 2) Induced and indirect impacts: Road related projects, expressways among others, through improvement of accessibility may result in producing and accelerating other development activities in the future, such as parking & service areas and gas stations. 1 Source: 1. Methodological considerations to strategic environmental assessment, D. van Sraaten, based upon paper, Technical approaches to environmental assessment regarding integrated water management, Dick van Straaten, Katia Nageis and Rudolf Verheyen, May 1995, 2. Cumulative Effects Assessment, Peter Wathern, March 10,

156 Mai Dich Noi Bai Expressway connects to Noi Bai Nhat Tan Bridge route which is currently under development by Japanese ODA and the Noi Bai International Airport lies in between. On the other hand, at the south end of Phap Van Cau Gie expressway route, it is connected and extends to the Cau Gie Ninh Binh expressway which VEC has already committed for its development. Thus, due to increase in distance by utilizing vehicles, such induced and indirect impacts mentioned above, may be brought about and revealed more clearly than Mai Dich - Noi Bai expressway route. For this reason, future development of parking & service areas and gas stations may be recognized as cumulative impact in both cases. 3) Time-crowded or space-crowded impacts: Under this category of impact, multiple logging of trees for instance, is taken into consideration. Normally, such impacts occur due to lack of time for environmental recovery in between the impacts. Since rotation period of logging is rather too fast for trees to fully grow (to recover), as a result, it may cause to spoil productivity of the soils. With regard to Mai Dich Noi Bai expressway route, especially at nearby sections from the starting point, logging of row of trees along both sides of the road will be expected. However, if in case there are no other development projects that will multiply affect the same Right of Way (ROW) areas, though the subjected project is prospected, it will not be categorized as time-crowded or space-crowded impact in between impacts. On the other hand, in Phap Van Cau Gie expressway route, the scale of logging is expected to be very limited, and with the same reason as mentioned above, time-crowded or space-crowded impact cannot be recognized, at least by logging Future provision During this study, based upon requirement stipulated in JETRO Environmental and Social Consideration Guideline (issued in October, 2010), the Screening format of JICA New Environmental and Social Consideration Guideline (issued in April, 2010) was utilized for conducting the screening EIA procedure. The results of the screening on Phap Van Cau Gie Expressway route and Mai Dich Noi Bai Expressway route are as per appendix 1, 2 attached at the end of this chapter. Major points of the result of Screening, including the one of rapid assessment and the rated environmental category based on their results are as follows: (1) Phap Van Cau Gie Expressway (i) Reference was made to items 2, 3, 26 and 32 in particular, within the appendix of Decree No. 21/2008/ND-CP, stipulating project categorization and scale that must apply the EIA procedure, by 4-12

157 assumption of concern to the subjected Project. After site survey and public consultation with the districts concerned, it was concluded that EIA procedure needs to be applied to this road project. Especially with regard to item No. 32 (whereby for those road construction projects that requires resettlement of more than 1,000 residents, all such projects must be subjected to EIA), in accordance with result of rapid assessment alone, this project s condition was believed to coincide with the stipulation of the item in question. However, in phase I of this road project, since the existing 4 lane is expected to be maintained and involuntary resettlement is assumed not to occur, EIA can be considered unnecessary. Nonetheless, in accordance with the Vietnamese law and regulations, a procedure named EPC (Environmental Protection Commitment) shall be required instead of EIA (note: as explained in the previous paragraph, EIA procedure shall be required in phase II). (ii) Result of rapid assessment: (a) 289 residential or commercial structures to be totally demolished or to be affected for resettlement, (b) 65 residential or commercial structures to be half demolished or partially to-be-affected, and (c) approximately 1,310 residents (converted by an estimate of average of approximate 4.5 family members in one family 2 ) to be affected for resettlement. (iii) Taking note of above results, and based on the involuntary resettlement evaluation criteria of Operational Policy 4.12, World Bank stipulating if in case 200 or more residents are to be affected for involuntary resettlement it can be considered as significant impact, on which JETRO and JICA guideline were formulated, this project was judged to be included in environmental category A. (2) Mai Dich Noi Bai Expressway (i) Taking in concern the appendix of Decree No. 21/2008/ND-CP, in which according to the stipulated project categorization and scale EIA procedure must be applied to the subjected project, items 2, 3, 25, 26, 32 and 36 had the possibility of concern in terms of this road route project in particular. After investigation by site survey and public consultation to the districts of concern, it was concluded that EIA procedure needs to be applied to this project. Especially with regard to item No. 32 (whereby for those road construction projects that requires resettlement of more than 1,000 residents, all such projects must be subjected to EIA), in accordance with below result of rapid assessment, this project s condition was believed to coincide with the stipulation of the item in question. Also, with regard to item No. 25 regarding construction project of freeway or Level I, II and III highway, whereby all coinciding projects are subjected for EIA, the subjected road route in particular includes construction of a new road partially at just south of the Thang Long Bridge. In addition, in terms of item No. 31 regarding construction project of a permanent bridge, above road or/ and railway, whereby all such projects of more than 200 m (excluding approaches) will be subjected for EIA, the subjected expressway route matches such condition. Therefore, EIA 2 Average number of family members per household in the subjected district by interview through responsible personnel (of People s Committee at the Ward level) at to-be-affected Communes in the subjected road route 4-13

158 procedure will be a prerequisite for its commencement. (ii) Result of rapid assessment: (a) 1,814 residential or commercial structures to be totally demolished or to be affected for resettlement, (b) 323 residential or commercial structures to be half demolished or partially be affected, and (c) approximately 9,480 residents (converted by estimation of average of approximate 5 family members in one family 3 ) to be affected for resettlement. (iii) Taking note of above results, and based on the involuntary resettlement evaluation criteria of Operational Policy 4.12, World Bank stipulating if in case 200 or more residents are to be affected for involuntary resettlement it can be considered as significant impact, on which JETRO and JICA guideline were formulated, this project was judged to be included in environmental category A Environmental improvement effect due to implementation of the Project (1) Possibility of CO 2 Reduction Effect With regard to analysis of whether the subjected projects have CO 2 emission reduction effect or not, below CO 2 emission factor 4 used on another project (Vietnam GMS Ben Luc-Long Thanh Expressway Project) based on EURO 4 (exhaust gas standard) was applied and utilized. The CO 2 emission factor was applied to future traffic demand projection data, according to whether the existing road maintains its current status, or if the project was commenced. The said data was converted into estimate amounts of CO 2 emission, relative to each condition, and then comparative analysis was conducted. [CO 2 Emission Factor (based upon EURO 4 Standard)] (a) Passenger Car: (b) Bus: (c) Truck: CO 2 Emission, kg/km CO 2 Emission, kg/km CO 2 Emission, kg/km Formula: Traffic amount by type of vehicle, by section (Units) CO 2 Emission Factor Distance (respective section, km) 5 1) Phap Van Cau Gie route: First, in the Phap Van Cau Gie expressway route, as per shown in table and figure 4-6, in comparison to maintaining the current status (maintaining existing 4 lane road, or leaving current 3 Same as above 4 Source (original): Measuring the Invisible: Quantifying the Emission Reduction from Transport Solution, Jul. 31, 2008, EMBARQ, the World Resources Institute (WRI) Center for Sustainable Transport 5 Attached data (on traffic demand projection) shows the total traffic amount of all sections of each subjected route, however, the amount of CO 2 emission cannot be simply calculated by applying the above presented formula to the revealed traffic amount figures. The actual total amounts of CO 2 emission are calculated by adding the amount of CO 2 emission emitted at each section, by applying the formula to the traffic amount of each section. Thus, precaution must be made. The traffic demand projection figures of each section are omitted in this chapter, due to volume of data and to save paper. 4-14

159 lane but upgrading and converting it into an expressway in phase I) with commencing project converting it into a 6 lane expressway in phase II, taking account of also the traffic volume of frontage road (national road 1a), the result showed signs of rather competing amount of CO 2 emission in either case. The reason cannot be determined for sure, however, possibility can be said that according to type of vehicles, and increase in speed by conversion into an expressway, further fuel efficiency could be expected. 2) Mai Dich Noi Bai route: In terms of the Mai Dich Noi Bai expressway route, as per shown in table & figure 4-9, in comparison to maintaining the current status (maintaining existing 4 lanes road), with commencing the project by converting it into an 6 lane expressway, the result showed that throughout 2013 to 2030, the amount of traffic was constantly relatively high if the road maintained its current status. And likewise, since the amount of CO 2 emission constantly grows (and higher if the road maintained its current status), it is very hard to assume that environmental improvement effect could be expected (in terms of CO 2 emission) by commencement of the project. (2) Uncertainties with regard to CO 2 Emission Analysis Analysis regarding to this item is based upon below explained multiple aspects of uncertainties, therefore, it is wise to state in addition that its conclusion will not extend further than mere estimate of tendency based upon an assumptive case. Vietnam, at present, is implementing the EURO 2 exhaust gas standard from July It is said that the country is expecting to draft an implementation plan for introducing EURO 3 to 5 standard within 2011 (among them, EURO 3 is expected to be implemented around 2013 or 2014). However, according to survey by the Ministry of Natural Resources and Environment (MONRE) in June 8, 2010, approximately 30% of public buses and vans in Hanoi City, did not fulfill the current exhaust gas standard (EURO 2 standard applied by TCVN stipulation). In this study, especially by speculation of the Phap Van Cau Gie road route project s estimated period of end of construction (phase I: 2013-, phase II: 2017-), in order to draw a projection on the amount of CO 2 emission, it might be said that applying the EURO 4 standard for its analysis does have a certain amount of relevancy 6. But as mentioned above, the implementation period of tightening the exhaust gas standard are yet uncertain, and it cannot be denied that there are some extent of gap with the implementation of the standards and its effectiveness of reinforcement. There are many other factors of uncertainties that need to be pointed out, as follows: 6 According to UNEP s Sustainable Procurement Guidelines for Motor Vehicles Background Report published in 2008, in Vietnam, (at least) in terms of heavy diesel vans and engines of tractors, etc. for off-road usage, it was suggested at the point of publication of the Report, that EURO 3 will be implemented from 2008, EURO 4 from 2010 and the implementation period of EURO 5 was planned to be announced within

160 Aspects of uncertainties (a) Future prospect and progress in introducing fuel efficient vehicles, eco-cars with less CO2 emission, and electric cars into the market (b) Progress in implementation of more strict vehicle exhaust gas standards, and reinforced control of the regulation (c) Traffic control effect by toll fee ratings (d) Influence to amount of traffic, due to progress of economic growth in surrounding districts (e) Fluctuation of the number of passengers at Noi Bai Airport (f) This particular analysis did not extend up to the point, where the change of traffic speed at the subjected road route may be accounted to. Therefore, the current analysis does not reflect the fluctuation of CO 2 emission, due to increasing efficiency of fuel. (g) Due to limited analysis through acquired data, the current analysis does not extend up to the point of analyzing in a district (second dimension) level, as opposed to just by analysis of the subjected road route (linear) level. Due to conversion of the subjected road into an expressway, the amount of traffic on the frontage roads and in surrounding districts could be eased, in contrast to expected concentration of traffic to the subjected road routes. 4-16

161 4-17 Table 4-4 Phap Van Cau Gie Expressway (maintaining 4 lane), future CO 2 emission provision Table 4-4 Phap Van - Cau Gie Expressway (maintaining 4 lane), future CO 2 emission provision (1) Viaduct part (maintaining 4 lane, Phase I: convert to expressway and improvement) Pick-up & Passenger car Small Bus Large Bus Medium sized Truck Heavy Truck Trailer Motor bike Tot. CO 2 4WD Truck emission, of all Year Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic PCU CO 2 Emission kind units kg units kg units kg units kg units kg units kg units kg units PCU kg kg 2010 N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A ,227 31,015 5,946 27,584 7,135 33,101 7,285 29,417 47, ,845 11,062 44,670 7,400 29,884 53,932 16,180 15, , ,445 33,025 6,388 29,636 7,666 35,564 7,803 31,509 51, ,556 11,848 47,846 7,926 32,009 57,427 17,228 16, , ,807 35,165 6,863 31,841 8,236 38,210 8,357 33,749 54, ,242 12,691 51,248 8,490 34,285 61,148 18,345 17, , ,322 37,444 7,374 34,210 8,849 41,052 8,952 36,148 58, ,973 13,593 54,892 9,094 36,722 65,111 19,533 18, , ,999 39,870 7,923 36,756 9,507 44,107 9,588 38,719 62, ,822 14,560 58,795 9,740 39,333 69,330 20,799 19, , ,850 42,454 8,512 39,490 10,215 47,388 10,270 41,471 67, ,868 15,595 62,975 10,433 42,130 73,823 22,147 20, , ,886 45,205 9,145 42,428 10,974 50,914 11,000 44,420 72, ,198 16,703 67,453 11,174 45,125 78,606 23,582 22, , ,119 48,134 9,826 45,585 11,791 54,702 11,782 47,578 77, ,902 17,891 72,249 11,969 48,334 83,700 25,110 23, , ,675 49,507 9,995 46,415 11,994 55,698 12,328 49,867 80, ,909 18,720 75,725 12,523 50,659 85,449 25,635 24, , ,284 50,922 10,168 47,260 12,201 56,712 12,900 52,271 84, ,665 19,589 79,374 13,105 53,101 87,243 26,173 24, , ,949 52,382 10,344 48,121 12,412 57,746 13,501 54,795 88, ,210 20,501 83,207 13,715 55,665 89,083 26,725 25, , ,672 53,888 10,523 48,999 12,627 58,799 14,130 57,445 92, ,585 21,457 87,232 14,355 58,357 90,970 27,291 25, , ,454 55,442 10,705 49,894 12,846 59,872 14,791 60,229 96, ,832 22,460 91,458 15,026 61,185 92,905 27,871 26, , ,298 57,044 10,891 50,805 13,069 60,966 15,484 63, , ,997 23,512 95,898 15,729 64,154 94,890 28,467 26, , ,207 58,698 11,081 51,734 13,297 62,081 16,211 66, , ,126 24, ,560 16,468 67,274 96,925 29,078 27, , ,183 60,404 11,274 52,681 13,528 63,217 16,973 69, , ,270 25, ,458 17,243 70,550 99,013 29,704 27, , ,228 62,164 11,470 53,645 13,764 64,374 17,774 72, , ,481 26, ,603 18,056 73, ,154 30,346 28, , ,346 63,981 11,671 54,628 14,005 65,554 18,614 76, , ,814 28, ,008 18,909 77, ,350 31,005 29, ,139 Tot. amount of CO2 emission 12,378,187 (2) National Road 1a (traffic demend provision and estimated CO2 emission of frontage/ national road) Year Pick-up & Passenger car Small Bus Large Bus Trailer Motor bike Tot. CO 2 4WD Truck Medium sized Truck Heavy Truck emission, of all Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic PCU CO 2 Emission kind units kg units kg units kg units kg units kg units kg units kg units PCU kg kg 2010 N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A ,374 21,526 7,600 11,007 9,120 13,208 6,807 9,238 44,627 60,560 10,337 14,028 6,916 9,385 63,853 19,156 5, , ,324 22,921 8,165 11,826 9,798 14,191 7,291 9,895 47,800 64,866 11,072 15,025 7,407 10,052 67,991 20,397 6, , ,593 24,406 8,773 12,705 10,527 15,246 7,810 10,598 51,198 69,478 11,860 16,094 7,934 10,767 72,397 21,719 6, , ,205 25,988 9,425 13,651 11,310 16,381 8,365 11,352 54,839 74,418 12,703 17,238 8,498 11,532 77,088 23,126 6, , ,179 27,672 10,126 14,666 12,152 17,600 8,960 12,159 58,738 79,709 13,606 18,464 9,102 12,352 82,083 24,625 7, , ,541 29,465 10,880 15,757 13,056 18,909 9,597 13,023 62,914 85,376 14,573 19,776 9,749 13,230 87,402 26,221 7, , ,316 31,374 11,689 16,930 14,027 20,316 10,279 13,949 67,387 91,446 15,609 21,182 10,443 14,171 93,066 27,920 8, , ,529 33,407 12,559 18,189 15,071 21,827 11,010 14,941 72,178 97,948 16,719 22,689 11,185 15,178 99,097 29,729 8, , ,669 32,655 12,128 17,425 14,554 20,910 11,286 15,512 73, ,691 17,139 23,555 11,466 15,758 97,334 29,200 8, , ,177 32,007 11,741 16,740 14,089 20,088 11,580 16,111 75, ,618 17,584 24,465 11,764 16,367 95,849 28,755 8, , ,030 31,456 11,393 16,125 13,671 19,350 11,891 16,740 77, ,737 18,057 25,419 12,080 17,005 94,615 28,385 8, , ,208 30,993 11,078 15,572 13,294 18,686 12,221 17,399 80, ,059 18,557 26,420 12,415 17,675 93,606 28,082 8, , ,692 30,613 10,795 15,075 12,954 18,090 12,569 18,090 82, ,591 19,086 27,470 12,769 18,377 92,801 27,840 7, , ,469 30,311 10,539 14,627 12,646 17,553 12,938 18,815 84, ,345 19,646 28,571 13,143 19,114 92,182 27,654 7, , ,526 30,080 10,307 14,225 12,368 17,070 13,326 19,576 87, ,330 20,236 29,726 13,538 19,886 91,731 27,519 7, , ,853 29,918 10,097 13,863 12,116 16,635 13,736 20,373 90, ,557 20,859 30,937 13,954 20,697 91,437 27,431 7, , ,442 29,821 9,907 13,537 11,888 16,244 14,169 21,209 92, ,039 21,515 32,207 14,393 21,546 91,288 27,386 7, , ,287 29,786 9,735 13,245 11,682 15,893 14,624 22,086 95, ,786 22,206 33,538 14,856 22,437 91,273 27,382 7, ,206 Tot. amount of CO2 emission 4,079,801

162 4-18 (3) Total amount of Viaduct and Frontage road Passenger car Small Bus Large Bus Pick-up & Medium sized Truck Heavy Truck Trailer Motor bike Tot. CO 2 emission, of all Year 4WD Truck Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic PCU CO 2 Emission kind units kg units kg units kg units kg units kg units kg units kg units PCU kg kg 2010 N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A ,601 52,541 13,545 38,591 16,254 46,309 14,092 38,655 92, ,405 21,399 58,698 14,316 39, ,786 35,336 20, , ,769 55,946 14,553 41,462 17,464 49,754 15,094 41,403 98, ,422 22,921 62,872 15,334 42, ,418 37,625 22, , ,400 59,571 15,636 44,547 18,763 53,456 16,167 44, , ,720 24,550 67,342 16,424 45, ,545 40,064 23, , ,527 63,432 16,799 47,861 20,159 57,433 17,317 47, , ,391 26,296 72,130 17,592 48, ,199 42,660 25, , ,178 67,542 18,049 51,422 21,659 61,706 18,548 50, , ,530 28,165 77,258 18,842 51, ,413 45,424 26, , ,391 71,919 19,392 55,248 23,270 66,297 19,867 54, , ,244 30,168 82,752 20,182 55, ,225 48,367 28, , ,202 76,579 20,835 59,358 25,002 71,230 21,279 58, , ,645 32,313 88,635 21,617 59, ,672 51,502 30, , ,648 81,541 22,385 63,774 26,862 76,529 22,792 62, , ,851 34,610 94,937 23,154 63, ,797 54,839 32, , ,344 82,162 22,123 63,840 26,548 76,608 23,614 65, , ,599 35,859 99,280 23,989 66, ,783 54,835 32, , ,461 82,929 21,909 64,000 26,290 76,800 24,480 68, , ,283 37, ,839 24,869 69, ,092 54,928 33, , ,979 83,838 21,736 64,246 26,083 77,095 25,392 71, , ,948 38, ,626 25,795 72, ,698 55,109 33, , ,880 84,881 21,601 64,571 25,921 77,485 26,351 74, , ,644 40, ,652 26,769 76, ,576 55,373 33,762 1,015, ,146 86,055 21,500 64,968 25,800 77,962 27,360 78, , ,424 41, ,929 27,794 79, ,706 55,712 34,162 1,053, ,767 87,355 21,430 65,433 25,716 78,519 28,421 81, , ,342 43, ,469 28,872 83, ,071 56,121 34,592 1,092, ,733 88,778 21,388 65,959 25,665 79,151 29,537 85, , ,456 44, ,286 30,006 87, ,656 56,597 35,050 1,134, ,036 90,322 21,371 66,543 25,645 79,852 30,710 89, , ,827 46, ,395 31,197 91, ,450 57,135 35,536 1,178, ,670 91,985 21,377 67,182 25,653 80,619 31,942 94, , ,519 48, ,809 32,449 95, ,442 57,733 36,048 1,224, ,633 93,766 21,406 67,873 25,687 81,447 33,237 98, , ,600 50, ,546 33, , ,623 58,387 36,587 1,273,344 Tot. amount of CO2 emission 16,457,988 Table 4-5 Phap Van Cau Gie Expressway route (phase II: convert into 6 lane expressway), future CO 2 emission projection Table 4-5 Phap Van - Cau Gie Expressway route (phase II: convert into 6 lane expressway), future CO 2 emission projection (1) Viaduct part Pick-up & Passenger car Small Bus Large Bus Medium sized Truck Heavy Truck Trailer Motor bike Tot. CO 2 4WD Truck emission, of all Year Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic PCU CO 2 Emission kind units kg units kg units kg units kg units kg units kg units kg units PCU kg kg 2010 N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A ,499 63,705 12,561 60,110 15,073 72,132 2,108 8,026 13,817 52,613 3,201 12,187 2,141 8, , ,003 67,833 13,495 64,583 16,194 77,499 2,258 8,596 14,800 56,354 3,428 13,054 2,293 8, , ,798 72,229 14,499 69,388 17,399 83,265 2,418 9,208 15,852 60,360 3,672 13,982 2,456 9, , ,904 76,909 15,578 74,550 18,693 89,460 2,590 9,862 16,979 64,652 3,933 14,976 2,631 10, , ,995 94,536 18,092 86,449 21, ,738 5,972 24,311 39, ,370 9,068 36,916 6,067 24,697 84,902 25,471 23, , , ,662 19,438 92,880 23, ,456 6,396 26,039 41, ,702 9,713 39,541 6,498 26,453 90,404 27,121 25, , , ,185 20,884 99,791 25, ,749 6,851 27,891 44, ,838 10,404 42,352 6,960 28,333 96,262 28,879 27, , , ,131 22, ,215 26, ,658 7,338 29,874 48, ,838 11,143 45,364 7,455 30, ,500 30,750 28, , , ,752 22, ,798 26, ,958 7,953 32,416 52, ,506 12,077 49,224 8,079 32, ,317 31,595 29, , , ,390 21, ,405 26, ,286 8,629 35,208 56, ,810 13,103 53,465 8,766 35, ,223 32,467 30, , , ,045 21, ,035 26, ,642 9,371 38,277 61, ,927 14,230 58,124 9,520 38, ,223 33,367 31, , , ,715 21, ,688 25, ,025 10,188 41,652 66, ,050 15,471 63,249 10,350 42, ,320 34,296 32, , , ,403 21, ,363 25, ,436 11,087 45,365 72, ,395 16,837 68,888 11,263 46, ,515 35,255 33, , , ,107 21,058 99,060 25, ,872 12,079 49,455 79, ,204 18,342 75,098 12,270 50, ,814 36,244 33, , , ,828 20,842 97,779 25, ,335 13,172 53,961 86, ,743 20,001 81,941 13,381 54, ,218 37,265 34, , , ,566 20,631 96,520 24, ,823 14,378 58,929 94, ,312 21,833 89,485 14,606 59, ,732 38,320 35, , , ,322 20,423 95,281 24, ,337 15,709 64, , ,241 23,855 97,807 15,959 65, ,359 39,408 36,753 1,007, , ,094 20,219 94,063 24, ,876 17,181 70, , ,901 26, ,994 17,454 71, ,103 40,531 37,747 1,066,713 Tot. amount of CO2 emission 12,294,990

163 4-19 (2) National road 1a (frontage road) Passenger car Small Bus Large Bus Pick-up & Medium sized Truck Heavy Truck Trailer Motor bike Tot. CO 2 emission, of all Year Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic PCU CO 2 Emission kind units kg units kg units kg units kg units kg units kg units kg units PCU kg kg 2010 N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A ,848 20,687 13,051 17,666 15,662 21,199 12,656 16,083 82, ,433 19,218 24,422 12,857 16, ,464 78,739 19, , ,698 22,028 13,908 18,834 16,689 22,601 13,539 17,208 88, ,806 20,559 26,130 13,754 17, ,472 83,842 21, , ,863 23,455 14,821 20,080 17,785 24,096 14,483 18,411 94, ,695 21,993 27,958 14,713 18, ,582 89,275 22, , ,362 24,975 15,794 21,408 18,953 25,689 15,494 19, , ,136 23,528 29,913 15,740 20, ,865 95,059 24, , ,066 7,594 1,286 2,830 1,543 3,396 11,334 14,040 74,299 92,040 17,210 21,320 11,514 14,263 72,527 21,758 6, , ,236 8,086 1,382 3,041 1,658 3,649 12,140 15,038 79,582 98,584 18,434 22,836 12,332 15,277 77,227 23,168 6, , ,483 8,610 1,485 3,267 1,782 3,920 13,003 16,107 85, ,593 19,745 24,459 13,209 16,363 82,231 24,669 6, , ,810 9,168 1,595 3,510 1,914 4,212 13,927 17,253 91, ,101 21,149 26,199 14,148 17,527 87,560 26,268 7, , ,215 9,690 1,705 3,721 2,046 4,465 14,096 17,764 92, ,456 21,405 26,976 14,320 18,046 86,537 25,961 7, , ,907 10,294 1,847 3,981 2,216 4,777 14,285 18,308 93, ,022 21,693 27,802 14,512 18,599 85,641 25,692 7, , ,974 11,001 2,030 4,303 2,436 5,163 14,496 18,886 95, ,810 22,013 28,679 14,727 19,186 84,869 25,461 7, , ,557 11,839 2,272 4,708 2,727 5,649 14,730 19,500 96, ,831 22,368 29,611 14,964 19,809 84,223 25,267 7, , ,891 12,856 2,598 5,225 3,117 6,270 14,987 20,151 98, ,099 22,757 30,599 15,224 20,471 83,702 25,111 7, , ,416 14,125 3,047 5,900 3,656 7,080 15,267 20, , ,625 23,183 31,648 15,509 21,172 83,310 24,993 7, , ,010 15,786 3,685 6,803 4,422 8,164 15,573 21, , ,424 23,647 32,759 15,820 21,916 83,049 24,915 7, , ,551 18,114 4,620 8,046 5,545 9,655 15,904 22, , ,510 24,151 33,937 16,157 22,704 82,923 24,877 7, , ,215 21,687 6,040 9,813 7,248 11,775 16,263 23, , ,899 24,695 35,186 16,521 23,539 82,937 24,881 7, , ,532 27,774 8,269 12,414 9,922 14,896 16,649 24, , ,608 25,282 36,508 16,913 24,424 83,097 24,929 7, ,962 Tot. amount of CO2 emission 4,241,198 (3) Sum of viaduct and frontage road part Passenger car Small Bus Large Bus Pick-up & Medium sized Truck Heavy Truck Trailer Motor bike Tot. CO 2 Year 4WD Truck emission, of all Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic PCU CO 2 Emission kind units kg units kg units kg units kg units kg units kg units kg units PCU kg kg 2010 N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A ,347 84,392 25,612 77,777 30,734 93,332 14,763 24,109 96, ,046 22,419 36,610 14,998 24, ,464 78,739 19, , ,701 89,861 27,403 83,417 32, ,100 15,796 25, , ,159 23,987 39,184 16,047 26, ,472 83,842 21, , ,661 95,684 29,320 89,467 35, ,361 16,901 27, , ,055 25,665 41,939 17,170 28, ,582 89,275 22, , , ,884 31,372 95,958 37, ,149 18,084 29, , ,788 27,461 44,889 18,371 30, ,865 95,059 24, , , ,131 19,378 89,279 23, ,134 17,306 38, , ,410 26,279 58,236 17,580 38, ,430 47,229 30, , , ,749 20,820 95,921 24, ,105 18,536 41, , ,286 28,147 62,377 18,830 41, ,631 50,289 31, , , ,796 22, ,058 26, ,669 19,854 43, , ,432 30,148 66,812 20,169 44, ,494 53,548 34, , , ,299 24, ,725 28, ,870 21,265 47, , ,939 32,292 71,562 21,603 47, ,060 57,018 36, , , ,443 23, ,519 28, ,423 22,049 50, , ,962 33,482 76,200 22,399 50, ,854 57,556 36, , , ,684 23, ,386 28, ,063 22,914 53, , ,832 34,795 81,266 23,278 54, ,864 58,159 37, , , ,045 23, ,338 28, ,806 23,868 57, , ,737 36,243 86,803 24,246 58, ,092 58,828 38, , , ,555 23, ,396 28, ,675 24,918 61, , ,881 37,838 92,859 25,313 62, ,542 59,563 39,321 1,014, , ,259 23, ,588 28, ,706 26,074 65, , ,494 39,594 99,487 26,488 66, ,218 60,365 40,180 1,058, , ,232 24, ,961 28, ,953 27,346 70, , ,829 41, ,746 27,780 71, ,124 61,237 41,075 1,107, , ,615 24, ,582 29, ,499 28,744 75, , ,167 43, ,700 29,200 76, ,267 62,180 42,007 1,161, , ,681 25, ,565 30, ,478 30,282 81, , ,822 45, ,422 30,762 82, ,655 63,197 42,978 1,222, , ,009 26, ,094 31, ,112 31,972 87, , ,140 48, ,993 32,479 88, ,296 64,289 43,990 1,291, , ,868 28, ,477 34, ,772 33,830 94, , ,509 51, ,502 34,367 96, ,200 65,460 45,043 1,371,675 Tot. amount of CO2 emission 16,536,187

164 4-20 Table 4-6 Phap Van Cau Gie Expressway (CO 2 emission: comparison of maintaining current lane to implementation of phase II) Yr. CO 2 emission (Kg) Maintaining Commencing , , , , , , , , , , , , , , , , , , , , , , ,015,871 1,014, ,053,380 1,058, ,092,944 1,107, ,134,638 1,161, ,178,542 1,222, ,224,746 1,291, ,273,344 1,371,675 1,600,000 1,400,000 1,200,000 1,000, , , , , Maintaining Commencing

165 4-21 Table 4-7 Mai Dich Noi Bai Expressway route (maintaining existing 4 lane), future provision of CO 2 emission Table 4-7 Mai Dich - Noi Bai Expressway route (maintaining existing 4 lane), future provision of CO 2 emission Pick-up & Passenger car Small Bus Large Bus Medium sized Truck Heavy Truck Trailer Motor bike Tot. CO 2 4WD Truck emission, of all Year Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic PCU CO 2 Emission kind units kg units kg units kg units kg units kg units kg units kg units PCU kg kg 2010 N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A ,557 35, , , ,132 88, ,371 88,424 26,040 15,741 17,396 10,881 11,206 5, , ,595 18, , ,543 37, , , ,190 94, ,819 94,294 27,977 16,912 18,690 11,690 12,032 5, , ,483 19, , ,683 40, , , , , , ,555 30,059 18,170 20,080 12,560 12,919 6, , ,012 21, , ,059 43, , , , , , ,233 32,295 19,522 21,574 13,494 13,872 6, , ,223 22, , ,763 46, , , , , , ,356 34,698 20,975 23,180 14,498 14,895 7, , ,161 23, , ,889 49, , , , , , ,954 37,280 22,535 24,904 15,577 15,994 7, , ,872 25, , ,540 53, , , , , , ,058 40,053 24,212 26,757 16,736 17,173 8, , ,407 27, , ,826 57, , , , , , ,702 43,033 26,013 28,748 17,981 18,440 8, , ,819 28, , ,829 57, , , , , , ,892 41,059 24,749 27,474 17,119 17,679 8, , ,527 27, , ,295 56, , , , , , ,185 39,196 23,560 26,273 16,307 16,966 8, , ,756 26, , ,204 56, , , , , , ,583 37,438 22,440 25,139 15,543 16,296 7, , ,482 25, , ,538 56, , , , , , ,089 35,778 21,387 24,070 14,823 15,668 7, , ,683 24, , ,282 56, , , , , , ,706 34,210 20,395 23,060 14,144 15,080 7, , ,337 23, , ,422 56, , , , , , ,436 32,730 19,462 22,108 13,505 14,528 7, , ,427 22, , ,943 56, , , , , , ,285 31,332 18,583 21,208 12,903 14,011 7, , ,935 22, , ,833 56, , , , , , ,255 30,012 17,756 20,360 12,335 13,527 6, , ,846 21, , ,082 56, , , , , , ,352 28,765 16,977 19,558 11,800 13,074 6, , ,145 20, , ,679 56, , , , , , ,579 27,587 16,244 18,802 11,296 12,651 6, , ,821 20, ,899 Tot. amount of CO2 emission 12,834,519 Table 4-8 Mai Dich Noi Bai Expressway route (project commencement, including viaduct), future CO 2 emission projection Table 4-8 Mai Dich - Noi Bai Expressway route (project commencement, including viaduct), future CO 2 emission projection (1) Viaduct part Pick-up & Passenger car Small Bus Large Bus Medium sized Truck Heavy Truck Trailer Motor bike Tot. CO 2 4WD Truck emission, of all Year Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic PCU CO 2 Emission kind units kg units kg units kg units kg units kg units kg units kg units PCU kg kg 2010 N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A ,846 28,825 8,551 30,131 6,841 24,105 2,188 5,940 21,881 59,399 1,459 3,960 1,250 3, , ,587 19, , ,623 30,693 9,187 32,273 7,350 25,898 2,344 6,362 23,437 63,622 1,562 4,241 1,339 3, , ,928 20, , ,579 32,682 9,871 34,781 7,897 27,825 2,510 6,815 25,104 68,146 1,674 4,543 1,434 3, , ,939 22, , ,727 34,800 10,605 37,369 8,484 29,895 2,689 7,299 26,888 72,991 1,793 4,866 1,536 4, , ,664 23, , ,079 37,055 11,394 40,149 9,115 32,119 2,880 7,818 28,800 78,180 1,920 5,212 1,646 4, , ,149 25, , ,648 39,456 12,242 43,136 9,794 34,509 3,085 8,374 30,848 83,739 2,057 5,583 1,763 4, , ,443 26, , ,448 42,013 13,153 46,346 10,522 37,077 3,304 8,969 33,041 89,693 2,203 5,980 1,888 5, , ,598 28, , ,495 44,735 14,131 49,794 11,305 39,835 3,539 9,607 35,390 96,070 2,359 6,405 2,022 5, , ,670 30, , ,697 47,440 14,176 46,881 11,341 39,904 3,657 9,996 36,573 99,964 2,438 6,664 2,090 5, , ,077 28, , ,245 50,340 14,228 49,988 11,382 39,990 3,784 10,418 37, ,175 2,523 6,945 2,162 5, , ,021 27, , ,175 53,434 14,288 50,116 11,430 40,093 3,920 10,873 39, ,729 2,613 7,249 2,240 6, , ,478 26, , ,528 56,798 14,355 50,266 11,484 40,213 4,066 11,365 40, ,653 2,711 7,577 2,324 6, , ,427 25, , ,349 60,394 14,430 50,438 11,544 40,351 4,223 11,898 42, ,979 2,815 7,932 2,413 6, , ,845 24, , ,689 64,263 14,513 50,634 11,611 40,507 4,392 12,474 43, ,739 2,928 8,316 2,509 7, , ,714 23, , ,609 68,431 14,605 50,853 11,684 40,682 4,573 13,097 45, ,970 3,048 8,731 2,613 7, , ,016 23, , ,172 72,923 14,706 51,097 11,765 40,877 4,767 13,771 47, ,711 3,178 9,181 2,724 7, , ,734 22, , ,456 77,772 14,816 51,366 11,853 41,093 4,976 14,500 49, ,005 3,317 9,667 2,843 8, , ,854 21, , ,545 83,009 14,935 51,661 11,948 41,329 5,201 15,290 52, ,898 3,467 10,193 2,972 8, , ,360 20, ,955 Tot. amount of CO2 emission 5,102,295

166 4-22 (2) Frontage road part Passenger car Small Bus Large Bus Pick-up & Medium sized Truck Heavy Truck Trailer Motor bike Tot. CO 2 emission, of all Year 4WD Truck Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic PCU CO 2 Emission kind units kg units kg units kg units kg units kg units kg units kg units PCU kg kg 2010 N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A ,808 31,921 11,343 6,403 9,074 5,122 21,664 14, , ,065 14,443 9,804 12, , , ,587 19, , ,477 33,989 12,186 6,880 9,749 5,504 23,204 15, , ,521 15,469 10,501 13, , , ,928 20, , ,161 36,192 13,093 7,391 10,475 5,913 24,854 16, , ,721 16,569 11,248 14, , , ,939 22, , ,927 38,537 14,067 7,941 11,254 6,353 26,621 18, , ,717 17,747 12,048 15, , , ,664 23, , ,844 41,034 15,114 8,532 12,091 6,826 28,514 19, , ,566 19,009 12,904 16, , , ,149 25, , ,986 43,693 16,238 9,167 12,991 7,334 30,541 20, , ,329 20,361 13,822 17, , , ,443 26, , ,434 46,525 17,466 9,849 13,957 7,879 32,713 22, , ,070 21,808 14,805 18, , , ,598 28, , ,272 49,540 18,745 10,582 14,996 8,465 35,038 23, , ,859 23,359 15,857 20, , , ,670 30, , ,577 46,461 17,719 10,078 14,176 8,062 35,698 24, , ,767 23,798 16,251 20, , , ,077 28, , ,843 43,613 16,784 9,617 13,427 7,694 36,389 24, , ,906 24,259 16,660 20, , , ,021 27, , ,899 40,977 15,929 9,197 12,743 7,358 37,113 25, , ,284 24,747 17,086 21, , , ,478 26, , ,593 38,536 15,150 8,815 12,120 7,052 37,869 26, , ,906 25,246 17,527 21, , , ,427 25, , ,781 36,274 14,439 8,466 11,551 6,773 38,659 26, , ,780 25,773 17,985 22, , , ,845 24, , ,339 34,177 13,791 8,149 11,033 6,519 39,482 27, , ,913 26,322 18,461 22, , , ,714 23, , ,151 32,232 13,201 7,861 10,561 6,289 40,340 28, , ,312 26,893 18,954 23, , , ,016 23, , ,111 30,427 12,664 7,600 10,131 6,080 41,233 29, , ,987 27,489 19,466 23, , , ,734 22, , ,123 28,752 12,176 7,364 9,741 5,891 42,161 29, , ,945 28,107 19,996 24, , , ,854 21, , ,100 27,196 11,734 7,150 9,387 5,720 43,125 30, , ,196 28,750 29,546 24, , , ,360 20, ,128 Tot. amount of CO2 emission 12,586,125 (3) Sum of Viaduct and Frontage road Passenger car Small Bus Large Bus Pick-up & Medium sized Truck Heavy Truck Trailer Motor bike Tot. CO 2 emission, of all Year 4WD Truck Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic CO 2 Emission Traffic PCU CO 2 Emission kind units kg units kg units kg units kg units kg units kg units kg units PCU kg kg 2010 N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A ,654 60,746 19,894 36,534 15,915 29,227 23,852 20, , ,464 15,902 13,764 13, ,242 1,063, ,174 38, , ,100 64,682 21,373 39,153 17,099 31,402 25,548 22, , ,143 17,031 14,742 14, ,041 1,132, ,856 41, , ,740 68,874 22,964 42,172 18,372 33,738 27,364 23, , ,867 18,243 15,791 15, ,970 1,206, ,878 44, , ,654 73,337 24,672 45,310 19,738 36,248 29,310 25, , ,708 19,540 16,914 16, ,103 1,284, ,328 46, , ,923 78,089 26,508 48,681 21,206 38,945 31,394 27, , ,746 20,929 18,116 17, ,528 1,367, ,298 50, , ,634 83,149 28,480 52,303 22,785 41,843 33,626 29, , ,068 22,418 19,405 19, ,318 1,456, ,886 53, , ,882 88,538 30,619 56,195 24,479 44,956 36,017 31, , ,763 24,011 20,785 20, ,598 1,550, ,196 56, , ,767 94,275 32,876 60,376 26,301 48,300 38,577 33, , ,929 25,718 22,262 22, ,458 1,651, ,340 60,392 1,012, ,274 93,901 31,895 56,959 25,517 47,966 39,355 34, , ,731 26,236 22,915 22, ,345 1,600, ,154 57,918 1,024, ,088 93,953 31,012 59,605 24,809 47,684 40,173 35, , ,081 26,782 23,605 22, ,569 1,553, ,042 55,596 1,043, ,074 94,411 30,217 59,313 24,173 47,451 41,033 36, , ,013 27,360 24,335 23, ,130 1,509, ,956 53,418 1,061, ,121 95,334 29,505 59,081 23,604 47,265 41,935 37, , ,559 27,957 25,104 23, ,066 1,469, ,854 51,378 1,081, ,130 96,668 28,869 58,904 23,095 47,124 42,882 38, , ,759 28,588 25,917 24, ,345 1,432, ,690 49,468 1,103, ,028 98,440 28,304 58,783 22,644 47,026 43,874 40, , ,652 29,250 26,777 25, ,983 1,398, ,428 47,682 1,126, , ,663 27,806 58,714 22,245 46,971 44,913 41, , ,282 29,941 27,685 25, ,196 1,366, ,032 46,016 1,152, , ,350 27,370 58,697 21,896 46,957 46,000 42, , ,698 30,667 28,647 26, ,420 1,338, ,468 44,462 1,179, , ,524 26,992 58,730 21,594 46,984 47,137 44, , ,950 31,424 29,663 26, ,207 1,312, ,708 43,018 1,208, , ,205 26,669 58,811 21,335 47,049 48,326 46, , ,094 32,217 39,739 27, ,399 1,289, ,720 41,676 1,249,083 Tot. amount of CO2 emission 17,688,420

167 4-23 Table 4-9 Mai Dich Noi ai Expressway (CO 2 emission: comparison of maintaining current lane to implementation of project) Yr. CO 2 emission (Kg) Maintaining Commencing , , , , , , , , , , , , , , ,316 1,012, ,354 1,024, ,047 1,043, ,397 1,061, ,412 1,081, ,091 1,103, ,448 1,126, ,494 1,152, ,241 1,179, ,703 1,208, ,899 1,249,083 1,400,000 1,200,000 1,000, , , , , Maintaining Commencing

168 Etc. Social Environmenta Natural Env. Environmental Pollution Affects on environmental and social aspects due to implementation of the Project During this study, in accordance with requirement of JETRO Environmental and Social Consideration Guideline, Environmental Checklist (on Roads, Bridges) format of the JICA New Environmental and Social Guideline was utilized on the projects (Phap Van Cau Gie Expressway, Mai Dich Noi Bai Expressway) for screening out of presumed environmental and social impact items. The results of preliminary environmental review (at the Pre-F/S stage) based upon this checklist are as per appendix 3, 4. For the detailed proof for enlisting of environmental and social impact items (or reasons why some items should be omitted), and for probable tentative mitigation measures, please refer to these attached papers. Summary of screened out environmental and social impact items are as follows: Table 4-10 Enlisting of assumed Environmental and Social Impact Items Env. & Social Impact Items Phap Van - Cau Gie Mai Dich - Noi Bai route route Air quality Water quality Soil quality Waste Noise & Vibration Ground subsidence Odor Bottom sediment Traffic accident Protected area Ecosystem, flora & fauna Hydrology Topography & geology Involuntary resettlement Livelihood, employment and local economy Social capital, social institutions such as local decision-making bodies, etc. Existing social infrastructure & service Indeginous people, minority groups Socially vulnerable people Misdistribution of damage & benefit, local disputes Gender, Children's rights Cultural heritage Landscape Water rights, water use right, right of commons Working environment Risks & hazards (including infectious diseases such as HIV AIDS, etc.) Global warming Others (ground, underground facilities)* Note(*): including cumulative impact, other than global warming, such as possible future development of housing, gas stations, and parking, service areas. 4-24

169 4.1.7 Opening of Public Consultations In this study, public consultation was not necessarily required under the JETRO Environmental and Social Consideration Guideline. However, owing to the fact that Vietnam is a country that has already implemented the Strategic Environmental Assessment (SEA) system which requires EIA at an early stage of policy, program and plan level, where by consultation with to-be-affected residents on anticipated issues, such as environmental and social impact items could be screened out in a more concrete fashion, partial public consultations were conducted with to-be-affected Communes (people s committee: residential authority at the ward level) (by commissioning a local consultant, namely, EPC Co., Ltd. for its implementation). (1) Objective and Method Since the public consultation was conducted at the Pre-F/S stage, endeavors were made to secure transparency of information, in order to make it easier for the affected residents to picture the situation, although the contents of the projects outlines were still tentative. Information was therefore, disclosed to the public. First of all, as for its objective, (a) public consultation was conducted at an early stage of project formation (in consistency with the Vietnamese SEA related laws and regulations), and (b) it was mainly intended to reflect anticipated issues raised during the public consultations, for screening out possible environmental and social impact items during the course of Study. As for the method, a Vietnamese version of (a) tentative outline of each project; of the Phap Van Cau Gie expressway and Mai Dich Noi Bai expressway route (based on the tentative content at the Pre-F/S stage), and (b) a tentative list drafted by the METI study team on the assumed environmental and social impact, based on result of site surveys conducted prior to the public consultations (revealing it only as a brainstorming purposes, by setting condition that the list will be revised later on and reflecting the result of the public consultations) were handed out. In reference to these materials, the METI Study team concentrated on capturing the anticipated issues through implementation of the projects, and risen from the affected residents side (however, due to still being at a Pre-F/S stage, the above mentioned a and b materials were all re-collected at the end of each consultations). (2) Result of public consultations, addressed to affected Communes at the Phap Van Cau Gie Expressway route (a) Period of implementation: Oct 13 (Wed.) 20 (Wed.), 2010 (b) Subjected Districts and Communes: Communes of Tu Hiep, Tu Hiep, Ngu Hiep, Lien Ninh, Thuong Tin, Ha Noi, Van Binh, Hieu, Le Loi, Van Diem, Thang Loi, Van Tu, Duyen Thai, Thang Tri, Nam Phong, Nam Trieu, Phu Tien, Dai Xuyen, Phu Xuyen (Attendants: each Commune representatives or responsible person in charge. Vice President of Phu Xuyen District, local 4-25

170 environmental authority, officials in charge of Land clearance and compensation, Planning and finance, Urban management, Construction Supervision) (c) Anticipated issues on environmental and social impact raised by above mentioned stakeholders Possible impact to residential and commercial structures, agricultural fields, fish ponds (for aquaculture), cultural heritages (numerous pagodas <eastern style tower>, temples, martyrs monument, etc.), irrigation & drainage system (culverts, waterways at the roadside), graves, flower planting area, structure and public land owned by a public company under Ministry of National Defense, etc., within ROW, 20m from edge of the existing road at both sides. Otherwise, a majority of the related Communes raised grievance and claim on low height of the crossing underpasses. Among the Communes, one raised a possibility that the height of existing culverts used for the underpasses may not fulfill the domestic standard requirements. (3) Result of public consultations, addressed to affected Communes at the Mai Dich Noi Bai Expressway route (a) Period of implementation: Oct 13 (Wed.) 20 (Wed.), 2010 (b) Subjected Districts and Communes: Communes of Phu Cuong, Hai Boi, Kim Chung, Nam Hong, Vong La, Co Nhue, Xuan Dinh, Mai Dich (Attendants: Vice Mayor of Quang Minh City, each Commune representatives or responsible person in charge) (c) Anticipated issues on environmental and social impact, raised by above mentioned stakeholders Impact toward residential and commercial structures, agricultural land, fish ponds (for aquaculture), cultural heritages (a traditional arts and craft village, a temple already registered as cultural heritage of Hanoi City, a well of temple subjected for a traditional event, pagodas of at least more than four) (including impact on sub-structures, such as gate, walls and fences), one hotel, sub-structure (fences) of educational facility (of social infrastructure & service), relocation of graves and grave yards, waterway and irrigation system, water supply and power line & distribution system, flower planting area, etc. Claims on low height of underpasses was also raised Consideration of other alternatives The main concept of both project routes are to improve and upgrade the existing roads, therefore, during this Pre-F/S stage, consideration of other alternatives were not conducted (Main reason: (i) since in Vietnam, infrastructure development against outline of its master plan cannot be made easily, unless the plan is altered, often taking years for its revision, (ii) as mentioned above, the main concept of both routes are already fixed to improve and upgrade the existing road, (iii) in case consideration of alternative are to be taken place, under the said restricted circumstances, the number of lanes and width of the road may become variables. However, in reality, the number of lanes and road width is determined by the Vietnamese road design policy based on traffic amount projection, therefore, consideration of alternatives is limited, by stand point of environmental and social consideration). However, comparison between the zero option and other alternatives to be paid attention during the F/S stage are as follows: 4-26

171 1) Phap Van Cau Gie route: The North-South Expressway Plan connecting Northern Vietnam to Southern Can Tho was approved by the Prime Minister on January 21, Phap Van Cau Gie is the starting section of this North-South Expressway, the first highway in Vietnam, whose pavement is worsening due to increasing weight of traffic and ground subsidence. After opening the currently under construction Cau Gie Ninh Binh Expressway which connects at the southern side of the subjected route from 2011, issue regarding speed design and accommodating traffic capacity are expected to intensify. At the southern edge of the subjected route, the second Don Van industrial park is located, and upgrading and widening of this expressway is expected to be highly beneficial for the enterprises (including Japanese enterprises) that have advanced into the industrial parks. 2) Mai Dich Noi Bai route: With further active economic activity and development of motorization, traffic congestion are worsening rapidly at the city center of Hanoi. At present, among the main access routes from Noi Bai Airport and industrial parks at north of Hanoi to the city center, in the Mai Dich Noi Bai section, further increase in traffic is a growing concern since 3 satellite cities are planned to be constructed at the northern side of Noi Bai. In order to resolve matters, Hanoi City have decided to reinforce control over the city traffic, and on early construction of upgrade into an expressway of 6 city road routes (including the subjected route), in March Along and surrounding the Mai Dich Noi Bai expressway route, there are 5 industrial parks, namely, Thang Long, Kuang Ming, Noi Bai, Bien Sung and Khai Quang industrial parks, and therefore the construction of the expressway is expected to provide high benefits to advanced enterprises (including Japanese enterprises) into these industrial parks. Also, two of the above subjected expressway routes will be connected to the currently under construction Hanoi Ring Road 3 (urban viaduct expressway), thus are expected to form a main artery of cross-boarder land distribution route, connecting Hai Phong port Hanoi Lao Cai Kunming and Bangkok Laos Hanoi (East-West-Economic Corridor). In addition, at the above explained public consultations, no objections or particular opinions were raised on the commencement of the projects, from affected Communes of both road routes. However, upon result of the public consultations and in accordance with the JETRO, JICA Environmental and Social Guideline, taking respect for the local culture at the F/S stage; (i) it is all the more necessary to avoid impact toward numerous cultural heritages (it is stipulated that all acts that will have affect toward registered cultural heritages, are strictly prohibited by the Cultural heritage law ). And likewise, in obedience with the law, (ii) with regard to the crossing underpasses of the subjected road routes, consideration of alternatives can be considered as a prerequisite, for instance, by altering the road design or 4-27

172 design of structure, etc., to follow (to secure a certain amount of height, stipulated by) the related domestic law and regulations. However, with regard to the latter point, in phase II of Phap Van Cau Gie route, development of a continuous frontage road of 30 km covering all sections, at both sides of the road is planned; therefore, complementary function to the underpass can be expected. In conclusion, with regard to consideration of alternatives, below matters ought to be taken into concern. Firstly, at standpoint of plausibility of project implementation, ease on traffic congestion including benefit of road users in general and economical benefit effect on enterprises advanced into surrounding industrial parks can be expected, therefore, it can be judged that both routes own such plausibility. On the other hand, at the standpoint of possibility of realization, judgement cannot be made so evenly. Below judgement is based on assured profitability, assuming that full compensation cost for land acquisition and resettlement, etc. can be covered by the Vietnamese side. First, in phase I of Phap Van Cau Gie route, since width of the existing road will be maintained, involuntary resettlement will not be anticipated, therefore, possibility of realization can be stated as mostly high. On the other hand, in phase II of the same route, approximately 290 structures are subjected for demolishment and more than 1,300 residents will be subjected for resettlement, thus possibility of realization can be regarded as slightly difficult. On the contrary, in the case of Mai Dich Noi Bai route, approximately 1,815 structures to be subjected for demolishment and estimated 9,500 residents subjected for involuntary resettlement. Significant social impact can therefore be anticipated, although the degree of possibility of realization may differ according to different sections. Especially, since the section south of Thang Long bridge passes through urban area packed with residential and commercial structures, the possibility of realization at this section may be regarded as mostly difficult (or extremely difficult, in need of long number of years ), whereas at the two sections north of Thang Long bridge, possibility of realization may be positioned as slightly difficult, having less number of residential and commercial areas. In addition, as already pointed out, for consideration of other alternatives, avoidance of impact to cultural heritages and issue on the height of crossing underpasses in comparison with domestic law and standard (mitigation measure) must be tackled from the standpoint of compliance, and can be regarded as a focal point (including reconfirmation on its necessity) to overcome during the F/S stage. 4-28

173 4.1.9 Law on Environmental Protection (LEP) and Laws and regulations on SEA and EIA Establishments of environmental laws and regulations in Vietnam, began after interests toward environmental problems regarding development issues rose during the 1980s, which led to serious consideration of related legislation establishments. In 1991, participation to the United Nations Conference on Environment and Development was decided, which enhanced mood for Vietnam to adopt the National Plan for Environment and Sustainable Development: NPESD , with the assistance of UNDP, etc. In the National Plan, establishments of environmental administrative laws and formation of authorities were suggested, and this became the foundation of enacting environmental law and instituting related administrative system of Vietnam today. The environmental protection basic law in Vietnam is the Law on Environmental Protection (hereon after stated as LEP ) enacted in December 1993 (effective from January 1994), is stipulated by the Constitution of Vietnam. In article 18 of the legislation, it clarifies on the obligation of the environmental impact assessment (hereon after stated as EIA ) stating that the auditing result of the EIA report will be one of the requirements for approval of projects by the competent authority, or receiving approval for the implementation of projects. However, in fact, there were many cases where EIA reports were drafted and approved after the project s construction began, and therefore, during the initial stages after the establishment of the old LEP, there were cases lacking in its effectiveness. Among the early Strategic Environmental Assessment (SEA) and EIA procedural basic regulations, such regulations as Decree on the enforcement (enactment) of Environmental Protection Law (Decree No. 175, 1994) and Circular on the auditing, etc., of EIA for investment projects (Circular No. 490, 1998), etc. existed. But in the initial stage of its establishments, there were some differences in their contents, and in parts, implementation requirements were not so clear. Such being the background, previously, the quality of EIA was not so good, the auditing system was not established, and decision making of EIA, and review of project plans were insufficient. On the other hand, in preparation for acquiring WTO s official membership, mood for establishing of new environmental laws rose, and so the Vietnam Agenda 21 and Long term National Environmental Protection Strategy was drafted, and thus strengthened policy including establishment of global standard legislations were taken into concern (acquired WTO membership in January 2007). Keeping up the trend, in recent years, firstly, the LEP was amended (amendment 2005) by Decree No. 52/2005/QH11 approved by the 8th congress, 11th National Assembly, dated November 29, which came into effect from July 1, 2006, and other related law and regulations such as Detailed regulations and guidance for implementation of the law on protection of the environment (Decree No.21/2008/ND-CP), Law on protection of the environment and detailed regulations, and function, role, authority and organization of MOT (Decree No.51/2008/ND-CP dated April 22, 2008), Guidance on strategic environmental assessment, environmental impact assessment and environmental protection commitment (MONRE s Circular 4-29

174 No.05/2008/TT-BTNMT dated December 8, 2008), Decree No. 21/2008/ND-CP dated February 28, 2008 regarding amendments and additions to some articles of Government s Decree No. 80/2006/ND-CP. Establishment of related laws and regulations, and amendments led to creating the foundation of today s EIA system in Vietnam Related agencies (1) Ministry of Natural Resources and Environment (MONRE) In accordance with approval by the 9th People s Congress of the National Assembly held in August 5, 2002, Resolution No,2/2002/QH11 stipulating the list of governmental ministries, offices and agencies including MONRE was adopted. MONRE was established by setting subordinate bodies as integrated authorities. Former General Department of Land Administration Former General Department of Hydro and Meteorology National Environment Agency of (former) Ministry of Science, Technology and Environment Vietnam Department of Geology and Minerals and Institute of Geology and Minerals Section of Water Resources Management, Ministry of Agriculture and Rural Development In November 2001, Governmental Degree No.91/2002/ND-CP was issued, stipulating MONRE s function, role, authorization and organization. In the following December 2002, MONRE took the lead in stipulating the affiliated agencies function, role, authorization and organization, and numerous ministerial ordinances were issued, stipulating MONRE s initiative authorization over the affiliated agencies. Figuer4-1 shows MONRE s organizational structure. Among them, those surrounded in broken line markings, namely the Vietnam Environment Protection Agency (VEPA), Department of Environment (DOE) and the Department of EIA & Appraisal are the sections and agency that practice the actual environmental administrative policy. 4-30

175 Figure 4-1 Organizational structure of Ministry of Natural Resources and Environment(MONRE) Source: The Comprehensive Study on the Sustainable Development of Transportation System in Vietnam (VITRANSS 2), Preliminary Study Report (JICA, 2007) (2) Departments of Natural Resources and Environment (DONRE) MONRE, in cooperation with the Ministry of Home Affairs, drafted the Decision No. 45/2003/QD-TTg regarding establishment of provinces Department of Natural Resources and Environment (DONRE) and in April 2003, the Prime Minister enacted the draft. Following the decision, DONRE was established at 64 locations including each provinces and the 5 cities under central control (Hanoi, Ho Chi Minh, Hai Phong, Da Nang, Can Tho), and through these Departments, local environmental administrative policies are conducted The SEA & EIA System With regard to the environmental procedure, upon amendment of the LEP in July 2006, below three points were stipulated under chapter 3 of the subjected legislation. Item one:strategic Environmental Assessment (SEA) Item two:environmental Impact Assessment (EIA) Item three:environmental Protection Commitment (EPC) 4-31

176 (1) Strategic Environmental Assessment (SEA) procedure 1) Article 14: obligating SEA at the drafting stage of Strategies and Plans as follows: (a) Economic Social Development Strategies, Planning, Plans at the National level (b) Development Strategies of Industrial Sector, etc., Planning, Plans nationwide (c) Provincial, Cities under central control (here forth stated as provincial level ) Economic Social Development Strategies, Planning, Plans (d) Land use plans, forest preservation & development, other natural resource development and utilizations covering two or more provinces and districts (e) Key Economic District Development Plans (f) River Basin Integrated Plan covering more than one local provinces 2) Implementing period of SEA: SEA is an important part of the plans, and therefore, the SEA report must be drafted at the same time as drafting of the plans, etc. (Article 15, item 2). 3) Items to be incorporated in the SEA Report: (a) Project objective, scale, outline of characteristic (b) General outline of nature, socio-economic, and environmental conditions regarding the project (c) Possible negative impact projection, due to implementation of the project (d) Numerical data, and footnote on source of method regarding evaluations (e) Overall direction of environmental issues solution, during the course of implementation of the project, and presentation of its measures 4) Assessment Board: A SEA Assessment Board will be established and its result of auditing, shall become an important evidence for approval of the subjected plan, etc. (Article 17, item 6). Incidentally, the composition of the SEA Assessment Board and the responsible authorities for its establishment is stipulated, in Article 17, items 2, 3, and 7 (see Table 4-11). 4-32

177 Table 4-11 Composition of the SEA Assessment Board and Authority in charge of establishment Kind of Plan & Strategy Nationwide in scale of Plan and Strategy, also related to multiple local provinces Plan and Strategy under local provinces or cities of central jurisdiction Composition of Auditing Council Representative of the project approving agency, project related central ministries and government offices, agency under direct control of the government, representative of people's committee of local provinces, expertise experts with appropriate experience in accordance with project content and characteristics, other representative of organization and individual appointed by authorized body possessing right for establishment of the Assessment Board. Representative of people's committee at the local provincial level, expertise agency of environmental protection and related department or bureau at provincial level, expertise experts with appropriate experience in accordance with project content and characteristics, other representative of organization and individual appointed by authorized body possessing right for establishment of the Assessment Board. Authority in charge of establishment Plans and Strategies approved by the National Assembly, Government or Prime Minister: MONRE Projects of which central ministries and government offices possessing the right of approval: Central ministries and government offices Peoples Committee at the local provincial level 5) Consultations and information disclosure: It was noted that during consideration of drafting of Development Strategies and Plans, opinions must be collected from related central ministries, divisions, districts, and scientist and experts. And especially during the consideration of drafting stage of Development Planning with the subjected cities and districts, its draft was stipulated be disclosed to public and must recruit opinion from the residents and people s committees of the plan s subjected district (Article 6, item 1c., Governmental Decree No. 140/2006/ND-CP) Also, organizations and individuals, were to possess a right to send claims or petitions regarding environmental protection to the auditing committee of the project and organizing agencies and approving authorities, and the auditing committee of the project and approving authorities must consider on these claims and petitions before forming results and making decisions (stipulated in Article 17 item 5 of LEP). (2) Environmental Impact Assessment(EIA)procedure Previously, the administrative law on EIA procedure was based on Article 18, item 2 of the old LEP. However, EIA subjected projects were not made clear at that point. Thus, a project list in need of EIA was stipulated through Circular on EIA report auditing, etc., for investment projects (Circular No. 490/1998/TT-BKHCNMT) enacted in By amendment of the LEP (which came into effect, from July 2005), projects in need of EIA reporting was presented and initially clarified at the legitimate level (Article 18, item 1). 4-33

178 1) Legitimate ground for screening procedure Also, after the amendment of LEP, through appendix I of Decree 80/2006/ND-CP on implementing detailed regulation of the Law on Environmental Protection and guidance dated September 8, 2006, a detailed list of projects in need of EIA reporting and approval was presented, and detailed stipulation on 102 projects were decided. Incidentally, traversing projects of sectors and provinces enlisted in the Decree s appendix II comes under the jurisdiction of MONRE, and for other projects, it was decided that the division in charge at DONRE of the district level to handle the case (jurisdiction as per shown below). Divisions in charge (a) Central governmental level: MONRE and competent government offices (b) Local governmental level: People s Committee (authority in charge: DONRE) Under Appendix of Decree No. 21/2008/ND-CP dated February 28, 2008 (see table 4-12), the above stated detailed project list have now been renewed, and currently, based upon this appendix the screening procedure in which the necessity of EIA is determined are been processed. Here under, the table shows an extracted part of this appendix, of which items centering around items that may have connection with the subjected project of this report in particular. 4-34

179 Table 4-12 Appendix, Decree 21/2008/ND-CP, enlisting projects for which an EIA Report must be prepared No. Project Scale National important projects and works for which the National Assembly makes the investment decision in principle pursuant to Resolution NQ11 of the National Assembly dated 29 June 2006 Projects using part or all of the land of a natural conservation zone, national park, historical and cultural site, world heritage site which is classified, or which is not yet classified but is the object of a protection decision made by a people's committee of a province or city under central authority Projects with a potentially direct adverse impact on a river watercourse, coastal area or area containing a protected area 25 Projects for the construction of a freeway, or a Level I, II or III highway All 26 Projects for the upgrade or improvement of a freeway, or a Level I, II or III highway All All All Length 50 Km or more 27 Projects for the construction of a Level IV highway Length 100 Km or more 31 Projects for the construction of a permanent bridge above a road (and/or) railway 32 Projects for the construction of road works Length 200m or more (excluding approaches) Requiring resettlement of 1,000 or more people 45 Projects for construction of high-pressure powerlines Length of 100 Km or more 50 Projects for the construction of a telecommunications route Length 100 Km or more 52 Projects for the construction of a reservoir lake or irrigation reservoir 53 Projects for irrigation works Reservoir capacity of 300,000 cubic meters or more of water Covering an area of 200 or more hectares 55 Projects for a sea wall or river dyke Length of 1,000m or more 61 Projects for mining minerals (on dry land) to use as building materials (Source) Appendix, Decree No.21//2008/ND-CP dated February 28, 2008, partially extracted 2) Vietnam s EIA procedure Mining output capacity of 50,000 cubic meters or more of materials per year The outline of the EIA procedure in Vietnam based upon current related laws and regulations, are shown in Figure 4-2. Based on Article 18 of the LEP, the project proponent or implementer, upon reference to Appendix of Decree No.21/2008/ND-CP, identifies whether the subjected project requires EIA procedure in which an EIA Report must be drafted. Incidentally in Vietnam, even when EIA procedure is exempted, a substituting procedure called Environmental Protection Commitment (EPC) must be conducted. In Vietnam, however, there are no stipulations on required conditions of consultant firms and researching institutions for conducting EIA. On the other hand, previously, implementing period of EIA was not clarified, but through amendment of the LEP, it is stipulated that EIA reports must be drafted at the same time as the project feasibility study (F/S). (Article 19, item 2 of LEP) 4-35

180 One point that should be stressed out, is that the LEP stipulates necessity in making consultations with the local communities at an early stage of the project development. As shown in Fig. 4-2, the public consultations with the to-be-affected residents, stakeholder meetings and receiving approval from the Commune People s Committees (CPC) (ward level residential authorities) and correlated Fatherland Front Committees (FFC) must be conducted at various stages prior to final drafting of the EIA report, in which results of the above must be reflected. And before the final auditing by the EIA Assessment Board (of which MONRE or DONRE determines its establishment), procedures must be made in receiving approval from the related ministries and government offices, and district level People s Committee (in the subjected projects case, PC of Hanoi City). Incidentally in the amended LEP, for those projects that requires the EIA procedure, it is clearly stated that only after the approval of the EIA report, the approval on investment, construction and development can be issued as opposed to the old LEP (amended LEP, Article 22, item 4) As for reference, items that should be incorporated in the EIA reports, are as follows: (a) Detailed outline of the project (b) The environmental condition of the project implementing site and surrounding areas, environmental impact sensitivity and evaluation on environmental thresholds (c) Environmental impact, evaluation on to-be-affected environmental constituent factors and socio-economic factors, and risks of accidents, etc. (d) Mitigation measures, and preventive, counter measures of environmental accidents (e) Environmental protection commitment during construction and operation phase of the project (f) Environmental management and monitoring plan (g) Budgeting for environmental protection (h) Opinions and objections raised from communes and residential communal representatives of the project implementing site (i) Figures for evaluation, and source of data, etc 4-36

181 Communal People's Committee (CPCs), corelated Fatherland Front Committee Public Consultation/ Stakeholder Meetings Figure 4-2 EIA Procedure in Vietnam Project determination & Project investment report Projects listed in Decree No. 21/2008 /ND-CP Screening Projects not listed in Decree No.21 /2008/ND-CP EIA Scoping Environmental Baseline Study Impact Analysis Mitigation Measures EPC (Environmental Protection Commitment) Project Feasibility Study Project Assessment Environmental Management Plan (i) Project information, (ii) Mitigation measures must be disclosed for receiving comment and approval from CPCs & FFCs, within 15 days after information disclosure EIA Report MONRE/ DONRE Internal Auditing Re-doing Decision on EIA Assessment Board establishment Project implementation and EMP implementation (carrying out mitigation Project Monitoring & Evaluation (M & E) Other related ministries, Provincial People's Committee (PPC) EIA Auditing by EIA Assessment Board EIA Disapproval EIA Approval Re-design/ After approval, the project owner is obliged to, Additional Assessment (1) set up an executive summery of the EIA report and * If time duration for comment disclose to the Communal People's Committee (CPC) within & re-correction of EIA takes 5 days after receiving Approval Letter from the Board (time more than 24 months, project duration of information disclosure lasts till the beginning of owner has to re-establish the operation phase) EIA for new assessment (2) report to the related District People's Committee (DPC) process within 15 days after receiving Approval Letter from the Board (3) send back the authority having the right of organizing the EIA Assessment Board (PPC or DPC, etc.), document on (i) Construction Plan and EMP (following designated form), (ii) trial operation plan (of structures), (iii) report on fulfilled requirements enlisted in the EIA report, until the beginning of the operation phase, and on fulfilled requirements instructed upon approval of EIA, conducted (following designated form) 4-37

182 (3) Vietnamese Environmental Standards 1) Ambient air standard: Standards based on TCVN are as follows, Table 4-13 Vietnamese Ambient Air Environmental Standard (TCVN5937:2005) (Unit: μg/m 3 ) Index substance Avg. per hour Avg. per 8 hrs. Avg. per 24 hrs. Avg. per year SO CO 30,000 10, NO O 3 (Ozone) TSP PM Ph National technical standard on harmful substances within ambient air (QCVN 06:2009/BTNMT) 2) Exhaust gas standard: Previously, based upon TCVN , threshold on vehicle exhaust gas was set forth and use of leaded gasoline was prohibited from July Currently, since July 2008, regulation by the EURO 2 Standard is implemented. Vietnam is said to draft the implementation plan for EURO 3 to 5 within 2011, and it plans to implement the EURO 3 standard in around 2012 or Other environmental standard related to air quality in Vietnam are the concentration threshold of harmful substances within ambient air (TCVN ), and industrial emission standard on inorganic matter and dust (particulate matter) (TCVN ), etc. 3) Water quality environment standard: - Water quality environment standard of surface water: TCVN Divided into two types: waters for household water usage, after proper treatment (class A criteria), and waters for usage other than household water source (class B criteria); setting forth each 31 items of maximum measuring value. - Amended standard of QCVN :TCVN dated December 31, 2008 Categorized into 4 classes - A1, A2, B1, B2 (A1: water source supplied for household water, A2: water source supplied for household water, after proper treatment, B1: water source for irrigation, B2: water source supplied for water transportation) 4-38

183 Table 4-14 Vietnamese Standard on Surface Water Quality (QCVN 08:2008/BTNMT) Item Unit A1 A2 B1 B2 Temperature ph Turbidity mg/l DO mg/l SS mg/l BOD 5 mg/l Coliform MPN/1000ml 2,500 5,000 7,500 10,000 Source:QCVN 08:2008/BTNMT Table 4-15 Domestic Regulation on "Domestic water discharge" (QCVN 14:2008/BTNMT) (Colum B: Discharge into water bodies, not used for water supply) No. Parameter Unit Threshold 1 ph - 5~9 2 BOD 5 (20 ) mg/l 50 3 TSS (Total Suspended Solid) mg/l TDS (Total Disolved Solid) mg/l S 2- mg/l N-NH 4 mg/l N-NO 3 mg/l 50 8 Vegetable Oil and Grease mg/l 20 9 Surface active agent, surfactant mg/l P-PO 4 mg/l Coliform MPN/100ml 5,000 Source:QCVN 14:2008/BTNMT Table 4-16 Domestic Regulation on "Domestic water discharge" (QCVN 14:2008/BTNMT) No. Parameter Unit Threshold 1 ph Total hardness mgcaco 3 /l Fe mg/l 5 4 TDS mg/l - 5 N-NO 3 - mg/l 15 6 As mg/l Pb mg/l Coliform MPN/100ml <3 Source:QCVN 14:2008/BTNMT - Others include, National technical standard QCVN25:2009 on wastewater discharge from solid waste disposal sites 4-39

184 4) Soil quality environment standard: Below table illustrates the heavy metal threshold level of such standard, QCVN 03:2008/BTNMT. Table 4-17 Vietnamese Environmental Standard on Soil Quality (03/2008/BTNMT) (heavy metal threshold) No. Parameter Unit Theshold 1 Pb mg/kg soil 12 2 As mg/kg soil 5 3 Cu mg/kg soil Cd mg/kg soil Zn mg/kg soil 300 Source:QCVN 03:2008/BTNMT 5) Maximum permitted noise levels: Acoustic - Noise in public and residential areas, maximum permitted noise levels (TCVN ) Table 4-18 Vietnamese Standard on Acoustic - Noise in Public and Residential Areas, Maximum Class Areas Areas in need of tranquility: (hospitals, libraries, clinics, kindergartens, schools, churches, pagodas, temples) Residential areas: (residences, hotels, rest homes, administrative offices) Residential areas within production, commerce, trade facilities, and service areas Source:TCVN Permitted Noise Levels (TCVN ) Period of time db (A) 6:00-18:00 18:00-22:00 22:00-6: ) Maximum permitted vibration levels: TCVN TCVN , etc. 7) Waste management related laws and regulations (a) Amendment of LEP (2005) Chapter VIII Waste management (b) Detailed regulation and guidance for implementation of LEP (Decree No.80/2006/ND-CP of Aug. 9, 2006), item 4 Waste management, etc. (c) Regulation on harmful waste management (Decision No. 155/1999/QD-TTg) (1999) (d) Directive No.23/2003/CT-TTg of June 21, 2005, on enhancing the management of solid waste 4-40

185 in urban centers and industrial parks (4) Law and regulations on land acquisition and resettlement plan (RP) 1) Land recovery related laws and regulations 7 The administrative law on land recovery is the Law of land, and as for its objective, it is said that the country is able to recover land for the benefit of national defense, security guarantee and public benefit. The law in question was totally amended in 1993, amended in 1998 and amended again in December 2003, and by approval from the National Assembly, the New Law of Land came into effect from January The Land Law (dated Nov. 26, 2003) - Decree No. 181/2004/ND-CP: Governmental guidance for the implementation of Land Law - Decree No. 182/2004/ND-CP: Regulation on violation of administrative land property management - Decree No. 186/2004/ND-CP: Regulation on land recovery for road construction works - Decree No. 188/2004/DN-CP: Regulation on method for land pricing and land frameworks in the event of land recovery by the government - Decree No. 197/2004/ND-CP: Regulation on land recovery and compensation - Circular No. 114/2004/TT-BTC: Detailed guideline of Decree No. 188/2004/ND-CP - Decree No. 17/2006/VD-CP: Amendment of the Land Law and Decree No. 197/2004/ND-CP - Decree No. 84/2007/ND-CP: Supplementary stipulations on issue or LURC, land acquisition, land use right implementation, procedure of compensation, assistance in the event of land recovery by the state and grievance redress - Decree No.69/2009/ND-CP, enacted from October 11, 2009: new decree on land acquisition and resettlement; amending regulation on land use planning, cost of land, land recovery, compensation and resettlement - Decision 18/2008/QD-UB: Regulation on compensation, assistance and resettlement in Hanoi - Decree No. 172/1999/ND-CP, Article 39: partial stipulation regarding protection and preservation of cultural properties - Law on Cultural Heritage: based on National Assembly Decision No. 28/2001/QH10 dated June 29, Procedure on land acquisition and Compensation, Assistance and Resettlement With regard to land acquisition in Vietnam, there are following 6 majors steps to be carried out within its process: - Step 1. Submission of proposal from the owner of project to competent authority, issuance of investment 7 Environmental and Social Consideration Study on Nhat Tan Noi Bai Airport Connecting Road construction project of Vietnam, Nippon Koei Co., Ltd, Nov

186 Project Affected Persons (PAPs) license upon approval of the proposal from the authority - Step 2. Identification of (different) land recovery form, according to development objective of the project - Step 3. Announcement on land recovery addressed to the subjected location Preparation of study on land acquisition impact, and drafting of compensation, assistance and resettlement plan by to-be-affected District s existing Land Bank Development Dept., if not, by a newly established Compensation, Assistance and Resettlement Committee - Step 4. Land recovery impact survey, drafting of Compensation, Assistance and Resettlement plan by the Land Bank Development Dept., or the Compensation, Assistance and Resettlement Committee (of the subjected district), approval from People s Committee of Hanoi City through DoNRE regarding the plan Figure 4-3 Land Acquisition Procedure based upon Decree No. 69/2009 (1/2) Step 1 Submission of Project Proposal (Article 27) Implementer Competent Authority For basis of (i) allocating land, (ii) land for leasing, Issuing of Approval of covert the purpose of land use. These decisions "Investment License" "Project Proposal" will be based on the master plan and plan of land use approved by the competant authorities. Step 2 (Article 28) Step 3 (Article 29) Define the differenct cases of land acquisition based on the purposed of the project development Location and notice on land acquisition purpose Implementer Competent Authority Project Dossier submission + Notice Land acquisition needs Affected Districts "Declaration" PC of Hanoi City Announcement: (i) Reason for Land Acquisition Chairman Loud Speaker (ii) Project Plan, Resettlement Design Plan System Post "Notice" at public places of the Commune and Communities Step 4 (Article 30) Chairman Inform on the schedule of survey of land and nonland affected assets Compensation, Assistance and Resettlement Committee Land Bank Development Dept. Affected Communes After approval of the Investment Project, Conduct the Study (New establishment )or (in case, alredy existing) Allow the survey and preparation for the investment project Land Acquisition Impact Study Compensation, Assistance and Resettlement Plan preparation Drafting of Compensation, Assistance and Resettlement Plan Publically posted Decree 197/2004/ND-CP (Information disclosure: not less than 20 days) based on Decree 17/2006/ND-CP Decree 187/2004/ND-CP PC of Hanoi City Approval Submission Implementer after review Oppinion (hearing) Revision of Plan Submission of Compensation, Assistance DoNRE and Resettlement Plan 4-42

187 Project Affected Persons (PAPs) Figure 4-3 Land Acquisition Procedure based upon Decree No. 69/2009 (2/2) Step 5 (Article 31) Decision on land acquisition, approval of the plan of compensation, assistance and resettlement, land allocation and leasing land (i) Affected Districts (ii) Decision on land recovery from households and institutions & Information disclosure of the Compensation, Assistance and Resettlement Plan to PAPs Compensation, Assistance and Resettlement Committee Compensation, Assistance and Resettlement Plan (within 3 days from approval) * Information disclosure at public places Payment of Compensation based upon Entitlement (iii) Within 20 days from the day the entitlement is paid to the household, the household has to give up the land and other assets to the project. Step 6 (Article 32) Forcing resettlement will be followed as it is instructed in item 3, Article 39 of the Land Law. 4-43

188 Drafting procedure of Compensation, Assistance and Resettlement Plan(RP) Next, Compensation, Assistance and Resettlement (RP) drafting procedure can be illustrated as per following Fig Figure 4-4 Resettlement Plan (RP) Procedure (1) Study on alternatives of the routes and efforts on minimising land acquisition and other social adverse impacts (2) Identify the applied legal framework (national and requirements of the project financed institution) (3) - Carry out socioeconomic survey (about 30% of project affected households) - Inventory of losses (IOL) survey for 100% of affected households (individuals, collectives and public works) Cadastral Map main tool Inventory of Loss (a) Project Affeced Households (b) Affected Assets (land and non-land assets) Socioeconomical survey report (4)Categorization of land acquisition impacts after IOL surve - different affected land types - buildings fully or - crops partially - trees affected - vulnerable groups, etc. (5)Public Consultation - land acquisition - Compensation Group discussion - Social assistance (Elderly, Ethnic Minorities, - resettlement Female headed households, etc.) - Livelihood restoration activities (6) Replacement Cost Survey - Land - Buildings - Crops - Trees, etc. (7)Preparation of the Resettlement Plan - Project description and efforts in minimizing land acquisition impacts - Legal Framework Compensation, Assistance - Eligibility and Entitlement and Resettlement Plan - Socioeconomic condition - Land acquisition impacts - Public Consultation and participation - Resettlement arrangements - Livelihood restoration activities - Ethnic minorities issues (if, applied) - Gender issues & strategy - Implementation arrangements (institutional arrangment and implemention schedule) - Monitoring - Complaint and Grievances - Cost estimate and budget As for land recovery, Compensation, Assistance and Resettlement (RP), based on Decree No. 69/2009, the following schedule will be taken into process for its implementation. 4-44

189 No. Table 4-19 Land recovery, Compensation, Assistance and Resettlement implementing schedule A. Preparation Phase 1 Activity (based on Decree No. 69/2009) Preparation of map, carrying out of Socio-Economic Survey, Inventory of Losses (IOL) survey, replacement cost survey, conducting public consultations Period (days) Legitimately stipulated under Decree no. 69/2009 (LS) or average required period based on Good Practice (GP) 60 GP 2 Preparation of Draft Resettlement Plan (RP) 30 GP 3 Consultation with stakeholders on drafting of RP 45 GP Finalization of RP, submission to project implementer. 4 Submission of RP by project implementer to competent authorities for approval 20 GP 5 Disclosure & dissemination of the approved RP 15 GP B. Implementation Phase Preparation of dossier to obtain a decision on land use for the project (Article 27). Land use master plan, land use schedule must be approved by the competent authorities. Land recovery, handing over of the land to the project (Article 28 & 29): Marking (beaconing) of the site for area to be acquired; declaration of the reasons of acquiring land, and disclosure of topo-cadastral map of to-be-acquired area to the affected communities (information disclosure, and dissemination). Preparation of cadastral map, carrying out the Detailed Measurement Survey (DMS), preparation for a draft General Compensation, Assistance and Resettlement Plan. Informing local authorities and local people about the land acquisition policy and schedule (Article 29 & 30). Establishment of the district Compensation, Assistance and Resettlement Committee Public consultation for a draft general compensation, assistance and resettlement plan at the community level Finalization of the general Compensation, Assistance and Resettlement Plan with documentation on the feedback from stakeholders, submission to DoNRE of Hanoi for its review Decision on issue of land recovery, approval for compensation, assistance and resettlement plan. Handing over of the land to the project Approval of the Compensation, Assistance and Resettlement Plan 5 Resettlement site planning or resettlement arrangement, detailed design and tender document preparation for the sites. Must be reviewed and approved by Hanoi authorities (District, Construction Dept. and Hanoi People's Committee) Bidding invitation, bidding evaluation and awarding the contract to the contractor for the site Information disclosure of approved Compensation, Assistance and Resettlement Plan Responsibility by project implementer, LS (on required content) 45 LS (on required content) 90 LS (on required content) 30 LS (Article 29, item 5) 20 LS (Article 30, Item 2c) 30 GP 30 GP LS (period, from the date of decision on land recovery is issued) (Article 31, item 2) 120 GP 30 GP 3 LS (from the date of the Plan approval) (Article 4-45

190 No. Activity Period (days) Legitimately stipulated under Decree no. 69/2009 (LS) or average required period based on Good Practice (GP) 31item 2c) 12 Payment to households 30 GP 13 Construction of the site, construction supervision 120 GP 14 Allocation of plot to households and house construction Handing over the land from households to the project Forcing land acquisition (Article 32; and Article 39 of Land Law) Monitoring and evaluation throughout project life cycle LS (from the date of payment) (Article 31, item 4) LS (required date: Article 31) 4.2 Measures Required by the Vietnamese Government and Implementing Body As one of the requirements of the recipient country and implementing body, the most important point stipulated in the JICA new Environmental and Social Consideration Guideline as to which JETRO should follows suite, is to fulfill full compensation by setting forth relevant replacement cost for PAPs assets based upon market prices. Firstly, rough estimation on total compensation cost of PAPs presumed actual loss of assets, including its scale of impact (residential & commercial structures, residential, agricultural and aqua-cultural land, etc.) was surveyed, by rapid assessment. Forming a tentative entitlement matrix at this Pre-F/S stage was also necessary, for setting conditions of replacement costs of PAPs assets, based upon marketing price, etc. (for estimation). Therefore, it was all the more necessary to hire a so called Independent Property Appraiser, who is familiar with World Bank and Asian Development Bank s (ADB) environmental and social consideration study, to carry out this part of analysis and survey. The already mentioned local consultant, EPC Co., Ltd. also had the background and capability to carry out this task, so was involved in the rapid assessment and forming of the tentative entitlement matrix Result of the rapid assessment In the rapid assessment, the tentative road alignment of each of the subjected road routes was set by the METI study team member by utilization of existing digital maps and aerial maps, and the road design was drawn on the above maps by CAD software. The residential and commercial structures, residential land (including fish pond land) and agricultural land was confirmed and plotted, one by one on the above 4-46

191 mentioned CAD processed map. With this method, each of these assets were evaluated and counted, according to the degree and full or partial impact (residential and commercial structures was plotted one by one according to the degree of full or partial impact, and then was calculated automatically, whereas in the case of land, the CAD software also automatically calculated the scale of area to be affected for those that were individually marked). [Major items to be affected at Phap Van Cau Gie project site, including scale of impact] (1) Residential land (including fish pond land) and agricultural land, etc.: To-be affected area( m2 ) Residential Land 16,831 m2 Commercial Land 12,562 m2 Agricultural Land 690,796 m2 Fish Pond Land 469,139 m2 (2) Residence, commercial structure and sub-structure Housing Area 41,245 m2 Full impact, in need of resettlement 289 structures Partial impact 65 structures Sub-structures (3) Others Yearly crop, trees [Major items to be affected at Mai Dich Noi Bai project site, including scale of impact] (1) Residential land (including fish pond land) and agricultural land, etc.: To-be affected area( m2 ) Residential Land 141,137 m2 Commercial Land 3,255 m2 Agricultural Land 395,334 m2 Fish Pond Land 59,648 m2 (2) Residential, commercial structure and sub-structure Housing Area 172,137 m2 Full impact, in need of resettlement 1,814 structures Partial impact 323 structures Sub-structures (3) Others Yearly crop, trees 4-47

192 4.2.2 Tentative formation of Entitlement Matrix With cooperation of the above mentioned local consultant firm, an entitlement matrix was temporarily set, applicable to both road routes. Its content is as per appendix No.5, the matrix covers the result of the interviewing survey conducted to responsible people of the affected communes at both expressway route area, regarding current market price for setting replacement cost of assets Estimate of total compensation cost In reference to the result of the rapid assessment and tentative setting of the entitlement matrix, and taking in concern the market price based on replacement cost of PAPs assets (based upon rapid marketing survey toward affected communes conducted by the local consultant), and being one of the requirements based upon JICA guideline as to which JETRO should follows suite, the estimation of total compensation cost resulted as shown in table As a result, in the Phap Van Cau Gie expressway route, a total estimate amount of 5 trillion 76.6 billion VND (Vietnamese Don) will be necessary, or approximately 21.8 billion yen (applying the exchange rate as of December 8, 2010, 1 VND = ). Likewise, in Mai Dich Noi Bai expressway route, a total estimate amount of 11 trillion billion VND or approximately 49.4 billion yen will be necessary. On the other hand, the People s Committee of Hanoi City, releases a public announcement regarding land price according to districts, every year on January 1. Incidentally, the compensation cost amount applied in the Financial, economical feasibility (pls. refer to Chapter 5) of this report, is not based upon the compensation cost amount, taking reference to the market price, as reported in the previous paragraph, but based upon a tentatively applied double amount of land unit prices, publicly announced by the People s Committee of Hanoi City. 4-48

193 A. Phap Van - Cau Gie expressway route No. Table 4-20 Compensation estimate (rough estimate) Compensation item Based on current market price Based on unit price set by Hanoi People's Committee 1 Land (Residential, Commercial, Agri-/Aquacultural) 2 Tril Bil. VND Bil. VND 2 Residence (incl. commercial) (House area based) Bil. VND Bil. VND 3 Substructure(estimate 5% of above item 2) 5.8 Bil. VND 5.8 Bil. VND 4 Annual crop, trees 10.2 Bil. VND 10.2 Bil. VND 5 Allowances (for resettlement) 1 Tril Bil. VND 1 Tril Bil. VND 6 Implementation cost (2% of above total) 90.4 Bil. VND 43.7 Bil. VND 7 Contingency (10% of above total) Bil. VND Bil. VND Total 5 Tril Bil. VND 2 Tril Bil. VND B. Mai Dich - Noi Bai expressway route No. Compensation item Based on current market price Based on unit price set by Hanoi People's Committee 1 Land (Residential, Commercial, Agri-/Aqua-cultural) 10 Tril. 310 Bil. VND 1 Tril Bil. VND 2 Residence (incl. commercial) (House area based) 1 Tril Bil. VND 1 Tril Bil. VND 3 Substructure(estimate 5% of above item 2) 64.6 Bil. VND 64.6 Bil. VND 4 Annual crop, trees 4.2 Bil. VND 4.2 Bil. VND 5 Allowances (for resettlement) 1 Tril Bil. VND 1Tril Bil. VND 6 Total amount after correction (+) 10 Tril Bil. VND 3 Tril Bil. VND 7 Implementation cost (2% of above total) Bil. VND 89.4Bil. VND 8 Contingency (10% of above total) 1 Tril Bil. VND Bil. VND Total 5 Tril Bil. VND 4 Tril Bil. VND Grand Total (A+B) 16 Tril Bil. VND 6 Tril Bil. VND (Note) Total amount after correction (+): Through result of public consultation conducted at the subjected route, in terms of some of the assets to be affected at the route (at already leveled out areas), it was made clear that compensation have been already partially paid. Therefore, the total amount after correction is 20% deducted amount of total of items 1 to 5. The land prices, publicly announced by the People s Committee of Hanoi City on January 1, 2010, and were used as a partial basis of the financial analysis conducted (other than land; the residence, annual crop and trees are based upon above mentioned marketing survey), are as follows (partially extracted): Unit price of to-be-affected districts of Phap Van Cau Gie expressway route Fish pond land: Commercial land: Agricultural land: Residential land: 135,000 2,310, ,000 1,400, ,000 3,360, ,000 21,000,000 VND/ m 2 VND/ m 2 VND/ m 2 VND/ m 2 Unit price of to-be-affected districts of Mai Dich Noi Bai expressway route Fish pond land: Commercial land: Agricultural land: Residential land: 3,500, ,000 2,625, ,000 26,400,000 VND/ m 2 VND/ m 2 VND/ m 2 VND /m

194 4.2.4 Other requirements Apart from the above explained budgeting requirements of the estimated compensation costs, major items of other requirements to be prepared by the Vietnamese side, could be summarized as here under. Although final decision must be based upon negotiation and agreements among related parties, the METI Study team would like to make a suggestion (see below) to all parties involved, to start preparations in building up necessary systems to further advance into the next studying stage. 1) Drafting of EIA, Environmental Management Plan (EMP), Monitoring Plan (MP): By the Vietnamese government, Ministry of Transport (MoT), other relating authorities, and the project enterprise (SPC) * with JICA Study Team s assistance (as far as possible) 2) Socio-economic survey, census survey (drafting of PAPs inventory), inventory of losses (IOL) survey, Compensation, Assistance and Resettlement Plan : * with JICA Study Team s assistance (limited to drafting RP outline) Note: Especially in terms of land recovery preparation and resettlement plan drafting, planning based on sufficient consideration of the land recovery, compensation, assistance and resettlement implementation schedule, as per show in the previous table

195 CHAPTER 5 FINACIAL AND ECONOMIC FEASIBILITY

196 5.1 Estimated Project Cost Because the design has not been finalized nor detailed the preliminary cost estimate must be based on only a limited number of items. These items must represent the hundreds of items in the final bill of quantity. Therefore comparing a unit rate in this estimate with a unit rate on a final BOQ is a false comparison. The item unit rate on this BOQ must be higher than the any final rate to carry the hundreds of items that will added at the detail design phase. The unit costs are derived from typical cost in Vietnam and international Projects. The construction cost of the bridges was estimated in detail for the whole project. The project costs were estimated in accordance with the guidelines issued by the Government of Vietnam, and therefore the cost breakdown is indicated in Vietnamese Dong. Conversion of the financial cost to economic cost was done in accordance with the method used in VITRANSS2 study. Table 5-1 Government Guidelines for Cost Estimation in Vietnam No. Title Date Circular 04/2005/TT-BXD Guiding the formulation and management of expenses of investment projects on construction of works 2005/04/01 Decree No. 26/CP Temporarily Regulating The Salary in Enterprises 1993/05/23 Circular 03/2005/TT-BXD Guiding the Adjustment of Cost Estimates of Capital Construction Works 2005/03/04 Circular 16/2005/TT-BXD Guiding the Adjustment of Work Construction Cost Estimates 2005/10/13 Decree No. 16/2005/ND-CP On Management of Investment Projects on the Construction Works 2005/02/07 Decision No. 24/2005/QD-BXD Decision on Promulgation of Estimate Norms for Construction Projects Part of Construction 2005/07/29 Decision No. 24/1999/QD-UB Decision on Promulgation of Unit Price in Capital Construction in Hanoi City 1999/05/15 Decree No. 118/2005 Readjusting the Minimum Wage Level 2005/09/15 Decree No. 158/2003/ND-CP Detailing the Implementation of the Value Added Tax Law and the Law Amending and Supplementing a Number of Articles of the Value Added Tax Law 2003/12/10 Decree No. 03/2006/ND-CP Providing for Provisions on Minimum Wages of Vietnamese Employees Working for Foreign Invested Enterprises Foreign Agencies and Organizations and Foreign 2006/01/06 Individuals based in Vietnam Decree No. 233-HDBT Regulations on Labour for Enterprises with Foreign Owned Capital 1990/06/22 Decree No. 204/ND-CP Regarding Salary System for Public Servants, Officials and Military Force 2004/12/14 Decree No. 155/2004/ND-CP Amending and Supplementing a Number of Articles of the Government s Decree No. 41/2002/ND-CP of April on Policies towards Labourers Redundant 2004/08/10 due to the Restructuring Enterprises Decree No. 41/2002/ND-CP On Policies towards Labourers Redundant due to the Restructuring of State Enterprises 2002/4/11 5-1

197 5.1.1 PV-CG Expressway Table 5-2 Cost Estimates for PV-CG Expressway Item Phase I Phase II Total Total Cost Work Items 430,636 1,760,584 2,191,221 General Items Temporary Works 43, , ,122 VAT (10%) 47, , ,034 Construction Cost 521,070 2,130,307 2,651,377 Basic Design (Construction Cost x 1.0%) 5,211 21,303 26,514 Detailed Design (Construction Cost x 1.5%) 7,816 31,955 39,771 Supervision Cost (Construction Cost x 3.0%) 15,632 63,909 79,541 EIA, EMP, RP (Construction Cost x 1.0%) 5,211 21,303 26,514 Sub-Total A 554,940 2,268,777 2,823,717 PPP Administration Cost (Sub-Total A x 3%) 16,648 68,063 84,712 UXO Clearance Cost (Sub-Total A x 0.1%) 555 2,269 2,824 Land Acquisition & Resettlement 0 2,778,690 2,778,690 Sub-Total B 572,143 5,117,799 5,689,942 Physical Contingency (5%) 28, , ,563 Price Contingency (18%) 102, , ,025 Grand Total 703,736 5,655,794 6,359,530 Note: Land Acquisition & Resettlement and concerning costs are assumed to be double of unit price set by Hanoi People's Committee MD-NB Expressway Table 5-3 Cost Estimates for MD-NB Expressway Item Section A Section B Section C Total Total Cost Work Items 2,599,266 2,572, ,810 5,744,546 General Items Temporary Works 259, ,247 57, ,455 VAT (10%) 285, ,972 63, ,900 Construction Cost 3,145,112 3,112, ,100 6,950,900 Basic Design (Construction Cost x 1.0%) 31,451 31,127 6,931 69,509 Detailed Design (Construction Cost x 1.5%) 47,177 46,690 10, ,264 Supervision Cost (Construction Cost x 3.0%) 94,353 93,381 20, ,527 EIA, EMP, RP (Construction Cost x 1.0%) 31,451 31,127 6,931 69,509 Sub-Total A 3,349,544 3,315, ,152 7,402,709 PPP Administration Cost (Sub-Total A x 3%) 100,486 99,450 22, ,081 UXO Clearance Cost (Sub-Total A x 0.1%) 3,350 3, ,403 Land Acquisition & Resettlement 2,578, ,152 2,583,233 5,725,168 Sub-Total B 6,032,163 3,980,930 3,344,268 13,357,361 Physical Contingency (5%) 172, ,889 38, ,610 Price Contingency (18%) 621, , ,986 1,373,795 Grand Total 6,826,440 4,767,019 3,519,306 15,112,765 Note: Land Acquisition & Resettlement and concerning costs are assumed to be double of unit price set by Hanoi People's Committee 5-2

198 Figure 5-1 Mai Dich Noi Bai Expressway Section A Section B Section C Source: Study Team 5-3

199 5.2 Financial Analysis & Results List of Requisite Parameters Parameters required for financial analysis are as follows: (1) Implementation/Operation Period (i) Land Acquisition Period (ii) Construction Period (iii) Operation and Maintenance Period (2) Project Cost Estimates 1) Initial Investment Cost (i) Land Acquisition Cost (ii) Construction Cost (iii) Basic Design Cost (iv) Detailed Design Cost (v) Supervision Cost (vi) Environmental Management Plan Cost (vii) Administration Cost (viii) Unexploded Ordnance (UXO) Clearance Cost (ix) Physical Contingency (x) Price Contingency (xi) VAT (10%) 2) Operation and Maintenance Cost (i) Annual Routine Operation and Maintenance Cost (ii) Periodic (assuming every 7 years) Maintenance Cost (iii) Toll System Management (3) Financial Structure 1) Bank Loan (i) Share (debt equity ratio) (ii) Loan Interest Rate (iii) Loan Tenure (Grace Period, Loan Repayment Period) (iv) Interest During Construction (IDC) (v) Finance Charge 2) Guarantee and Insurance (i) Insurance for Physical Damage (ii) Guarantee for Force Majeure/Liability/Commercial Risks etc. 3) Taxation Procedure for Corporate Income Tax (i) Tax Incentive (Preferential tax rate/tax exemption period/tax reduction period) (4) Revenue Forecast 1) Revenue Forecast based on the traffic demand forecast Project Implementation Period (1) Land Acquisition Period: In case of PV-CG, land acquisition is assumed to be implemented within 3 years from 2012 to 2014, while in case of MD-NB, land acquisition is assumed to be implemented within 2 years from 2013 to 2014, although uncertainty for the period for land acquisition may be expected. (2) Construction Period: In case of PV-CG, construction period is assumed to be 2 years for Phase I while 3 years for Phase II. Some work items attached with construction work, which includes basic design, detailed design and EIA/resettlement planning, is assumed to be completed in early timing of Phase I and Phase II. Interest During Construction (IDC) is considered within construction period of Phase II. In case of MD-NB, construction period is assumed to be 4 years from 2015 till (3) Operation and Maintenance Period: In case of PV-CG, operation and maintenance period is assumed to start in 2013, which is the timing immediately after completion of the construction work of Phase I. It lasts until In case of MD-NB, operation and maintenance period is assumed to be 13 years from 2017 till

200 5.2.3 Project Cost Estimates Project cost can be classified into mainly 3 categories i.e., 1) Initial Investment Cost, 2) Operation and Maintenance Cost and 3) Other Costs. (1) Initial Investment Cost (i) Land Acquisition Cost: a. PV-CG Land acquisition cost is considered based on the following presumptions which correspond to variations of responsibility sharing between SPV and the public entity. Land acquisition cost is discussed in Sub-Clause where both the market prices and Hanoi People s Committee s standard prices are indicated. Taking account of the difference between the above 2 prices as large as 10 times, in the financial analyses the land acquisition costs are assumed to be twice of Hanoi People s Committee s standard prices. Table 5-4 Options of consideration of Land Acquisition Cost Options Descriptions Consideration in the cash flow analysis Cost is shouldered solely by public Land acquisition cost is not considered in the Option 1 entity in Viet Nam in the form of cash flow analysis. Government subsidy. Option 2 Option - 3 Cost is shouldered by SPV only. Cost is shared between public entity in Viet Nam and SPV. Land acquisition cost is fully taken into account in the cash flow analysis. Criteria for reasonable cost sharing is capping cost amount to ensure financial viability and benchmark of rate on return of equity. According to the Regulation on Public-Private Partnership Investment Piloting (Decision No. 71/2010/QD-TTg) Chapter II stipulates State Contribution. Article 8 stipulates as: The total value of State Contribution shall not exceed 30% of the total project investment except otherwise decided by the Government. And Article 9 stipulates State capital for the State Contribution to the Project in a way that: State capital is used for building support construction work, land clearance and resettlement organization and compensation or as needed and that depending on the nature of particular project, state capital can be used to cover a part of the project cost. In this context, land acquisition cost may be expected to be supported by state budget. However the amount of state budget support, whether it will be 100% support or partial support, for cost of land acquisition will be determined on the basis of the specific nature of the project. In addition, such support and other state capital contribution must not exceed 30% of the total project cost, which is stipulated in the law as well. Taking account of above legal matters, the expected amount of state capital contribution as to above Option-1 and 3 are to be carefully examined in the light of the criterion of 30% of the total project cost. 5-5

201 a. MD-NB Land acquisition cost is considered based on the following option-1 presumption only which corresponds to responsibility sharing between SPV and the public entity. Table 5-5 Options of consideration of Land Acquisition Cost Options Descriptions Consideration in the cash flow analysis Cost is shouldered solely by public Land acquisition cost is not considered in the Option 1 entity in Viet Nam in the form of cash flow analysis. Government subsidy. (ii) Construction Cost: Construction cost contains 1) Civil Work Cost and 2) Other related cost including insurance cost and all that. In case of PV-CG, construction cost in Phase I is for 4 lanes overlay cost while construction cost in Phase II is for construction of frontage road and 6 lanes widening work of existing 4 lane road. In case of MD-NB, construction work is related to development of new road infrastructure. (iii) Basic Design Cost: Basic design cost is estimated as 1.0% of construction cost. (iv) Detailed Design Cost: Detailed design cost is estimated as 1.5% of the construction cost, assuming such design work is done by local consultants. (v) Supervision Cost: Supervision cost is estimated as 3.0% of the construction cost. (vi) Environmental Management Plan Cost: Environmental management cost is estimated as1.0% of construction cost. (vii) Administration Cost: Administration cost is estimated as 3.0% of the total cost covering from construction cost to environmental management cost, which are stated as above, assuming such administration work is done by local experts. (viii) Unexploded Ordnance (UXO) Clearance Cost: UXO clearance cost is estimated as 0.1% of sum of the cost of (ii), (iii), (iv), (v) and (vi). (ix) Physical Contingency: Physical contingency is estimated as 5% of total costs from (ii) till (viii). (x) Price Contingency: Price contingency is estimated as 18% of total costs from (ii) till (viii). (xi) Value Added Tax (TAX) (10%): VAT is estimated as 10% of all costs. (2) Operation and Maintenance (O&M) Cost (i) Annual/Routine O&M Cost: Annual/routine O&M is estimated as annual expenditure. Escalation factor is taken into account setting as 5.0% as an annual rate. (ii) Periodic (assuming every 7 years) Maintenance Cost: Periodic maintenance is assumed to be done every 7 years. Corresponding cost is estimated. Increasing rate of 10.0% at every 7 years is imposed due to tear and wear of the asset. (iii) Toll System Management: The cost includes personnel expenses being paid for remuneration of local staffs, who are engaged in toll system operation, and cost for maintenance of toll collection booth. In addition to above O&M costs, payment of annual land use fee or fee for lease of land is, in general, included as an investor s obligation. However, according to the Law on Investment (No. 59/2005/QH11), Chapter 5 Section 2 Article 36 stipulates land use incentive in a way that: 5-6

202 Investors which invest in investment incentive sector and geographical areas shall be entitled to an exemption from payment of or a reduction of land rent and land use fees. Note: As for above slanted description incentive sectors is defined in the Law on Investment Chapter 5 Section 1 Article 27 such that investors who are engaged in construction and development of infrastructure facilities and important industrial projects with a large scale). On the basis of the above stipulation, land use fee or fee for lease of land is not taken into account as an annual cost Financial Structure (1) Financial Source Options The following options are considered as possible financial sources: (i) Public Loan (JICA Private-Sector Investment Finance: PSIF) (ii) Commercial Bank Loan (Foreign Banks) (iii) Commercial Bank Loan (Domestic Banks) (iv) Corporate Bonds (issued by SPC) (v) Equity Each financial source option is outlined below: (i) JICA Private-Sector Investment Finance: The conditions of this system are under consideration at the time of preparation of this report. There is also another similar loan system provided by the Government of Japan (by JBIC). The conditions are typically as follows: Table 5-6 Public Loan Interest Rate Loan Tenure Grace Period Repayment period Finance Charge 1.0% + Risk Premium 3 years 10 years Assuming 0.3% of the total amount of loan These public loans have two major characteristics. From an investor s point of view, the loans can function as soft loans (low interest, provision of grace period and long repayment period). Besides, these loans, being provided by the Government of Japan, can be a financing measure with a kind of guarantee for risk hedge. (ii) Commercial Loan from Overseas Mega-bank: The following table provides typical conditions of commercial loan from overseas mega-bank. The interest rate is usually floating provided by (LIBOR 6-month interest rate + risk premium). Hence, borrowers hedge the interest floating risk by means of SWAP fixed interest rate. Due to high uncertainty of the investment environment, risk premium is very high in Vietnam. Table 5-7 Commercial Loan from Overseas Mega-bank {6-month LIBOR +Risk Premium} or {5-year SWAP fixed Interest Rate interest rate} Loan Tenure Grace Period - Repayment Period Max. 5 years Commercial loan from overseas mega-bank is more costly than public loan. 5-7

203 (iii) Commercial Loan from Vietnamese Bank: First of all, it should be noted that the current borrowing interest rate of Vietnamese bank is as high as 14% - 18% and the repayment period is as short as 3 years. Hence, commercial loan from Vietnamese bank cannot be considered as a possible option. Table 5-8 Commercial Loan from Vietnamese Bank Interest Rate % Loan Tenure Grace Period - Repayment Period Max. 3 years (iv) Corporate Bond issued by SPC: The interest rate of corporate bonds is around 14% which is as high as that of commercial loan from Vietnamese bank. The rate may be lowered if the Government guarantee is obtained, but it seldom happens. Hence, corporate bond cannot be considered as a possible option. Table 5-9 Corporate Bond Interest Rate Min % Repayment Period 5 Years (v) Equity: Possible investors are Japanese private investors and Japanese Government Institutions. Investment from investors who have the headquarter office in Japan could work as a risk mitigation tool. The benchmark for the rate of return is assumed 20% taking account of the investment environment in Vietnam. The 20% is set based on the results of hearings done in not only Vietnam but also Indonesia and Philippines. (2) Comparison of Possible Financial Sources The following table summarizes the results of comparison of possible financial sources. It can be concluded that public loans from Japanese Government Institution such as JICA and equity injection are adequate financial source options for the project. Table 5-10 Comparison of Possible Financial Sources Advantages Disadvantages Rating (i) Public Loan (JICA PSIF) (ii) Commercial Bank Loan (Foreign Bank) (iii) Commercial Bank Loan (Vietnamese Bank) (iv) Corporate Bond (issued by SPC) (v) Equity Low-cost soft loan Work as a risk mitigation measure There exist many experienced and reliable banks There are many state-owned banks with which making a contract is relatively easy Contribute to having a variety to finance portfolio. More flexible financing measure that bank loan or corporate bond Loan contract negotiation may be time-consuming Very costly due to high risk premium Very costly due to the currently high interest rate and short repayment period Very costly due to the currently high interest rate and short repayment period Return on equity expected to be more than 20%. Japanese investor will be exposed to FOREX change risk. excellent Partially satisfactory unsatisfactory unsatisfactory satisfactory Based on the above study, public loan from Japanese Government financial institutions and 5-8

204 equity from sponsoring companies are considered to be the main financial sources. In addition, guarantees and taxes are also considered. Each financial facto is further explained as follows: (i) Loan and Equity: Within Phase I, which is from 2011 till 2012, all of the costs are assumed to be provided by equity only. From 2013 till 2016, loan credit is assumed to be drawn down. Debt Equity ratio is assumed to be 70% vs. 30%. Conditions of loan are set on the basis of existing loan scheme provided by Japan Bank for International Cooperation, Asian Development Bank and International Finance Corporation. The conditions being assumed are as follows: Table 5-11 Loan conditions being assumed Interest rate 1.0% + Risk Premium (assumed to be 0.3%) Loan Tenure Grace period Repayment period Finance Charge 3 years 10 years Assuming 0.3% of total amount of loan As for equity, benchmark of the rate of return is assumed to be 20% on the basis of the current situation of actual investment circumstances in Viet Nam. (ii) Interest During Construction (IDC): IDC is estimated during the construction period. As for Phase I in case of PV-CG, the cost of 4 lane overlay work is assumed to be provided only by equity. Therefore there is no need to consider IDC in Phase I period. (iii) Insurance for Physical Damage: Assuming 0.75% of value of depreciable assets is insurance cost. The cost is assumed to be annual expenditure. (iv) Guarantee: As for guarantee scheme to cover variable risks including natural/political force majeure, commercial risks, economic risks, the guarantee services provided by public institutions are available. Such institutions are MIGA, IFC, ADB, JBIC and NEXI. In this study, the service provided by NEXI is considered. The conditions of the guarantee are as follows: a. Nippon Export and Investment Insurance (NEXI): NEXI covers such risks as natural force majeure including flood, earthquake, which is said as Acts of God, and political force majeure including sovereign risk, confiscation risk and war. The condition of NEXI is as follows: Table 5-12 Guarantee conditions being assumed Guarantee coverage Guarantee period Annual Fee up to 95% of expected damage amount up to 15 years [Guarantee coverage] x [Viet Nam coefficient (0.58%)] (vi) Taxation Procedure for Corporate Income Tax: Taxation procedures are as follows: a. Normal tax rate According to the Law on Corporate Income Tax (No.14/2008/QH12), Chapter III Article 10, Corporate Income Tax Rates which is normally imposed is specified as The rate of corporate income tax shall be 25 %. b. Tax incentive b-1: Preferential Tax Rate According to the Law on Corporate Income Tax (No.14/2008/QH12), Chapter III Article 13, Corporate Income Tax Incentives being preferential tax rates is specified as follows: The tax rate of 10 % shall apply for 15 years to newly established enterprises from 5-9

205 investment projects in areas with... investment in development of especially important infrastructure facilities of the State. As for above slanted description investment in development of especially important infrastructure facilities of the State, this means "Development of..,roads,.. And other infrastructure works of special importance as decided by the Prime Minister" according to the Decree No.124/2008/ND-CP. b-2 Tax Exemption According to the Law on Corporate Income Tax (NO QH12), Chapter III Article 14, Incentives being duration of tax exemption and reduction is stipulated as follows: The following enterprises shall be exempted from corporate income tax for a maximum period of 4 years and shall be entitled to a 50 % reduction of the amount of corporate income tax payable for a maximum period of 9 subsequent years: Newly established enterprises from investment projects in areas with... investment in development of specially important infrastructure facilities of the State. c. Tax Imposing Schedule Above preferential tax rate as well as tax exemption are both taken into account in the tax imposing schedule as follows: Figure 5-2 Corporate Tax Imposing Schedule d. Carrying forward losses The Law on Corporate Income Tax (No. 14/2008/QH12) Chapter III Article 16 is stipulating the deal of the carrying forward losses as follows: Enterprises which suffer a loss shall be entitled to carry forward the loss to the following year and such loss shall be deductible from assessable income. Losses may be carried forward for a maximum period of 5 years as from the year following the year in which the loss arose.. In addition, the Law on Investment (No. 59/2005/QH11) stipulates carrying forward losses in Chapter 5 Section 2 Article 34 as follows: If an investor suffers losses after completion of tax finalization with the tax office, it shall be permitted to carry its losses forward to the following year, and the amount of such losses shall be set off against taxable income for the purposes of corporate income tax in accordance with the Law on Corporate Income Tax. The period for carrying forward losses shall not exceed 5 years. Based on the above legal stipulations, carriage forward the financial losses are taken into account in cash flow calculations. e. Depreciation of fixed Assets and Deductible Expenses Depreciation of fixed assets can be considered deductible expenses when determining taxable income. However, in this case, the ownership of the expressway belongs to DRVN or VEC, not to SPC (Special Purpose Company). Therefore, annual amount of depreciation does not need to be considered. 5-10

206 5.2.5 Financial Evaluation of the Project Assumed Parameters a. PV-CG According to the list of requisite parameters, specific value for each parameter was set as follows:. Table 5-13 Input items and their specific value for financial evaluation (PV-CG) Shu Source: Study Team 5-11

207 b. MD-NB According to the list of requisite parameters, specific value for each parameter was set as follows:. Table 5-14 Input items and their specific value for financial evaluation (MD-NB) Source: Study Team 5-12

208 Indices for Financial Evaluation Financial evaluation was done on the basis of the following numerical indices. (i) Net Present Value (NPV) Present value of the expected cash flows is computed by discounting sum of construction cost and O&M cost at the required rate of return. A zero NPV means the project is capable of repaying original investment as well as the required rate of return. The rate of return at the zero NPV case is defined as Financial Internal Rate of Return (FIRR). NPV is given as the following formula. NPV = Σ [ [R y - C y ] / [1.0 + r] y-ybase ] y=ybase, ycomplete Where NPV: Net Present Value of the revenue R y : Revenue at certain year of y C y : Cost including construction cost and O&M cost at certain year of y r: discount rate ybase: the starting year of operation ycomplete: the year of completion of operation (ii) Financial Internal Rate of Return (FIRR) The FIRR is an indicator to measure the financial return on investment of an income generating project and FIRR is used to make the investment decision. FIRR is defined as a discount rate which gives zero to NPV, which is shown as the following formula. NPV = Σ [ [R y - C y ] / [1.0 + FIRR] y-ybase ] = 0.0 y=ybase, ycomplete The criterion for financially viable FIRR is given by weighted average capital cost (WACC). WACC is an average capital cost of loan interest rate and rate of return on equity weighted by the share of amount of loan and equity. (iii) Equity Internal Rate of Return (Equity IRR) The Equity IRR is an indicator to measure the return on equity, which comes from Japan investors, of an income generating project. The criterion for viable Equity IRR from the shareholder s point of view is given by rate of return on equity (ROE). ROE is given as 20% on the basis of actual condition of investment circumstance in Vet Nam. Equity IRR is given as the following formula. (modified) NPV = Σ [ [R y - C y - E y ] / [1.0 + Equity IRR] y-ybase ] = 0.0 y=ybase, ycomplete Where (modified) NPV: Net Present Value of the revenue in a modified form R y : Revenue at certain year of y C y : Cost including O&M cost and loan amortization at certain year of y E y: Equity injection at certain year of y (iv) Debt Service Coverage Ratio (DSCR) The Debt Service Coverage Ratio (DSCR), also known as "debt coverage ratio," is the ratio of cash available for debt servicing to interest and principal payments. It is a popular benchmark used in the measurement of SPC's capability to produce enough cash to cover its debt payments. In general, 5-13

209 DSCR is required to be higher than 1.2 when the SPV s repayment capability is considered as strong enough. DSCR is given as the following formula. DSCR y = [R y - C y ] / L y Where DSCR y : Debt Service Coverage Ratio at a certain year of y R y : Revenue at certain year of y C y : Cost including O&M cost and corporate tax at certain year of y L y: Amount of loan amortization at certain year of y (v) Loan Life Coverage Ratio (LLCR) LLCR is a financial ratio used to estimate the ability of the SPC to repay bank loan. The LLCR is calculated by dividing the NPV of the money available for debt repayment by the amount of debt owed by the SPC. In general, LLCR is required to be higher than 2.0 when the SPC s repayment capability is considered as strong enough. LLCR is given as the following formula. LLCR =Σ[R y - C y ] /ΣL y y=ybase, ycomplete y=ybase, ycomplete Calculation procedure as to above 5 indices are shown in the following example case, which assuming 6 years construction period from 2011 to 2016, 8 years operation period from 2013 to The following table is the model cash flow table following the above assumptions. Table5-15 Model cash flow table (1) NPV is given as follows: NPV = ( Net_R( y ) ) y=1 to 10 r : discount rate FIRR is given when NPV is equal to 0.0 as: NPV = ( Net_R( y, r = FIRR ) ) = 0.0 y=1 to

210 As for Equity IRR is calculated as follows: Table5-16 Model cash flow table (2) NPV is given s follows: NPV = ( Net_R( y ) ) y=1 to 10 Equity IRR is given when NPV is equal to 0.0 as: NPV = ( M_Net_R( y, r = Equiy IRR ) ) = 0.0 y=1 to 10 As for DSCR and LLCR are calculated as follows: Table5-17 Model cash flow table (3) DSCR is calculated in every year. DSCR ( y ) LLCR is calculated as follows: LLCR = [ M_Net_R( y ) ] [ LAM( y ) ] y=1 to 10 y=1 to

211 Results of Financial Analyses (1) PV-CG Financial evaluation was done for 3 cases varying the land acquisition cost to be shouldered by the SPC, i.e. Case 1: Case 2: The land acquisition cost is solely shouldered by public entity in Viet Nam, The land acquisition cost is shouldered by the SPC only, and Case 3: The land acquisition cost is shared between the public entity in Viet Nam and the SPC according to FIRR and Equity-IRR criterion. The amount of land acquisition cost to meet such criterions that FIRR is higher than WACC (7.0%) and Equity-IRR is higher than ROE (20.0%) was estimated. As a result, the share of land acquisition cost shouldered by the SPV is less than 63%. Traffic demands are forecasted under the assumption that toll rate is 800 [VND/km] and 1,000 [VND/km] for passenger vehicle. 5-16

212 1) Case 1 (Land acquisition cost is solely shouldered by public entity in Viet Nam) Table 5-18 Summary of the results for Case 1 Toll Rate=800 [VND/km] Toll Rate=1,000 [VND/km] NPV (Discount rate = WACC) 5,859,190 [million VND] 7,225,480 [million VND] FIRR (WACC = 7.0%) 13.2 % 15.3 % Equity-IRR (ROE = 20.0%) 26.1% 29.5% Average DSCR 2.1 (ranges from 1.4 to 2.3) 2.4 (ranges from 1.5 to 2.7) LLCR [million VND] Figure 5-3 Cash Flow Diagram for Case 1 (Toll Rate = 800 [VND/km]) [million VND] Figure 5-4 Cash Flow Diagram for Case 1 (Toll Rate = 1,000 [VND/km]) 5-17

213 2) Case 2 (Land acquisition cost is shouldered by the SPC only) Table 5-19 Summary of the results for Case 2 Toll Rate=800 [VND/km] Toll Rate=1,000 [VND/km] NPV (Discount rate =WACC) -889,470 [million VND] -341,190 [million VND] FIRR (WACC = 7.0%) 4.4% 6.0% Equity-IRR (ROE = 20.0%) 9.7% 14.7% Average DSCR 1.1 (ranges from 0.8 to 1.3) 1.3 (ranges from 0.8 to 1.5) LLCR Figure 5-5 Cash Flow Diagram for Case 2 (Toll Rate = 800 [VND/km]) [million VND] [million VND] Figure 5-6 Cash Flow Diagram for Case 2 (Toll Rate = 1,000 [VND/km]) 5-18

214 3) Case 3 (Land acquisition cost is shared between public entity in Viet Nam and SPC) Table 5-20 Summary of the results for Case 3 TOLL Rate=800 [VND/km] TOLL Rate=1,000 [VND/km] NPV (Discount rate = WACC) -23,844 [million VND] 524,460 [million VND] FIRR (WACC = 6.4%) 6.7% 8.4% Equity-IRR (ROE = 20.0%) 16.4% 20.9% Average DSCR 1.4 (ranges from 0.9 to 1.5) 1.6(ranges from 1.0 to 1.8) LLCR Figure 5-7 Cash Flow Diagram for Case 3 (Toll Rate = 800 [VND/km]) [million VND] Figure 5-8 Cash Flow Diagram for Case 3 (Toll Rate = 1,000 [VND/km]) [million VND] 5-19

215 (2) MD-NB Financial evaluation was done for 4 cases varying the construction cost to be shouldered by the SPC or the Government of Viet Nam. The land acquisition cost is assumed to be shouldered by the Government of Viet Nam. Case 1: Case 2: Case 3: Case 4: All construction cost covering Sections A, B and C is solely shouldered by the SPC Construction cost for Sections A and B is shouldered by the SPC Construction cost for Sections A and C is shouldered by the SPC Construction cost for Section C only is shouldered by the SPC Traffic demands are forecasted under the assumption that toll rate is 800 [VND/km] for passenger vehicle. The forecasted revenue at the toll rate 800 [VND/km] shows the biggest amount. Therefore, the financial evaluation was conducted only in case that toll rate is 800 [VND/km]. 5-20

216 (1) Case 1 (All construction cost covering section A, B and C is solely shouldered by the SPC) Case 1 is the case that all the construction cost for Sections A, B and C is covered by toll revenue only. As shown in the following diagram, construction cost is too huge therefore debt service amount is too big comparing to the amount of toll revenue. Therefore, financial performance is very poor. FIRR and Equity IRR is not available, DSCR as well as LLCR is very low. The result means that Case 1 cannot be operated under the self-financial scheme and any kind of public support may be indispensible. Table 5-21 Summary of the results for Case 1 Toll Rate=800 [VND/km] NPV (Discount rate = WACC) FIRR (WACC = 7.0%) Equity-IRR (ROE = 20.0%) -5,962,660 [million VND] N/A N/A Average DSCR 0.1 (ranges from 0.05 to 0.15) LLCR 0.1 [million VND] Figure 5-9 Cash Flow Diagram for Case 1 (Toll Rate = 800 [VND/km]) 5-21

217 (2) Case 2 (Construction cost for Section B and C is shouldered by the SPC) Case 2 is the case that the construction cost for Sections A and B is covered by toll revenue only. As shown in the following diagram, construction cost is still too huge therefore debt service amount is too big comparing to the amount of toll revenue. FIRR is still negative, Equity IRR is not available, DSCR as well as LLCR is very low. The result means that Case 2 can also not be operated under the self-financial scheme and any kind of public support may be indispensible. Table 5-22 Summary of the results for Case 2 Toll Rate=800 [VND/km] NPV (Discount rate = WACC) FIRR (WACC = 7.0%) Equity-IRR (ROE = 20.0%) -5,311,830 [million VND] N/A N/A Average DSCR 0.14 (ranges from 0.05 to 0.15) LLCR 0.16 [million VND] Figure 5-10 Cash Flow Diagram for Case 2 (Toll Rate = 800 [VND/km]) 5-22

218 (2) Case 3 (Construction cost for Section A and C is shouldered by the SPC) Case 3 is the case that the construction cost for Sections A and C is covered by toll revenue only. As shown in the following diagram, the financial performance of Case 3 is still very poor. FIRR is still negative, Equity IRR is not available, DSCR as well as LLCR is very low. The result means that Case 3 can also not be operated under the self-financial scheme and any kind of public support may be indispensible. Table 5-23 Summary of the results for Case 3 Toll Rate=800 [VND/km] NPV (Discount rate = WACC) -3,039,816 [million VND] FIRR (WACC = 7.0%) % Equity-IRR (ROE = 20.0%) N/A Average DSCR 0.23 (ranges from 0.1 to 0.3) LLCR 0.26 [million VND] Figure 5-11 Cash Flow Diagram for Case 3 (Toll Rate = 800 [VND/km]) 5-23

219 (4) Case 4 (Construction cost for Section C only is shouldered by the SPC) Case 4 is the case that the construction cost for Section C is covered by toll revenue only. As shown in the following diagram, the financial performance of Case 4 is slightly improved due to reduction of the huge amount of construction cost. However FIRR is not large enough comparing to WACC, Equity IRR is is not large enough comparing to ROE, DSCR as well as LLCR is very low. The result means that Case 4 can also not be operated under the self-financial scheme and any kind of public support may be necessary. Table 5-24 Summary of the results for Case 4 Toll Rate=800 [VND/km] NPV (Discount rate = WACC) -86,525 [million VND] FIRR (WACC = 7.0%) 5.1 % Equity-IRR (ROE = 20.0%) 0.8 % Average DSCR 1.2 (ranges from 0.5 to 1.4) LLCR 1.5 [million VND] Figure 5-12 Cash Flow Diagram for Case 4 (Toll Rate = 800 [VND/km]) 5-24

220 5.2.6 Sensitivity Analysis for PV-CG Sensitivity Analysis Carrying Cost of ROW Financial Analyses were conducted using different degrees of shouldering ROW cost the total amount of which is VND 2,778,690 Million. The summary results are presented in Tables 5-25 and 5-26 which clearly indicates that the viability of the project cannot be achieved without some degree of GOV s support to shouldering ROW cost. This sensitivity analysis points to a crucial aspect of the PPP Program. It shows that if the GOV were to attract the Private Sector, the issue of how much will be its contribution in terms of the rightof-way will have to be resolved being a decisive factor for negotiations. Table 5-25 Financial Results at Different Degrees of Shouldering ROW Cost (Toll Rate = 800 [VND/km]) ROW Carrying Options FIRR Equity- AVG. IRR DSCR 1 GOV carries the ROW Cost 13.2% 26.1% SPC carries the ROW Cost 4.4% 9.7% SPC carries 63% of ROW Cost & GOV carries 37% of ROW Cost 6.7% 20.6% 1.2 Table5-26 Financial Results at Different Degrees of Shouldering ROW Cost (Toll Rate = 1,000 [VND/km]) ROW Carrying Options FIRR Equity- AVG. IRR DSCR 1 GOV carries the ROW Cost 15.3% 29.5% SPC carries the ROW Cost 6.0% 14.7% SPC carries 63% of ROW Cost & GOV carries 37% of ROW Cost 8.4% 20.9% Sensitivity Analysis Toll Rate Taking account of the most recent trend of toll rate level in the newly planned/constructed expressways, the Toll Rates (for passenger car) of VND800 and VND1,000 were used in the financial analyses. Table 5-27 summarizes the results. If judging simply based on the financial analyses and the traffic/revenue forecasts behind those, Toll Rate of VND1,000 giving higher viability should be selected, while VND800 also provides high viability subject to GOV s shouldering all or a substantial part of ROW cost. At selection of the initial toll rate, to be considered are not only the analytical reasonableness, but also political viewpoints such as the users acceptability/affordability, coordination with Cau Gie Ninh Binh Expressway, the degree of ROW cost, pooling of surplus toll revenues, etc. and the judgment should be done globally. 5-25

221 Table 5-27 Sensitivity of PV-CG Project to increase in Initial Toll Rates FIRR (PV-CG) WACC=7% (VND million) ROW Carrying Options ITR = VND800 ITR = VND1,000 ITR = VND800 ITR = VND1,000 1 GOV carries the ROW Cost 13.2% 15.3% 5,859,190 7,225,480 2 SPC carries the ROW Cost 4.4% 6.0% -889, ,190 3 SPC carries 63% of ROW Cost & GOV carries of 37% of ROW Cost 6.7% 8.4% - 23, , MD-NB Carrying Construction Cost MD-NB consists of 3 sections (Section A: Mai Dich Thang Long South; Section B: 2 nd Thang Long Bridge; Section C: Thang Long North Noi Bai). Depending on different degrees of SPC s shouldering construction costs of 3 sections, 4 cases of financial analyses were conducted. Table 5-24 summarizes the results. It turned out that the financial viability of the project is poor even in Case 4 where SPC carries only the construction cost of Section C with the smallest section among 3 sections. This is attributable to the existence of the competing roads such as the ordinary road in parallel with the MD-NB expressway and also the Noi Bai International Airport Nhat Tan Bridge connecting road. Due to the competing roads (mainly due to the former), the traffic volume on the expressway is expected to be limited. Hence, in order to attract the private sector to the MD-NB expressway project with a functional handicap, it is considered that in addition to the GOV s injecting the public fund (including ODA) into Sections A & B the construction costs of which are high, a government cash subsidy is also required to improve the financial viability of the project. Another feasible approach may be to implement the project on a BT basis collateralizing the development right of lands possessed by Hanoi City. Table5-28 Financial Results at Different Degrees of Shouldering Construction Cost (Toll Rate = 8000 [VND/km]) Construction Cost Carrying Options FIRR Equity- AVG. IRR DSCR 1 SPC carries the Construction Cost of Sections A, B & C N/A N/A SPC carries the Construction Cost of Sections A & B N/A N/A SPC carries the Construction Cost of Sections A & C -12.6% N/A SPC carries the Construction Cost of Section C 5.1% 0.8%

222 PV-CG - Inflation & Foreign Exchange Rate Inflation and foreign exchange rate (FOREX) change are considered as follows in the implementation of financial analysis and interpretation of its results. (1) Although it is quite difficult to forecast inflation and FORX change in a quantitative manner, project investors and lenders should inevitably control the risks pertinent to those factors. This is particularly true in case of providing equity and/or loan in a foreign currency. What is usually done to cope with those risks is to incorporate inflation change and FOREX change in the toll rate adjustment formula to secure the rate of return at the necessary level by adjusting the toll rate accordingly. (2) In this study the above theoretical but complicated approach was not adopted, but a simple and conservative approach was taken. In other words, the financial analyses were conducted setting the project period a little short (20 years) and the toll rate fixed throughout the project period. The above approach intended to indicate the bottom line for the inflation/forec change issues to be noted in the project contract negotiation and also to leave the room of upward toll/project period adjustment and/or in case of having actual problems at the implementation stage. In interpretation of the financial analysis results, it should be noted that the profit in the cash flow includes not only SPC s retained earnings but also impact of inflation/forex change. 5-27

223 5.3 Economic Evaluation Results General (1) Methodology The economic evaluation is to examine the economic viability of project by comparing economic cost of the projects and economic return (so-called social benefit) to be generated in the regional or national economy. Evaluation indicators are Net Present Value (NPV), Economic Internal Rate of Return (Economic IRR) and Benefit Cost Ratio (BCR). The economic evaluation method is used the standard discount cash flow comparing by cost and benefit. (2) General Condition As described in chapter Traffic Demand Forecast, benefit of project is measured through with and without comparison. Using the results of traffic assignment to a network with a project subject to evaluate and also to the same network but without the project, total VOC (Vehicle Operation Cost) and TTC (Travel Time Cost) of each case are calculated. And then benefit is obtained as the difference of them between with and without cases Project Cost Project costs stated in the chapter Financial Evaluation of the Project, which are presented in the financial price. For Economic analysis, costs and benefits are analyzed form the point of view of society, which means interest on borrowing, taxes, direct or indirect subsidies should be excluded. In this regard, for this study, conversion rate 0.85 from financial cost which is used in VITRANSS2 is applied. Economic Cost of Phap Van Cau Gie is shown in Table5-23 and that of Mai Dich Noi Bai is shown in Table

224 Table 5-29 Economic Cost of Phap Van Cau Gie (Mil. VND) Financial Economic Cost (0.85 of Financial Cost) Cost Phase1 Phase2 Total Basic Design Services 26,514 4,429 18,108 22,537 Detailed Engineering Design Services 39,771 6,644 27,161 33,805 Construction Works 2,651, ,910 1,810,761 2,253,671 Construction Supervision Services 79,541 13,287 54,323 67,610 Environmental Management Plan 26,514 4,429 18,108 22,537 PPP Project Asministration Cost 84,712 14,151 57,854 72,005 UXO Clearance 2, ,928 2,400 Physical Contingencies 145,563 24,316 99, ,728 Price Contingencies 524,025 87, , ,422 Total 3,580, ,175 2,445,538 3,043,714 Table 5-30 Economic Cost of Mai Dich Noi Bai Financial Cost (Mil. VND) Economic Cost (0.85 of Financial Cost) Basic Design Services 69,509 59,083 Detailed Engineering Design Services 104,264 88,624 Construction Works 6,950,900 5,908,265 Construction Supervision Services 208, ,248 Environmental Management Plan 69,509 59,083 PPP Project Asministration Cost 222, ,769 UXO Clearance 7,403 6,292 Physical Contingencies 381, ,368 Price Contingencies 1,373,795 1,167,725 Total 9,387,597 7,979, Benefit Estimate Benefits of this study are consist from followings, Savings the Travel Time Cost (TTC) Savings the Vehicle Operating Cost (VOC) 5-29

225 Table 5-31 Travel Time Costs (TTC) by Vehicle Category Vehicle Type Motorcycle Car Small- Medium Bus Large Bus Driver Monthly Wage ( 000VND) Assistants Monthly Wage( 000VND) Driver + Assistant Hourly Rate (VND/h) Passenger Monthly Wage (7000VND) 3,000 3,000 3,000 3,000 Hourly Wage Rate (VND/h) 18,750 18,750 18,750 18,750 Percentage Work Time Passengers 40% 40% 40% 40% Passenger Time Cost (VND/h) 7,500 7,500 7,500 7,500 Vehicle Occupancy Freight Volume (Tonne) Freight Value per tonne hour (VND/tonne) Time Cost per Hour by Vehicle Type (VND/h) Pick-Up & 4WD Truck Medium Truck Heavy Truck Truck & Trailer 3,500 3,500 3,500 3,500 3,500 4,000 5,000 2,500 2,500 1,750 1,750 3,000 3, ,875 37,500 37,500 32,813 32,813 43,750 50, ,250 3,250 3,250 4,200 13,125 60, , ,000 36,713 43,863 84, ,300 Note: Vehicle Occupancy and Freight Volume are Calculated Based on Traffic Survey Result Conducted for This Study. Source: TA 7155-VIE Preparing the Ben Luc - Long Than Expressway Project (ADB,2010) 5-30

226 Table 5-32 Vehicle Operating Cost (VOC) following speed by Vehicle Category Car Bus Truck (km/h) Motorcycle Pick-Up Small- Large Medium Heavy Car & 4WD Medium Bus Truck Truck Truck Bus 10 1,008 8,008 12,125 14, ,874 11,518 13, ,977 10,911 12, ,503 10,415 11, ,113 9,973 10, ,723 9,642 10, ,388 9,311 9, ,109 9,035 9, ,859 8,870 8, ,636 8,759 8, ,468 8,704 8, ,357 8,704 8, ,273 8,759 8, ,247 8,870 8, ,245 9,035 8, ,062 4,273 9,311 9,136 Unit: VND Truck & Trailer 90 1,142 4,368 9,642 9,574 Source: Nhat Tan Bridge to Noi Bai Airport Connecting Road Construction Project Feasibility Study, TEDY, MOT PMU 85, Oct Cost Benefit Analysis Based on the estimated economic cost and benefit described in the previous sections, cost benefit analysis was calculated. The result is shown in Table The stream of cost benefit analysis are shown in Table 5-34 for Phap Van Cau Gie and in Table 5-35 for Mai Dich Noi Bai. Discount Rate was set as 12% considering Long Term (10 year) Government Bond Interest which was 11.75% as of December Table 5-33 Summary of Cost Benefit Analysis Evaluation indicators Phap Van Cay Gie Mai Dich Noi Bai EIRR 16.4% 14.5% NPV(Mil. VND, Discount rate12%) 1,625, ,163 BCR(Discount rate12%)

227 5-32 Table 5-34 Benefit Cost Stream of Phap Van - Cau Gie

228 5-33 Table 5-35 Benefit Cost Stream of Mai Dich Noi Bai

229 5.3.5 Sensitivity Analysis Cost The elasticity of EIRRs against the economic cost is the range of 1.0 and 1.3 and against the benefit is in the range of 0.7 and 1.0. The figures of EIRR are shown in Table 5-36 for Phap Van Cau Gie and in Table 5-37 for Mai Dich Noi Bai. In case of investment cost +30% and benefit -30% as base case, EIRR is 13.7% for Phap Van - Cau Gie but 9.1 %, less than 12%, for Mai Dich Noi Bai. Table 5-36 Sensitivity Analysis by Changing Cost and Benefit for Phap Van Cau Gie (EIRR:%) Benefit Base case -10% -20% -30% Base case % % % Cost Table 5-37 Sensitivity Analysis by Changing Cost and Benefit for Mai Dich Noi Bai (EIRR:%) Benefit Base case -10% -20% -30% Base case % % % Conclusion of economic analysis The result of economic analysis, Phap Van Cau Gie Expressway is effective shown by EIRR, NPV and BCR figures. Mai Dich Noi Bai is still effective but in case of higher cost, EIRR is insufficient 5-34

230 CHAPTER 6 PROJECT SCHEDULE

231

232 In this study, it is concluded that PV-CG Expressway and MD-NB Expressway should be dealt with independently. The discussion and recommendation concerning PPP scheme are shown in Appendix 3-4. Hence, the schedule of each expressway project is prepared separately without any coordination. 6.1 PV-CG Expressway The project schedule of PV-CG Expressway was prepared taking account of the following constraints imposed by GOV and also the conditions given by MOT to a Japanese investor (NEXCO-Central) on 28 September (1) NEXCO-Central has a target plan, though still preliminary, to proceed with the project. NEXCO-Central s above desire is put on paper in a practical (but aggressive) manner as described in (2) & (3) below.. (2) NEXCO-Central intends to implement the PPP project formulation soonest. Memorandum of Agreement (MOA) to be signed by MOT and NEXCO-Central in st quarter Terms of Reference (TOR) for Toll Concession Agreement (TOA) to be concluded at mid-2011 Shareholders Agreement to be negotiated and concluded in 2011 TOA to be negotiated in 2011 and concluded in st quarter Loan Agreement to be negotiated in 2011 and concluded in e st quarter (3) The expressway will be opened in phases: Phase I: Project formulation process to comment and SPC to be set up in 2011 Preparatory activities (procurement, EIA, RP, etc.) to commence in 2011 No land acquisition required Upgrading of 4 lanes to commence/complete in 2012 Toll facilities installation to complete in 2012 (by VEC9 Opening in 2013 after upgrading the existing 4-lane expressway Phase II: Commencement of implementation concurrently with Phase I processing Land acquisition conducted concurrently with Phase I operation Frontage road construction to commence in 2014 and complete in 2015 Widening to 6 lanes to commence in 2015 and complete in 2016 Opening in 2017 after widening to 6-lane 6-1

233 Source: Study Team Fig ure6-1 Phap Van Cau Gie Expressway : Project Schedule 6-2

234 6.2 MD-NB Expressway It can hardly be expected to have early realization of the project due to the following reasons: The construction cost is too big due to many bridge works, which will require a significant length of time for fund raising and project formation. The project includes Hanoi urban areas and a large number of residents (about 9,500 persons) will be affected by land acquisition. Land acquisition and compensation procedures will require quite a long time. Land acquisition and compensation cost is too big, which will require a significant length of time for fund raising. Since the financial viability of the project is poor, if a PPP scheme is to be pursued, a large amount of the Government contribution is indispensable. Nonetheless, in order to conduct the financial and economic analyses the project schedule of MD- NB Expressway was prepared based on a rough assumption as follow. The schedule is set so that the financial and economic results are comparable, to some extent, with those of PV-CG Expressway, (1) The expressway project is divided into 3 sections: Section A: Section B: Section C: Mai Dich Than Long South (Construction Period: 30 months) 2 nd Thang Long Bridge (Construction Period: 42 months) Thang Long North Noi Bai (Construction Period: 30 months) (2) Preparation time for the project Four (4) years time is assumed from now to the commencement of construction for project preparation including land acquisition. 6-3

235 Source: Study Team Figure 6-2 Mai Dich Noi Bai Expressway : Project Schedule 6-4

236

237 CHAPTER 7 ORGANIZATION IMPLEMENTING THE PROJECT

238

239 7.1 Outline of Implementing Agency The GOV, through the Ministry of Transport (MOT), gave Vienam Expressway Corporation (VEC) the mandate to develop PV-CG (Decision No. 929/QD-BGTVT on 6/Apr/10) and MD-NB (Decision No. 103/QD-BGTVT on 14/Jan/10) to be Toll Ways. VEC was mandated to develop expressways following the Prime Minister s instructions based on Decision No. 1245/CP-DMDM dated 01 April 2004, with the Ministry of Transport issuing Decision No. 3033/QD-QD-BGTVT dated 06 October 2004 that officially set up Vietnam Expressway Corporation (VEC). VEC s role is to perform lead responsibility in the investment and development of the national expressway network. When established, VEC was a new model of investment in expressways first introduced in Vietnam, working in a form of a State-run enteprise. It mobilizes investment capital, operates expressways under the Government s guarantee, manages toll collection and supply of services to repay loans and ensures profits for re-investment. Current VEC business activities consist of promoting and developing five active expressway projects and well as developing the expressway network plan. In addition, VEC is proceeding with its bond issuances as well as negotiations on mixed ODA/OCR loans and discussing PPP/BOT approaches Organization VEC s organization has been evolving to cope with the increasing workload from the ongoing projects as well as to prepare for the near future demand. In March 2010 VEC was converted from a state-owned enterprize to an one-member limited liability company and the conversion plan is still undergoing revisions. On the other hand, the road subsector of MOT is being reorganized, with the establishment of the Directorate for Roads of Vietnam (DRVN) and the Vietnam Expressway Management Administration (VEMA) with a view to creating full-service regulating entities for roads and expressways. VEMA will be a regulating entity for expressways and is expected to be established soon. The demarcation of responsibilities between VEMA and VEC needs to be carefully addreessed when VEMA is established. VEC will soon need an O&M team when Cau Gie Ninh Binh Expressway comes to operation which is expected at the end of 2011 or early The present VEC organization is shown below. 7-1

240 Figure 7-1 VEC Organization Source: VEC Home Page 7-2

241 7.1.2 VEC Projects VEC currently has the following expressway projects which have obtained financial sources for implementation: Project Construction Start Table 7-1 VEC Projects (Financing committed) Operation Start Principal repayment start Length (km) Fund Socurce Cost (US$mil) Cau Gie Ninh Bonds under construction Binh GOV 409 Noi Bai Lao ADB under construction Cai GOV 1,216 HCMC Long ADB JICA Thanh Dau under construction GOV Giay 932 Ben Luc 2012 ADB JICA Long Thanh (under design) GOV 1,609 Ha Noi Lang ADB EDCF Son GOV 1,394 Da Nang WB JICA Quang Ngai GOV 1,320 Total 667 6,880 Source: VEC Projects in the pipeline are as follows: Ha Long Mong Cai Expressway (128km) Phap Van Cau Gie Expressway (30km) Mai Dich Noi Bai Expressway (20.2km) Ninh Binh Thanh Hoa Expressway (121km) Thanh Hoa Ha Tinh Expressway (97km) Dau Giay Lien Khuong Expressway (191km) From the above, it is obvious that from the project management point of view, it is necessary to further strengthen the organization as more projects proceed to the implementation or operation stages VEC Financial Position (1) VEC s balance sheets for 2006 to 2009 are shown in Table 7-1. Over the last four years, VEC totally depends on deposit interest to spend on their administrative costs. From now on to 2012 when the first expressways are put into operation as planned, the company continues to finance operating costs by the decreasing interest income and projects administration cost allocation. (2) For the coming several years, construction of expressways (and loan disbursement) will continue, which will keep increasing the debts and assets. This trend will continue and the debt equity ration will be decreasing unless the equity is increased. (3) Table 7-1 indicates that the principal repayment for the loans for 5 expressways will commence from 2014 and the mount of repayment will keep increasing. According to ADB, depending upon the increase of traffic volume and toll revenue, VEC s financial position is expected to become stable after

242 Table 7-1 VEC s Balance Sheet (Unit: USD) ITEM 31/12/ /12/ /12/ /12/2009 A. SHORT-TERM ASSETS 13,818,215 35,548,414 84,882, ,311,719 I. Cash and Cash Equivalents 586, ,986 1,308,462 27,692,724 II. Short-term Financial Investment 526,316 13,343,684 22,684,211 0 III. Receivables 12,549,295 21,062,670 59,758, ,739,415 IV. Inventories V. Other Short-term Assets 156, ,073 1,131,334 1,879,580 B. LONG-TERM ASSETS 6,436,817 27,290,479 61,662, ,502,856 I. Long-term receivable II. Fixed assets 6,436,817 27,290,479 60,464, ,305,487 III. Long-term Investments IV. Long-term Investments 0 0 1,197,368 1,197,368 V. Other Long-term Assets TOTAL ASSETS 20,255,032 62,838, ,544, ,814,575 LIABILITIES AND EQUITY A. DEBTS 125,232 23,131,459 93,514, ,043, Short-term debts 123,176 2,073,914 7,522,483 46,498,977 II. Long-term debts 2,055 21,057,545 85,992, ,544,031 B. EQUITY 20,129,800 39,707,434 53,029,441 20,129,800 I. Equity 19,986,756 39,532,486 52,725,460 19,986,756 II. Others state-funded sources and funds 143, , , ,044 TOTAL LIABILITIES AND EQUITY 20,255,032 62,838, ,544, ,814,575 Source: VEC Table 7-2 VEC s Income Statement (Unit: USD) ITEM Income from Sales & Services 253, Deduction of Revenue Net income from Sales & Services 253, Cost of Goods Sold 253, Gross Incomes from Sales & Services

243 Income from Financial Activities 506, , ,579 95,409 Financial Activities Expenses Sales Cost Administrative Cost 183, , ,579 95,409 Net Profit from Business Activities 323, Other Income Other Expenses Other Profit Gross Profit before Tax 323, Current Corporate Income Tax Deferred Corporate Income Tax Profit after Income Tax 323, Source: VEC 7.2 Project Implementation Organization As discussed in Chapter 5, the recommended project implementation organization is a BOT type architecture. A key is to establish a Special Purpose Company (SPC) as the vehicle to ride into the PPP business. 7-5

244 JICA Source: Study Team PSIF Fig ure7-2 Recommended Project Organization 7-6

245 7.3 Evaluation of Capacity of Implementation Agency Similar to the other government agencies, VEC establishes a project management unit for each project when it comes to the implementation stage and assign a Director to manage the project management unit. To oversee the project from the VEC management position, a Deputy General Director is also assigned on top of the Director in charge. It is learnt that a Deputy General Manager is yet to be assigned to oversee the expressways in Northern Vietnam including both Phap Van Cau Gie and Mai Dich Noi Bai Expressways. Phap Van - Cau Gie Expressway is virtually the first experience of PPP expressway project for VEC and it is expected that a variety of experts/staff will be necessary to cover all aspects in a PPP project. It does not appear that VEC s current resources could cope with the requirements and therefore VEC should mobilize additional resources, paying particular attention to the following roles required in PPP projects. VEC should discuss with the private sector to share and/or strengthen the function as necessary: Project Manager - To understand/formulate/foresee the requirements of all aspects of the project, coordinate with all stakeholders and manage the project formulation/implementation team Engineering Consultant To determine the project scope Cost Estimate Specialist To estimate not only the facilities costs but also O&M costs Transport Specialist To forecast the traffic volume and toll revenues PPP Specialist To formulate the project architecture Financial Advisor To design and arrange the finance and negotiate with lenders Institutional Specialist To handle institutional matters pertinent to PPP projects in Vietnam Legal Specialist/Lawyer To handle legal matters and prepare legal documents such as Memorandum of Agreement, Toll Concession Agreement, Shareholders Agreement, Loan Agreement and so on Document Specialist To prepare tender documents 7-7

246 7-1

247 CHAPTER 8 TECHNICAL ADVANTAGES OF JAPANESE COMPANIES

248 8.1 Possible Form of Participation of Japanese Companies (1) Participation as an investor By bringing JICA s Private Sector Investment Finance and/or JBIC s Overseas Investment Loans together with their advantages (semi-soft loan + indirect government guarantee), a Japanese company s participation into an infrastructure project as an investor enables the project structure to be designed to minimize the financial burden to the local Government as well as the implementing agency. Project investment by private sector in developing countries associate various risks such as foreign currency exchange, overseas remittance, legislation change, war, civil war, etc. This often makes it difficult for a private investor to receive finance from commercial banks to implement project development to those countries. The objective of other official fund (OOF) is to eliminate such difficulties to enable the project development in developing countries. In particular, in projects on a BOT/PPP scheme, usage of OOF has a quasi-oda characteristic since the ownership of the project facilities will eventually be with the recipient country and contribute to infrastructure development stimulating the economy of the county. Besides, OOF is very attractive to Japanese investors, since finance from the Government of Japan makes them comfortable having indirect Government guarantee and also a soft loan with lower interest rate than commercial banks can be obtained. (2) Participation as a contractor Recently Japanese contractors have lost price-competitiveness in ordinary road/bridge projects overseas. The situation is the same in Vietnam, except a few exemptions, as road/bridge projects are dominated by Vietnamese, Korean and Chinese contractors. Aggravating the above situation is that most Japanese contractors (and their banks) have become quite risk-conscious in the Vietnamese construction market having had significant losses partially attributable to the Vietnamese unique laws/regulations and bureaucracy in the system. However, it appears that Japanese contractors are coming back to the Asian construction market, in particular the Vietnamese market, maybe due to the continuing recession in Japan and projects in Middle East nearing completion. In order to prepare for it, Japanese public and private sectors have started an action plan to try to improve or adapt the construction project environment in Vietnam, and therefore, a possibility of Japanese contractors participation into the projects where they have advantages technically and/or institutionally may become high. <by technical advantages> Generally speaking, Japanese contractors may still have some advantages in the projects with the following kinds of aspects: Difficult projects requiring state-of-the-art technology Projects in urban areas requiring rapid construction Projects requiring a construction method minimizing the effects to the existing traffic on narrow roads or adherence to the traffic safety and construction safety during construction Projects requiring special technology, for example, for soft ground treatment or for anti-liquefaction <by institutional advantages> STEP loan projects 8-1

249 Projects implemented by Japanese investors Projects requiring the contractor s shouldering the completion risk and a long term maintenance guarantee, for example, under PPP/BOT projects (3) Participation as an Operator Since there is virtually no tolled expressway in Vietnam, a possibility of a Japanese expressway operator participating into an expressway project with a role of O&M partner, trainer and/or advisor is supposed to be high. However, its business scale is small in terms of money, and the business chance is expected to be smaller in the future after O&M staff have been trained. Hence, it is recommended not to target the O&M business alone, but to use it as a tool make a package plan combining with other approaches to enable Japanese investors to strategically get into the project. 8.2 Advantages of Japanese Companies in this Project (1) Technical Advantages Technically challenging issues in PV-CG and MD-NB Expressways are summarized below together with the proposed countermeasures bearing Japanese contractors participation in mind. Table8-1 Technical Issues and Proposed Counter Measures Expressway Section Technical Issue Proposed Countermeasure In order to minimize the maintenance cost as well as the toll revenue loss during the maintenance works, carry out the initial pavement works with high Employ a Japanese pavement contractor PV-CG quality. GOV may require permeable pavement. Environmental constraints, such as minimum CO2 emission may be Use Stabilizer Method imposed for repaving works MD-NB Above the railway at the south of Thang Long Bridge the span length of viaduct needs to be significantly long and curved. Safety during erection of deck to be ensured. Use steel girders (2) Economical Advantages Generally speaking, it is quite difficult to find economical advantages for Japanese contractors in terms of price-competitiveness unless the project is difficult under special conditions. This project (PV-VG Expressway) is not an exception. However, it may be feasible to create the economical advantages for Japanese companies by incorporating into the project the factors (such as quality, safety, schedule, budget, construction planning, financing and integrated capacity) to which Japanese companies are still competitive to differentiate them from other countries companies. 8-2

250 (3) ITS Lookes at PV-CG Expressway project from the above point of view, it could be mentioned that Japanese companies have economical advantages in the following points: By means of JICA s Private Sector Investment Finance, the project investment plan is prepared without a significant financial burden to GOV and VEC. In case the Japanese investor requires the contractor to take out the full completion guarantee (budget & schedule) and long-term quality guarantee with a view to completely cut off the construction risks, Japanese companies could be in apposition to have economical advantages. The ITS technology is Japan is at the highest level in the world. Japanese Government and private companies have been trying to enter into the Vietnamese market. To make it successful, it is not adequate to only rely on the technical superiority, but it is necessary for Japanese Government and private companies to have wise business approach. The ETC system for Phap Van Cau Gie Expressway is incorporated into that of Cau Gie Ninh Binh Expressway and the detailed design has already commenced. The basic design was done by TEDI and Cadpro of Vietnam, the detailed design by Gungxi Institute of China and the design appraisal by KEC of Korea. The design includes the system using 5.8Ghz radio wave has already been included in the basic design. Although Japanese companies are good at this system, both China and Korea are also familiar with it, and therefore there is little chance for Japanese companies to be involved in the ETC system of Phap Van Cau Gie Expressway because of their weak cost-competitiveness. On the other hand, Noi Bai Toll Plaza is currently being operated manually relatively smoothly. Hence, If the Japanese companies intend to be involved in the ITS/ETC of Mai Dich Noi Bai Expressway, it is necessary to coordinate/negotiate the operation with the present operator before discussing technical matters. 8.3 Necessary Measures to Promote Japanese Companies Participation If evaluation is made for each Japanese companies from limited financial points of view, he will be rated low compared with Vietnamese, Chinese and Korean companies who have enjoyed financial competitiveness, it will not merit the Japanese companies. Thus, the following measures are needed and recommended in order that Japanese companies are evaluated properly taking consideration of their own advantages: A Japanese company will be a part of the team forming the project and determine the orientation of the project as well as the judgment criteria which merits the succeeding Japanese companies (such as contractors). It will introduce not only the integrated project operation viewpoint but also Japanese sense of values as necessary. As a support tool financially, Japanese Government will actively deploy its institutional funds such as JICA s Private Sector Investment Finance. Concurrently, public and private sectors will jointly proceed with improvement of the construction project environment in Vietnam to improve the motivation of Japanese contractors. 8-3

251

252 CHAPTER 9 FUNDING PROSPECT

253 9.1 Funding Source and Financial Planning Possible Funding Sources This Chapter provides summary of the findings which were previously discussed in Chapter 5.3. Through the previous discussion, mainly three possible funding sources were identified as follows:. (i) Bank Loan (ii) Corporate Bonds (iii) Equity Bank loan includes several types such as; Public Loan funded by international donor agencies Commercial Bank Loan funded by overseas mega-bank or domestic bank loan in Vietnam Bank Loan (Public Loan): Public loan includes the bank loan funded by international financial institutions such as JICA, JBIC, ADB, IFC. This kind of bank loan is, in general, provided aiming at the achievement of the public duty such as pursuing better social welfare, poverty alleviation and public benefit instead of commercial profitability. This kind of loan provides investors with some loan incentives for those who are engaged in the infrastructure development in developing countries. Public loan has mainly two significant characteristics. The one is that it is soft loan with low interest rate and long repayment period. Moreover the public loan does not bring about any additional liability on the borrowing countries which, in general, are shouldering huge amount of cumulative repayment liability of official loan. The other is that it can function as a risk guarantee facility for investors. Bank Loan (Commercial Loan from Overseas Mega-bank): Since this a commercial loan, it provides loan with higher interest rate and shorter repayment period comparing to the public loan. Overseas mega-bank like HSBC or Mizuho has plenty of experiences and professional skills in the field of project finance. However, as a whole, financial cost is significantly high. Bank Loan (Commercial Loan from Vietnamese Bank): There exist many state owned commercial banks in Vietnam. Recent lending interest rate provided by them has reached at extremely high level, that is to say, 18% to 20%. Most of the investors can never afford such high interest rate. Apparently, this loan provides neither grace period nor long repayment periods. Therefore, in general, financing cost is too high for investors to procure them. Corporate Bonds: Issuance of corporate bonds is a general financial scheme to supplement the amount of bank loan in general. However, in recent Vietnam, most interest rate of the corporate bonds is extremely high, that is to say, 13% to 14%. Maturity period is very short as five years. Furthermore, current bond market in Vietnam is not functioning properly. Therefore corporate bonds can not attract ordinary investors due to low liquidity. Equity: Equity injection has a big advantage in terms of rapidity of financing in its nature. Equity can be injected simply based on the investors decision. However, in general, the amount of equity injection has limitation comparing with the bank loan in terms of financial scale. In most cases, share of amount of equity is 20% to 30% of total financial requirement. 9-1

254 9.1.2 Financial Planning Taking account of the rapidity of procedure of the financial procurement, equity injection can be said as the fastest financial scheme. In general, as for procurement of bank loan, it takes long time for reaching of the financial close between borrowers and the bank. However, considering the amount of finance, the biggest amount of capital can be procured from the bank loan. These conditions should be carefully taken into account in making proper financial planning. As previously discussed in Chapter 5.2, equity is injected to the very first stage of the construction. After that, remaining initial investment cost is financed by the bank loan which should be the public loan. Taking account of the high financing cost for commercial bank loan, such loan should be procured as a bridge loan with very short period or as supplemental financing. 9.2 Examination of Financial Feasibility As for the feasibility of above mentioned financial schemes, it can be said that public loan and equity are the most feasible financing schemes on the basis of the following assessment results as previously discussed in Chapter 5.2. Bank Loan (Public Loan): Its advantage is that it can function as a low cost tool as well as risk alleviation tool, while its disadvantage is that it might take long time to reach financial close due to bureaucratic negotiation procedure. As a whole, this loan can be evaluated as Excellent. Bank Loan (Commercial Loan from Overseas Mega-bank): Its advantage is that there exist a plenty of trustworthy mega banks which have affluent financial skills and experiences, while its disadvantage is that risk premium is expected to be very high, therefore this kind of loan may be very costly. As a whole, this loan can be evaluated as Partially Satisfactory. Bank Loan (Commercial Loan from Vietnamese Bank): Its advantage is that there exist lots of state owned commercial banks in Vietnam so that making contact with them is relatively easy, while its disadvantage is that current interest rate is too high for investors to borrow and repayment period is too short as well, therefore this kind of lone is very costly. As a whole, this loan can be evaluated as Unsatisfactory. Corporate Bonds: Its advantage is that it contributes to make various kinds of financial portfolio, while its disadvantage is that interest rate is very high, and period of maturity is very short (5 years), therefore issuance of bonds is very costly. As a whole, this loan can be evaluated as Unsatisfactory. Equity: Its advantage is that fund injection is relatively more flexible comparing with the bank loan or issuance of corporate bonds, while its disadvantage is that return on equity is expected to be more than 20%. Furthermore, equity form Japanese corporation may be exposed to the risk of change of foreign currency exchange rate. As a whole, this loan can be evaluated as Satisfactory. 9.3 Cash Flow Analysis Based on the above mentioned evaluation process, public loan which is provided by JICA, and equity injection were identified as the most appropriate funding sources. As for financial performance of the selected above two funding facilities, conventional cash flow analysis was conducted and feasibility of the introduction of these two funding sources was quantitatively confirmed as discussed previously in Chapter 5.1. Evaluation of the quantitative feasibility of the introduction of public loan and equity injection was conducted through examination of the DSCR (Debt Service Coverage ratio), LLCR (Lone Life Coverage Ratio) for loan, and Equity IRR (Equity Internal rate of return). According to the results of the evaluation provided in Chapter 5.2, all of the evaluation indices of DSCR, LLCR and equity IRR are satisfied with the criterions. More detailed discussion is given in Chapter

255

256 CHAPTER 10 ACTION PLAN AND ISSUES

257

258 10.1 Actions taken or to be taken by the Japanese proponent toward the formulation of the Project (1) NEXCO Central made a presentation on the Phap Van Cau Gie Expressway Project to MOT and VEC in September The attendees were MOT, DRVN, VEC, TED and NEXCO. (2) Subsequently, as per MOT s instruction mentioned in Sub-Clause 10.2(1), NEXCO Central and VEC have formed a working group to jointly study the implementation scheme of the project. (3) In response to the request for proposal announced by JICA on 12 th November 2010 for PPP Infrastructure Study, Katahira & Engineers International, NEXCO Central and Itochu jointly submitted a proposal for Study on the PPP Program for the Phap Van Cau Gie Expressway Project. In this study, it is aimed to fabricate the results of this METI FS Study on the PPP Program for the Hanoi Urban Expressway Development to bring the project into the actual formulation stage. (4) NEXCO Central made an Interim report presentation on the Phap Van Cau Gie Expressway Project to MOT and VEC on 29 th December The attendees were MOT, DRVN, VEC, TED and NEXCO Central. (5) The above proposal was approved by JICA in January It is expected that the study will commence in April 2011 and the SPC be established in November Actions taken or to be taken by the concerned agencies in Vietnam toward the formulation of the Project (1) In the letter dated 7 th October 2010, MOT expressed its acceptance of NEXCO Central s proposal and instructed NEXCO Central and the concerned agencies in Vietnam to further study the project to submit another proposal to MOT. (2) Under the above MOT s instruction, NEXCO Central and VEC have formed a working group and been jointly drawing up the implementation scheme of the project. (3) VEC entrusted a local design consultant (TEDI) to conduct the Basic Design for Phap Van Cau Gie Expressway Phase 1 at the end of (4) In the Interim Report Presentation on 29 th December 2010, MOT Vice-Minister Mr. Duc issued the notice as follows: (i) MOT agrees to the project plan proposed by NEXCO Central, i.e. (a) VEC will maintain the concession right and the SPC will obtain the re-concession right from VEC; (b) the project will be implemented in 2 phases. (ii) MOF shall implement the process of transfer of the ownership of the existing Phap Van Cai Gie Expressway asset from DRVN to VEC (as of January 2011, valuation of the asset by MOT/VEC ongoing). (iii) VEC shall submit the project plan to MOT soonest. VEC and NEXCO Central shall jointly prepare a detailed financial plan for the project. (iv) VEC shall prepare technical documents including the existing ROW limits, traffic safety plan during construction/operation, and soft ground treatment plan. 10-1

259 10.3 Legal and Financial Constraints (1) Legal Constraints (a) The newly promulgated PPP regulation named Regulation on Public-Private Partnership Investment Piloting (Decision No. 71/2010/QD-TTg dated 9 th November 2010) stipulates that the total value of the State contribution shall not exceed 30% of the total project investment except otherwise decided by the Government. In the light of the above stipulation, VEC s investment amount and method to the SPC and the costs of land acquisition, resettlement and compensation should be carefully studied. (b) At present, the fixed assets of Phap Van Cau Gie Expressway are possessed by the Directorate for Roads of Vietnam (DRVN). The procedures required for the transfer of the assets to VEC or investment-in-kind or lease of the assets to the SPC should be examined. (c) By the regulation, the tolls collected at the toll roads in Vietnam should be delivered to MOF before distribution. Whether or not it is possible to simplify and expedite the money flow from road users to the SPC should be examined. (d) Concerning the project period, it is expected that some kind of criteria will be imposed by the GOV. Such limit should be applied either directly to the length of years the project or indirectly to the revenue amount/the rate of return. Based on the detailed financial analysis, the criteria should be studied and agreed. (e) According the Vietnamese regulations, the Basic Design for the large infrastructure projects, should be approved by the Prime Minister, for which their EIA should have been approved by MONRE s (or DONRE s) in advance. Without those approvals, the procedures including land acquisition and detailed design cannot be commenced. Since it is a time-consuming process, it is recommended that required procedures shall be practiced soonest possible. (2) Financial Constraints (a) At the macro level, the amount of Vietnam s public debt has exceeded 50% of GDP and is nearing to 60%. At the micro level, on the other hand, the total amount of VEC s debt consisting of ODA loans and bonds has exceeded US$3bil and is expected to reach US$5bil in It is desirable to formulate the project in such a manner as minimizing the financial burden to Vietnamese side. (b) VEC s budget for administration is largely supported by ODA loans for the ongoing projects. the loan repayment of VEC will begin in Thus, it is desirable to ensure that the operation of the toll revenue from Phap Van Cau Gie Expressway shall commence in 2013 in order to secure cash flow collected every day Necessity of Further Studies As far as PV-CG Expressway is concerned, the next step is to manage to formulate the project, for which the following studies are required. (1) To conduct Basic Design (2) To conduct EIA (3) To conduct RP (4) To confirm the costs and schedule for land acquisition, resettlement and compensation (5) To confirm the legal procedures necessary for signing the Toll Concession Agreement (TCA), the conditions imposed by MOA and the necessity of TOR of TCA. (6) To review traffic forecast and toll revenue forecast (7) To review financial analyses The Toll Concession Agreement Contract, among others, is the most important document since it addresses the essence of the project concept. The following is a suggested outline of the Toll Concession Agreement Contract. This outline does not claim to cover all aspects of the agreement but attempts to raise as much matters and issues as possible. 10-2

260 I. General Agreement Remarks Recitals Definition of Terms & Interpretations Intent of the SPC to: Finance, To be based on the legal rationale : of the SPC Design, and Construct the toll road being established (JV Agreement is cited) with facilities reference to MOA between JI-A and MOT. Subsequent Authorization Decision/Circular from MOT approving SPC Investment Plan signed by the Prime Minister. Intent and Plan of SPC to operate & Should be clear on the Contractual Structure of maintain the toll road facilities O&M (VEC s Subsidiary JSC Company or O&M Subsidiary of the SPC, or separate O&M JV Company of VEC/JI-A); citing MOT approval on SPC Investment Plan. The schedule, in general terms, of Final Schedule worked out by SPC with Consultant construction and commencement of is given. operations II. Design of the Toll Road Facilities Organizations for Design and Approval thereof Mechanisms for Approval of Design Remarks Includes Design tendering plan, Schedule of Design, and MOT approval with VEC endorsement. Design approval structure; GoV may require services of Independent Design Consultant. III. Construction of the Toll Facilities Remarks Construction Obligations Depending on SPC/VEC O&M plan. Terms of Design and Completion of Toll Facilities. Schedule of Construction As submitted by Consultant and approved by SPC. Management and Controllership of Construction Under VEC with pass-on to SPC depending on O&M Plan. 10-3

261 IV. Land Acquisition Remarks Party/ies of Liabilities Agreement on Joint Undertaking with specific roles between SPC and MOT, inclusive of acquisition schedules ROW to include utilities relocation. Budgets and Expenses Agreements on fiscal mechanisms and Claims, damages, escalation mechanisms Provides for Consequential Claims and adjustment mechanisms. V. Notices Notice-to-Proceed Security for Completion (corresponding to stages) Construction delays; extension of Construction Period Certificate of Substantial Completion Remarks Performance bonds: Amounts, period, and Terminations. Causes of delays, recourse mechanisms, e.g., extension of Construction Period and/or Concession Period. VI. Ownership of the Toll Road Remarks Ownership of the Toll Road Sovereign Ownership of the Land, with usufructory rights grant to SPC, including treatment of improvements to land. 10-4

262 VII. Operation & Maintenance Remarks Grant of Operations & Maintenance To be endorsed by MOT and approved by MOF, as provided in the MOA, citing SPC-VEC O&M arrangement and MOT Decision/Circular approving SPC Investment Plan. Terms of Operations & Maintenance Approval of O&M Plan submitted by SPC. Includes setting of initial toll rates with provisions for adjustment and review. Operations Staged Operations Approval of commencement of toll Collections as specifically cited in approved O&M Plan. Issuance of Certificate to Operate Covered by a Supplemental Decision/Circular based on MOT Decision/Circular approving SPC Investment Plan. Toll Collection will be authorized by MOF under a separated Decision/Circular. Implementation of Toll Collection Structure, as agreed between VEC and SPC and schedule as authorized by MOT based on submitted O&M Plan by SPC. Compliance to Applicable Laws and Regulations Certificate of Review to be submitted by legal counsels of MPI & SPC. Cost & Expenses Based on O&M Plan Safety & Emergency Operations, Based on O&M Plan Manpower, Operator s Subsidiary Company (if applied) Based on O&M Plan VIII. Enabling Provisions Remarks Security As negotiated by SPC and MOT GoV undertakings Aspects of: Legal Authorization/s, required Decisions and Circulars, implementation requirements of the project, and concession exclusivity grants; and other Government Commercial sureties like: expeditious remittances, etc. Taxes and Costs Citing applicable taxes, incentives, and reporting requirements 10-5

263 IX. Other Provisions Remarks Effectiveness of Agreement As agreed upon; and cited in MOT Decision/Circular approving SPC Investment Plan. Assignment As agreed upon: MOA, JV Agreement, SPC Investment Plan Change of Ownership Structure / Share Ownership As agreed upon: MOA, JV Agreement, SPC Investment Plan Confidentiality Amendments to Agreement Subject to negotiations. Sufficiency of Documents As agreed upon: MOA, JV Agreement, SPC Investment Plan Severability Based on existing Laws. Decree No. 108, Decision No. 71, Law on Investments, Enterprise Law, etc. Applicable Laws As applied, including arbitration venue, etc. Termination and Default Per negotiations Expanded scope of Project Grant of Concessional Rights to include other identified expressways and/or alignments inclusive of Mai Dich Noi Bai Expressway Project; that will be undertake subsequently and appended through a Supplemental Concession Agreement to this main Concession Agreement. Default Conditions of default, arbitration, resolution, and legal recourses for each partner. 10-6

264

265 List of Appendices Appendix 2: Appendix 3-1: Appendix 3-2: Appendix 3-3: Appendix 3-4: Appendix 4-1: Appendix 4-2: Appendix 4-3: Appendix 4-4: Appendix 4-5: Appendix 5-1: Minutes of meeting Design Drawings (Phap Van Cau Gie Expressway) Design Drawings (Mai Dich Noi Bai Expressway) Project Cost PPP Scheme Screening Result Phap Van Cau Gie Expressway Screening Result Mai Dich Noi Bai Expressway Preliminary Environmental Review Phap Van Cau Gie Expressway Preliminary Environmental Review Mai Dich Noi Bai Expressway Tentative Entitlement Matrix Project Implementation Schedule for Financial Analysis

266 Appendix 2 Minutes of Meeting

267 9 th August 2010, 11:00~12:00 Attendees: JICA, Office for Private Sector Partnership Mr. Yamada (Director), Mr. Inukai Study Team Member KEI Mr. Takebayashi, Mr. Miyake, Mr. Kunimasa MRI Mr. Sakurada 1. Explanation of Project Outline 2. Private Sector Investment Finance (PSIF) (1) Subject JICA and JBIC are working to make the demarcation of each organization s works clear. JICA s loan conditions may be announced in October 2010 if possible, March 2011 at the latest. JICA can provide both equity investment and loan. In the case of Hanoi PPP study, loan may be suitable. In special cases, equity investment is also possible. It may be possible to combine PSIF with JICA ODA loan. (2) Interest Rate The base rate is the interest rate of Japanese Government bond, and a risk premium is added on. The rate of risk premium depends on how to assess the ridership risk and how much risk the recipient country s Government shoulders. Since the toll revenue is received in a local currency, FOREX risk should be considered. (3) Judgment Whether or not the loan can be provided depends on the financial viability of the project. The rate of risk premium will be determined by JICA referring to similar projects. JICA s due diligence is expected to be conducted in a short period. 3. Others It may be possible to lower the toll rate level introducing VGF (viability gap fund). When JICA considers provision of a loan, JICA will ask the investor to submit the results of financial analysis and other necessary information.

268 9 th August 2010, 14:00~15:00 Attendees: JBIC, Asia-Pacific Finance Department Mr. Kishioka (Director), Mr. Hirata Mr. Gohei Study Team Member KEI Mr. Takebayashi, Mr. Miyake, Mr. Kunimasa MRI Mr. Sakurada 1. Explanation of Project Brief 2. Loan Conditions (1) Subject Hanoi PPP Project falls into the category of maintenance and improvement of Japanese industries internal competitiveness and can be a subject of JBIC loan. Export finance is applicable to the case Japanese products are exported, and investment finance is applicable to SPC. There is no demarcation between JBIC and JICA in terms of country, and JBIC could provide finance to the expressway projects studied in Hanoi PPP project. (2) Interest Rate The interest rate will be somewhere between that of commercial loan and JICA ODA loan. The risk premium will be determined considering the financial viability of the project, country risk, FOREX risk, etc. (3) Loan Tenure The loan tenure is usually 10 years. 20 years is possible depending on the conditions. (4) Judgment Whether or not loan can be provided depends on the financial viability of the project. The loan conditions such as loan tenure, interest rate, etc. vary depending on the financial viability of the project, and it is not possible to present the conditions in advance. In the project review, a number of cases shall be compared. JBIC considers it is difficult for SPC to take risks and Vietnamese Government guarantee is required. 3. Project Finance (PF) (non-recourse) The loan conditions for PF are more stringent than ordinary loans. PF usually requires Government guarantee, which makes the conditions similar to those of ordinary loans, and therefore there may not be much beneficial to introduce PF. PF may not be suitable to a tollroad business where the revenue forecast is unstable.

269 MINUTES OF MEETING Ministry of Planning and Investment SUBJECT : Study on Public-Private Partnership Program for Hanoi Urban Expressway Network Development DATE/TIME : September 8, 2010 / 2:00 PM LOCATION : Infrastructure & Urban Department Ministry of Planning & Investment Attendees: Name Designation Entity Reference Initials Mr. D. Le Hoang Official-Transportation Ministry of Planning & Investment (DLH) Mr. T. Takebayashi Project Director Katahira & Engineers International (TT) Mr. L. N. Hieu Highway Engineer Katahira & Engineers International (LNH) Mr. R. Villavicencio PPP / BOT Specialist Katahira & Engineers International (RV) Main Agenda Item: To update the Ministry of Planning & Investment regarding the above subject study. To obtain responses to submitted inquiries (attached) To seek guidance in the development approach proposed for the study. Salient Points discussed during the Meeting: Introducing the Study: Approach, Organization, and Schedule TT provided DLH a thorough briefing of the Study; describing the Project (Mai-Dich-Noi Bai and Phap Van-Cau Gie) alignments, network, and scope. TT showed Letter of Acceptance and Inception Report of the Project Study. DLH was made aware that the Study is being conducted in coordination with Vietnam Expressway Corporation and Nexco-Central. TT showed the Study schedule and pointed out milestones: Preliminary Report Dec with Study Report submission Feb DLH mentioned of VEC plan to undertake basic design and it was pointed out that is VEC activity is timed accordingly with the Study activities. DLH pointed out that Phap Van-Cau Gie Project is classified as a Hanoi suburban project, but could be considered an urban project because of proximity and linkage to 3 rd Ring Road. The Mai Dich-Noi Bai Project is unquestionably a Hanoi urban project. Introducing a Sample PPP Scheme TT showed a sample of the PPP Scheme under study. DLH commented that the PPP scheme shown is workable and can be developed further. Regarding the Submitted Inquiries Inquiry No. 1 Difference with PPP Regulation and BOT Law DLH pointed out that 2 significant difference between the Draft PPP Regulation and Decree No. 108 (BOT Law) are 1. The State contribution to the PPP scheme is set at a maximum of 30%; with the Private Investor at 70%. 2. The Government of Vietnam will not issue guarantees; with exceptions for special cases when the Prime Minister permits.

270 Inquiry No. 2 Transfer of VEC s Right to Project Enterprise DLH agrees that concession rights belonging to VEC can be carried forward into the Project Enterprise by virtue of VEC being a joint venture participant. Inquiry No. 3 PPP Model for Lach Huyen Port Project. DLH confirmed that Vinalines and Itochu Group (with Mitsui OSK Lines, Ltd., and Nippon Yusen KK) established a joint venture Project Enterprise to build two (2) berths for the Lach Huyen Port. DLH also confirmed that Vinalines will invest $250 million into the Project; funded through Vinamarine under the Ministry of Transport. This is the public sector contribution in the project. DLH mentioned that the Vinalines investment proportion is 51%. Inquiry No. 4 Investor Jointly and separately held liable to the Project Enterprise Contract. DLH suggested that KEI seek guidance from the Legislature Department of the Ministry of Planning & Investment. Reference persons were provided. Inquiry No. 5 Toll Remittances DLH acknowledges that the toll remittances are sent to the Treasury, there could be exceptions for a PPP Project Enterprise. He suggested that one approach is to arrange with the Ministry of Finance to provide a reserve fund from which the Project Enterprise can draw upon presentation of used toll tickets. There being no other matters discussed, the meeting was adjourned at 3:00 PM.

271 Attachment to Minutes of Meeting - MPI Inquiries to Ministry of Planning & Investment 08 September Subject Matter: PPP Regulations and the BOT Law (Decree No. 108) Inquiry: What the the differences between the above two? 2. Subject Matter: Vietnam Expressway Corporation (VEC) Inquiry: VEC is assigned (the right) to develop expressway projects, generally and specifically. In the case where VEC undertakes a specific project as a joint partner in a Project Enterprise, will this right with accrue into the Project Enterprise? 3. Subject Matter: Public-Private Partnership (PPP) model for the construction of Container Port Project in Lach HuyenPort. Details: News item of August 14, 2010 reports that Mitsui OSK Lines, Ltd., Nippon Yusen KK and Itochu Group will establish a Joint Venture with Vietnam National Shipping Lines (Vinalines) to construct the project. It was reported that under the PPP model, the project will use: o Official development assistance (ODA) loans from the Japanese Government, o Japanese Investors, and o Vinalines. Inquiry: Vinalines will invest US$ 250 million in building two container terminals. What is the funding source to be used? What portions of the project will be undertaken by the Joint Venture? Being a joint venture partner is the US$ 250 million investment of Vinalines considered as the public-sector investment? How does this PPP arrangement qualify with the BOT Law (Decree No. 108/2007/ND-CP)? 4. Subject Matter: Decree No. 108 (BOT Law) Inquiry: The Decree No. 108 (BOT Law) Under Article 16 (a) and (b) holds the Investor and the Private Enterprise jointly and separately to the BOT contract. The Investor is a majority shareholder of the Project Enterprise. And the primary obligation of the Investor is the capitalization of the Project Enterprise. Once this is accomplished, can the Investor be relieved from contractual liabilities of the Project Enterprise? 5. Subject Matter: Toll Remittances Inquiry: The present toll system is such that toll collections are managed by the Ministry of Finance. Effectively, toll collections are remitted to the Ministry of Finance. Under a PPP contract, Can the Project Enterprise manage and receive collected toll fees directly? What would be the appropriate mechanisms?

272 MINUTES OF MEETING Ministry of Planning and Investment SUBJECT : Study on Public-Private Partnership Program for Hanoi Urban Expressway Network Development DATE/TIME : September 13, 2010 / 2:00 PM LOCATION : Legislature Department Ministry of Planning & Investment Attendees: Name Designation Entity Reference Initials Mr. Phan Manh Dung Director General Legislature Department, MPI (PMD) Mr. T. Takebayashi Project Director Katahira & Engineers International (TT) Mr. Hoang Manh Phuong Deputy Director Legislature Department, MPI (HMP) Mr. R. Villavicencio PPP / BOT Specialist Katahira & Engineers International (RV) Main Agenda Item: 1. To update the Legislature Department of the Ministry of Planning & Investment regarding the above subject study. 2. To obtain responses to submitted inquiries (attached) 3. To discuss ramifications of Decree No. 108 (BOT Law) and seek guidance in the development approach proposed for the study. Salient Points discussed during the Meeting: Introducing the Study: Approach, Organization, and Schedule TT provided PMD & HMP a broad brief of the Study; describing the Project (Mai-Dich-Noi Bai and Phap Van-Cau Gie) alignments and scope. TT mentioned that the Study is under the sponsorship of Jetro. PMD & HMP suggested that we coordinate also with Ministry of Transport. PMD & HMP were made aware that the Study is being coordinated with Vietnam Expressway Corporation (VEC) and Nexco-Central as well. TT showed the Study schedule and pointed out its status and key milestones. PMD mentioned that there was a port project in the middle of Vietnam which was supposed to have been undertaken through BOT. PMD sensed that the project is having implementation difficulties; but did not elaborate on the proponent/investor. Introducing a Sample PPP Scheme TT showed a sample of the PPP Scheme under study. PMD simply commented that whatever scheme is selected, the important aspect for consideration is WHAT-IS-IN-THE-CONTRACT. PMD clarified further that each contractual provision in the contract would, in all cases, have undergo legal due diligence; and negotiated between the two parties, i.e., Public and Private. Legal checks will come as a matter of course. Regarding the Submitted Inquiries Inquiry No. 1 Difference between PPP Regulation and BOT Law HMP did not elaborate on significant differences between the Draft PPP Regulation and Decree No. 108 (BOT Law), and instead suggested we examine ourselves.

273 HMP noted that the draft PPP Regulation has been submitted to the Ministry of Justice and will, in a short period of time (in one or two months), be approved by the Prime Minister. Inquiry No. 2 Toll Remittances RV showed the Toll Collection Regime chart where toll proceeds are sent to and disbursed by the Treasury; and pointed to the problems it presents to the Private Enterprise. PMD suggested that whatever procedural changes that are deemed necessary, could be embedded into the Concession Contract as a Condition-Precedent, and leave the ratification of the Circular No. 90 as an obligation of the concerned Ministry. Inquiry No. 3 Investor is held jointly and separately liable to the Project Enterprise Contract. PMD & HMP fully understand the Investor s line/position with regards to relieving the Investor of liabilities undertaken by the Special Purpose Company of which the Investor is a party to. They, however, specifically pointed out that this provision is for the protection of the Government against any contingent exit of the Investor from the SPC. PMD & HMP suggested that exit or share disposal in whatever form by the Investor can be legally provided for and agreed among the parties of the joint venture SPC in their Shareholder s Agreement. There being no other matters discussed, the meeting was adjourned at 3:30 PM.

274 Date/Time: 26 th January 2011 Attendees: Dr. My Tuan Anh (VEC Deputy General Director) Toshio Takebayashi (Study Team Member) (1) VEC will implement the Phap Van Ca Gie Expressway project on a PPP basis. (2) The proposed PPP scheme which does not impose a big financial burden to Vietnamese Government or VEC is considered very attractive. (3) MOF is concerned about VEC s financial weakness. In order to help VEC, MOF has a plan to transfer the asset of the existing Phap Van Cau Gie Expressway from DRVN to VEC. As a preparatory work for it, MOT and VEC are now jointly conducting assessment/valuation of the above asset. The expressway was opened in 2002 and the construction cost then is not supposed to be so big. However, if re-evaluated considering the present situation, the value of the asset may be significantly high (as high as VND5tril.). (4) The Basic Design for Phase 1 of Phap Van Cau Gie Expressway is currently ongoing.

275 Result of consultation with Department of Natural resource and Environment (DoNRE) 1. Meeting time and location The meeting was held on 27 Oct. 2010, from 9:00 to 10:30 Location: DoNRE 2. Participants Mr. Nguyen Trong Dong, deputy director of DoNRE Mr. Dai, specialist on Land acquisition and compensation Mr. Ngo Thai Nam, specialist on environment, branch office of natural resources and environment; Ms. Huong, staff in branch office of natural resources and environment; (JICA Study Team: Mr. Miyake, EPC: Mr. Cong) 3. Content of the meeting - General introduction of the project - Environmental, social impacts and mitigation measures discussion; - Receiving ideas, contribution from participants 4. Results Mr. Dai Protected areas as well as ecological area along the road are under management of Department of Agriculture and Rural Development (DARD) in Ha Noi. Consultant can get detail list of the mentioned information from the DARD. Methods of receiving information should be in official letter. Anyway, on personal belief, no protected areas and ecological area are affected by the project because: (i) the alignment is upgraded from existing roads; (ii) land uses, as personal knowledge, mainly for cultivation and housing development; Part of land acquisition along the Mai Dich Noi Bai road was implemented by a project under management of Ha Noi PC in which, detailed measures, maps and other relevant information is not under management of DoNRE (because it is a properties of a project). Those information should be achieved from Land acquisition and compensation Board under district PCs which relates to the project alignment; In November this year, a city budget for land acquisition will be officially established in an organization directly belongs to Ha Noi PC to deal with any land compensation for projects under management of Ha Noi PC. This budget also deals with other supporting policies such as vocational training, etc. Mr. Nam Regarding to stake-holders in the projects, in the aspect of consultation, some main stakeholders could be pointed out for contact while other minor stake-holders which directly relevant/under controlled to/by the main stakeholders may not be mentioned. It means that, main stakeholders could understand which minor stakeholders under its control/management is suitable for the mission relevant to a project, to participate in the proposed consultation meeting. This is important when counting on number of meeting will be held and time limitation given for a project. Some other additional stakeholder should be mentioned in the two proposed projects as: (i) Ministry of National Defence, or relevant department under its management; This stakeholder should be mentioned in the Phap Van Cau Gie project because project s land acquisition might affect to building area from military as (1) construction company No. 99; (2) Vietel company; (ii) Department of urban architecture under management of Ha Noi PC; (iii) Department of urban transport and infrastructure under management of Ha Noi PC; (iv) Department of Land acquisition and compensation under management of Ha Noi PC Name of person relevant to project issues in Ha Noi PC is: Mr. Nguyen Van Khoi, Vice chairman of Ha Noi PC, in charge of transport issues within the city;

276 Date/Time: 14 th January 2011 Attendees: Mr. Ryoichi Nakagawa (Representative of BTD Japan) Note: BTD Japan is managing Dong Van Industrial Zone Toshio Takebayashi (Study Team Member) (1) Companies handling export products in Dong Van 2 Industrial Zone usually use the east route (NH38 NH39 NH5) to go to Hai Phong, and does not use Phap Van Cau Gie Expressway so frequently. (2) On the other hand, companies handling products domestically deliver the products to north and therefore the benefit they receive from upgrading/widening of Phap Van Cau Gie Expressway is significantly big. Those companies include Honda Lock which is delivering parts to Honda s bike assembly factory located north of Hanoi, companies delivering parts to Sam Song Electric s factory located in Bac Ninh Province which, north of Hong River. Showa Denko dealing with rare earth the mines of which are located north of Hanoi is also using Phap Van Cau Gie Expressway frequently. (3) BTD Japan has informed the companies located in Dong Van 2 Industrial Zone that Phap Van Cau Gie Expressway will be a tollroad shortly. BTD Japan would like to have as much information as possible on the Phap Van Cau Gie Expressway PPP project in order to distribute to the (future) tenants. (4) BTD Japan and the tenants of locator would like Phap Van Cau Gie Expressway be improved by eliminating differential settlement at box culverts, motorbikes and buses for traffic safety as well as ridability. (5) Other pertinent information - SABECO (the biggest beverage maker in Vietnam) has set up a new plant in Phu Ly (a town south of Ninh Binh). - Sagawa will set up a distribution center along Phap Van Cau Gie Expressway. - There is a plan to construct a new airport near Ninh Binh.

277 Date/Time: 14 th January 2011 Attendees: Mr. Cach (Vietracimex 8, Noi Bai Toll Plaza Deputy Manager) Toshio Takebayashi (Study Team Member) (1) The present operator (Vietracimex 8) took over the toll operation of Noi Bai Toll Plaza in October The contract of the previous operator was terminated due to its inadequate operation. (2) The operation scheme will be a BOT scheme from January The details of the contract are being discussed by MOF, MOT and DRVN. The contract period is 18 years from now. The toll rate for a passenger car will be increased from VND10,000 to VND15,000. (3) The toll revenue at Noi Bai Toll Plaza is VND5~6bil. (4) Vietracimex 8 has a plan to install a new toll plaza at Nam Hong (south of Noi Bai), though the detailed schedule is yet to be determined.

278 Date/Time: 14 th January 2011 Attendees: Mr. Yoshihiko Shimizu (Vice General Manager, Thanh Long Industrial Park Corporation) Toshio Takebayashi (Study Team Member) (1) Mai Dic Noi Bai Expressway will not significantly merit the logistics of Thang Long Industrial Zone since drivers of the trailers want to save tolls and do not frequently use tollroads. (2) There are about 440 Japanese working in Thang Long Industrial Zone and most of them are commuting from the center of Hanoi. They will welcome Section A (Mai DIch Thang Long South) of the expressway which enables them to stay away from traffic jam during rush hours. (3) If the expressway is constructed, the interchange in front of Thang Long Industrial Zone at the south end of Section C should be designed adequately considering the traffic flow.

279 Result of Public consultations (Reported and attended by Mr. Cong, EPC Co., Ltd.) Result of public consultation in communes along Phap Van Cau Gie Route Public consultation in communes of Hoang Mai district 1. Meeting time and location The meeting was held on 15 Oct. 2010, from 8:30 to 11:30 Location: at commune PCs: Hoang Liet ward 2. Participants Representatives from commune PCs. Name and lists are included in the table below; 3. Content of the meeting - General introduction of the project - Raising issues on environmental and social impacts as examples for brainstorming - Receiving ideas, contribution from participants 4. Results Mr. Phung Trung Hai Deputy head of Tu Hiep commune PC - The affected land within Hoang Liet ward consists of: (i) land for on-going projects (Tu Hiep Phap Van residential area project, Thang Long bridge project); (ii) land belongs to military (Min. of Defence) (Vietel company, Construction Company No. 99); - No agricultural land could be affected by the projects; - No cultural heritages or other protection areas are available in the region; Public consultation in communes of Thanh Tri district 1. Meeting time and location The meeting was held on 5 Oct. 2010, from 8:30 to 17:00 Location: at commune PCs: Tu Hiep, Ngu Hiep, Lien Ninh 2. Participants Representatives from commune PCs. Name and lists are included in the table below; 3. Content of the meeting - General introduction of the project - Raising issues on environmental and social impacts as examples for brainstorming - Receiving ideas, contribution from participants 4. Results Mr. Nguyen Xuan Hoan Deputy head of Tu Hiep commune PC - Land acquisition is mainly agricultural area and part of land for other projects. - Agricultural land price for compensation (exclude from other supporting finance) is about dong/m2 which is much lower than that in neighbor district (Hoang Mai district); - Need for other support from government and projects on jobs, job training for households who will be affected in the aspect of agricultural land by the project; - No pagodas or cultural heritages locating nearby the road will be affected;

280 - No intersections are available within Thanh Tri district that cause difficulties in traveling for local residents as well as local economic development; - Underpasses present their disadvantage by small dimension, improper height for local activities and local inundation that need to be improved; Mr. Hoang Van Deputy head of Ngu Hiep commune - Agricultural land will be affected; - Residential land will be affected in Tu Khoat, Viet Yen and Tu Truc villages; - Agricultural land for compensation is about dong/m2; - Cultural heritages: (i)ong Tuong pagoda in Tu Khoat village; (ii) communal monument; (iii) Chung pagoda in Viet Yen village; (iv) small temple in Tu Khoat village could be affected by the corridor of the road; - Other infrastructures: (i) temporary market in Tu Khoat village; (ii) Le Thanh Tong high school and a kindergarten along the road corridor could also be affected; - Underpasses present their disadvantages as above mentioned in Tu Hiep commune; - Irrigation & drainage system will be affected; - Existing water supply system and regional drainage system along the road will also be affected; - Dust generation is a main impact in operation phase that cause much problem to local residents; Mitigation measures: trees growing, regular cleaning the road surface; Mr. Nguyen Quang Te Deputy head of Lien Ninh commune - Land affected is agricultural land with price for compensation following government policy (about 300 mil. Dong/sao); - About more than 10 households in Tho Am village will be affected by the road; - Bat Nhiem pagoda close to Ngu Hiep commune could be affected; - A cemetory area in Noi Am village could be affected; - Problems of underpasses as above mentioned in the two communes; - Irrigation culverts will be affected by the project that should be designed properly for safety issues in local residents travelling; Public consultation in Thuong Tin district 1. Meeting time and location The meeting was held on 12 Oct. 2010, from 14:00 to 15:15 Location: in the meeting room of Thuong Tin People s committee 2. Participants District: Mr. Uong Duc Ngoc, Vice president of Thuong Tin PC Mr. Nguyen Van Trong, official on Land clearance and compensation Mr. Tu Duc Manh from division of Natural Resource and Environment Communes Representatives from 11 communes along the road that might be affected were at the meeting (officials in commune PCs) Details of participants were listed in the separate pages 3. Content of the meeting - General introduction of the project - Raising issues on environmental and social impacts as examples for brainstorming - Receiving ideas, contribution from participants 4. Results

281 Mr. Nguyen Duc Cong Head of Ha Hoi Commune PC - Land clearance should be implemented not only in the new area for construction but also in the ROW (in the mean of safe corridor of the national road). Enterprises located within the ROW sometimes are punished of violation in the aspect of land acquisition but actually, they are certificated to use the land. - Industrial zones are located far from the road and their drainage systems are in a separated direction that will not be affected by the road, in the meaning of impact on waste water; - Other local structures such as graves, underpasses, drainage culverts and resident houses along the road will be affected within 20m from the edge of the existing road; - No market price is available in the region. Price for compensation is based on government s policy; Mr. Nguyen Van Quang Head of Van Binh Commune PC - Cultivation area together with irrigation/drainage system (culverts, canal along the road) will be affected. It means, culvert should be strengthened and canal should be relocated when the road is in construction. - No market price for cultivation land is available. Price for compensation is based on government s policy; Mr. Le Tri Luan Head of To Hieu Commune PC - 20 residential houses will be affected in An Duyen village; - A temple in Dong Xuyen village which had been affected when the national road was constructed in , will also be affected; There might be possibility of relocation when the national road is constructed. The relocation of this cultural heritage should meet agreement with local resident. Mr. Toan Member of Le Loi Commune PC - Some plots for rose flower growing along the road will be affected. Vibration and dust generation are main source of reducing flower productivity. Mr. Ngo Van Duong Head of Van Diem PC - Road expanding at location of the fly-over might affect the height permission for transportation that the technical design consultant should take in consideration; - A pagoda and a temple will be affected at the location of flyover that might be for relocation; Representatives from other communes have the same idea mentioned above (Thang Loi, Van Tu, Duyen Thai communes) Mr. Uong Duc Ngoc Vice president of Thanh Tri district PC - No ethnic group of people is living along the road; - No biological areas are located along the road and in the district; Public consultation in Phu Xuyen district 1. Meeting time and location The meeting was held on 14 Oct. 2010, from 8:30 to 10:30 Location: in the meeting room of Phu Xuyen People s Committee

282 2. Participants District: Mr. Nguyen Chi Quan, Vice president of Phu Xuyen district PC And other 5 officials in: (i) Division of Natural resource and Environment; (ii) Division of Land clearance and Compensation; (iii) Division of Planning and Finance; (iv) Division of Urban Management; (v) Division of Construction Supervision. Communes Representatives from 5 communes along the road that might be affected were at the meeting (officials in commune PCs) Details of participants were listed in the separate pages 3. Content of the meeting - General introduction of the project - Raising issues on environmental and social impacts as examples for brainstorming - Receiving ideas, contribution from participants 4. Results Mr. Duc Head of Nam Phong Commune PC - Cultivation area (paddy field) and ponding area will be affected. Therefore, land clearance in the commune will be more easier than other communes with housing land clearance; - Culverts for irrigation system have been seriously degrading. Sludge sediment within the culvert at crossing-road section has been increased without maintenance; the thickness of sludge sediment increases up to 1.5m; This has made impact on water conveyance to cultivation area as well as drainage capacity of the region. (Noi Hop village of the commune); - Dust and polluted water in rainy days by traffic vehicle from road surface seems much impact on water quality in the fish-ponds that reduces fish productivity; There is a difference of productivity between fish-ponds along the road and others in the commune; - Present traffic system is a main problem. Under-pass of the road causes inconvenient to local residents, especially in the time of agricultural harvesting or funeral procession or wedding affairs; Small size of under-pass (with the height less than 3.2 m) does not meet 24-seat car. Low elevation of under-pass causes inundation, forming stagnant ponds within the under-pass. In the future, when upgrading local road, the bottom elevation of the under-pass will be lower than the elevation of the local-connecting-road. Lengthening the underpass will be necessary in this project but its dimension may be forced smaller that causes inconvenient (even impossible) to local residents for travelling; Mr. Trieu Head of Nam Trieu Commune PC - Land affected in the commune will be only cultivation area that can be easier for land clearance (about 1000 m2); - Height of the under-pass conflicts to local demand; Mr. Giang Head of Phu Xuyen town - The affected land is mainly for cultivation area; - Residential houses are located far from the road edge (50 60 m) - Height of the under-pass conflicts to local demand; - For improvement of traffic demand, a fly-over should be constructed in Nam Trieu town, facilitating travel demand of relevant 3 communes; Mr. Khuong Head of Phuc Tien commune - Cultivation area, residential area, transformer station and cemetory of Co Che village will be affected;

283 - There are 4 under-passes located within the commune: (i) for provincial road No 428; (ii) Local road to Co Che village; (iii) traditional road reaching other villages; (iv) farming road; All are stacked by the under-passes of the Phap Van Cau Gie road because of their improper dimension and local flooding; - A fly-over should be constructed for the road No 428 to improve the present condition of traffic; - The danger of rats living along the road-edge is a main problem destroying nearby paddy field. Number of increased rats much reduces paddy rice productivity along the road, in comparison with other paddy fields; - Market price for cultivation land compensation is about 1 million dong/m2 meaning that 360 mil. dong/sao or more; Mr. Viet Head of Dai Xuyen commune - Fourteen under-passes are located in the commune. All cause conflict to local demand of traffic and local traffic-planning; - Sludge sediment in the culverts for irrigation; - Direction of the culvert crossing the road is not correct in the direction of the connectingcanals that causes earth canal erosion and increasing maintenance works; - Elevation of those culverts conflict with canal, causing sludge sediment and water conveyance capacity (irrigation and drainage capacity); - Soil disposal from road construction will be sold to local residents uncontrollably that cause problems in irrigation/drainage planning; - There are some other infrastructure projects, such as Cau Gie- Ninh Binh road, industrial zone and city-gate (from Km210-Km212) that might cause some problems as: (i) land and project over-lapping; (ii) waste disposal from other places will be uncontrollably disposed in the connecting-point-among-project-regions that cause difficulties for local authorities in management; Mr. Nguyen Huu Chien Technical inspector of the district - Degrading of road surface quality; - Road settlement; - A conflict will be cause when ROW is not fully implemented for compensation. A remaining half of the house is still in the land of road s corridor without compensation by project owner but suffers from violation of the ROW; Mr. Nguyen Chi Quan Vice president of Phu Xuyen Commune - Agree with decision for upgrading the express way Phap Van Cau Gie; - The 2/3 area of the district has been suffering from inconvenience of under-pass by construction of the road, without any flyover that impact on economic development of the district. It ll be the best if construction of interchange at Cau Gie (Gie bridge) for the district or fly-over at the proposed locations above. - Reparing and improvement of supporting construction along the road (culverts, lining-irrigation replacement along the road and under-pass) should be in consideration in the project; - Collecting road along the express way should be widened (if possible) for 2 ways traffic. Local road planning will be connected to the collecting road. - Land clearance activities (compensation and objects relocation) should counted to the land of road s corridor; - Price of land compensation all should be basically follow Ha Noi policy;

284 Public consultation in communes along Mai Dich Noi Bai Route 1. Meeting time and location From 13 20/10/2010 Location: At commune PCs along; 2. Participants Representatives from commune PCs. Name and lists are included in the table below; 3. Content of the meeting - General introduction of the project - Raising issues on environmental and social impacts as examples for brainstorming - Receiving ideas, contribution from participants 5. Results Ms. Duong Thi Vuong Deputy head of Quang Minh town Me Linh district - About2.5km of road crossing the town. Frontage road and ROW (20m) are available. - About 10 households in Gia Trung village (residential area No 7) will be affected; - Enterprises area locating outside existing ROW; - Few cultivation area will be affected; - The Dai Bi pagoda might be affected on its gate and wall due to new ROW of road; - No graves along the road; - Intersection at Gia Trung should be considered better solution to cross the road, reaching village cemetery Mr. Nguyen Van Xa Official in Phu Cuong commune, Soc Son district - About 5km of the road cross the commune; - local graves area locating along the road; - Underpasses do not well serve because of their disadvantages. Their limited height and local inundation and cause difficulties to the demand of local resident s traveling - Cultivation area is at low elevation in comparison to other area. Drainage direction is to Ca Lo river. Proper construction methods against local flooding should be considered - Water supply system or ecological area are locating along the road Mr. Nguyen Van Tien Deputy head of Hai Boi commune PC, Dong Anh district; - Bac Thang Long industrial zone will not be affected; - Thu Nga hotel will be affected; - Land nearby boundary to Kim Chung was cleared for land acquisition, mainly on the left side (from Mai Dich to Noi Bai direction), about 50m - Electric piles, electric transform station along the road will be affected; - Very few cultivation area, which is unable to cultivate because of land used from project, remains along the road; - Drainage system for the area and industrial zone will be driven to Viet Thang canal that will not affect the road. Anyway, water drainage should be considered in construction phase; Mr. Hoang Duc Khang Deputy head of Kim Chung commune PC - On left side (from Mai Dich Noi Bai direction), land was cleared about 50m; - The area is at low elevation of the region. Drainage system has not been completed because each section belong each project-area (typically in Mau village); - Residential area in Nhue village will be affected; - Existing problems on underpass (connecting road A and road 5 crossing the Mai Dich Noi Bai road) (as mentioned above) should be considered when construction of the road;

285 - Drainage system along the road should be considered in the design phase, increasing drainage capacity of the region and overcoming the region-separation of the road Mr. Nguyen Viet Khoa Head of Nam Hong commune PC - Tiep river is a main drainage canal in the commune; - Residential houses in Doai and Dia villages will be affected; - Canal system at grade III, IV (tertiary canal, farming canals) and cultivation area along the road will be affected; - A fly-over from Dia, Doai village to Chua village should be considered to construct; - A temple and a banian tree of more than 50 years of age will be affected; - Well of Giong temple will also be affected that measures should be considered. Festival relevant to the well and Giong temple is held every year in Dia village. Traditional style, cultural character of this well of Giong temple will be affected by structure relocation. - A pumping station from Tiep river for 80ha of cultivation area will be affected; - Firms as Nam Hong, Ham Hoa and Bac Son along the road will be affected by land acquisition; Mr. Nguyen Van Tu Judiciary official in Vong La commune PC - Land belongs to Vong La are located under Nam Thang Long bridge, along Red river. Affected land is mainly garden and agricultural area; - Households living in that area, mainly without certificate of land use right. The area was cleared in the aspect of land acquisition at the time of the bridge construction (1992) - Garden area is mainly for fruit trees, fishing ponds. The area presents its economic value rather than ecological value; - Sand exploitation along the Red river by local residents is unlicensed - No pagodas, graves or temple locates within the project area. The nearest relics is located 200 m far away from the project area; Mr. Nguyen Huy Tao Official on land survey in Co Nhue commune PC - about 3km of the road cross the commune in which, 500m crossing residential area of high residential area; - Water supply system, other electric systems under the road will be affected; - Intersection with road No 4 should be considered for proper solution; - Drainage system of the region has not been completed because it was separated by section at each area of each project available in the region; Water drainage should be considered during construction; - Area of private company and governmental organization has been in state of relocation for land clearance (about 20m) from the road edge, facilitating land clearance of the project; - Green tress growing along the road (from 1983) will be affected; - A traditional village as fabric weave jobs of the commune will be affected by land acquisition. Jobs finding and jobs training should be considered for local households whose houses are fully affected; Mr. Tran Ngoc Huan Deputy head of Xuan Dinh commune PC - About 2km of the road cross Xuan Dinh commune; - Pagodas named Ly Phuc Man and Gian which were certificated as cultural heritage by city authorities are locating along the road and will be affected. This should be considered in the technical design. - No agricultural land remains in the commune because of construction projects; Local residents along the road live by free trading without any stable jobs. Jobs training and job opportunities are main issues that should be considered during project implementation;

286 - Relocation measure proposed: house-range after the affected houses from the road edge should be relocated, giving place for the relocation of nearby affected houses - Jobs training should be on cooking, or opportunities of working in industrial zone; Mr. Le Trung Kien Head of Mai Dich commune PC - Agree on government policies of the project; - A grave belongs to local resident will be affected; - Market price for residential land is quite high (about 270 mil. Dong/m2); - Underground drainage system will be affected; - For reducing disturbance to society, construction activities should proceed right after land clearance;

287 Appendix 3-1 General Drawings and Structural Drawings of Phap Van Cau Gie Expressway

288 Appendix 3-2 General Drawings and Structural Drawings of Mai Dich Noi Bai Expressway

289 Appendix 3-3 Project Costs

290 Appendix 3-4 PPP Scheme

291 1. PPP Scheme Thus far, the Technical & Financial viability of the PV-CG Expressway Project has been established based on the conditions of Carrying Cost of the Right-of-Way and the Initial Toll Rate applied. The search for the PPP Implementation Framework clearly paved way for the PV-CG Expressway Project for implementation under PPP. The issue at hand is to determine the Optimum PPP Delivery Approach or Scheme (Base Case) and develop the Business Case with the appropriate and applicable Concession Architecture to finally conclude in a Toll Concession Agreement. PV-CG and MD-NB expressways could be considered a single Project 1. However, their individual viabilities would be different. Thus, the strategic approach is: to conduct viability analysis separately for the two expressways, determine which expressway is to be prioritized, and resolve undertaking options for the other bite-sizing strategy. In this regard, and based on the scopes of work for each expressway, it is recommended that the PV- CG be undertaken prior to MD-NB. This recommendation can be validated and reinforced by the results of the individual technical and financial analysis on both PV-CG and MD-NB. Further on, it is recommended that the implementation of PV-CG be staged wherein the 1 st stage (Phase-1 PVCG ) is the upgrading of the existing four (4) lanes; and the 2 nd stage (Phase-2 PVCG ) is the expansion with the two (2) additional lanes. The above basically defines the base-case implementation scenario. 2. Development of PPP Alternative Schemes Generally, there are six (6) major PPP Alternative Schemes, each characterized distinctively by the nature of the contributions of each partner (Public & Private Sector), the individual roles in the partnership, and the common objective of the partnership. The available schemes are: Build-Operate-Transfer, with its variants: Build-Transfer-Operate, Build-Operate-Transfer, with GOV providing Cash Subsidy: either front-ended or tail-ended, Segment Divided (vertically sliced division), Build-Lease-&Transfer, Simple Upgrade and O&M Concession, and Build-Own-Operate scheme Each of these is discussed together with its merits, and with its advantages, and disadvantages under consideration. 2.1 Build-Operate-Transfer or Build -Transfer-Operate A Special Purpose Company (SPC), in this case, representing the Private Sector will be set up to handle the upgrade of the existing PV-CG Expressway; and invests in Toll Facilities for toll collection. Prior to this, the SPC would conclude a Toll Concession Agreement with the GOV. The GOV, in turn, secures the Right-of-Way, in part or in whole. The SPC will obtain a Toll Operating Certificate as authorization to collect tolls. After an agreed period of time, the SPC will construct the additional two (2) lanes. Operation and maintenance can be managed by the SPC or contracted to a service provider depending on the agreement between the GOV and the Private Sector. This scheme has been utilized pervasively in Vietnam; and comes in multitude of variant forms and provision. In most cases, a Joint Stock Company is formed between the Public and Private Sector. 1 Defined in this report, the Project is composed the alignments of both PV-CG and MD-NB Expressways. However, for the purpose of the PPP Development Study, these are analyzed from the point-of-view of two sub-projects implemented separately. App3-4-1

292 Figure 1 Build-Operate-Transfer Source: Study Team 2.2 Build-Operate-Transfer with Cash Subsidy In this scheme, the SPC will undertake the upgrading of the existing road, install the toll facilities, and collect the toll. After an agreed period of time, the SPC will construct the additional one (1). Coincidentally, the SPC will construct the 2 nd additional lane utilizing the GOV cash support to be provided under conditions of construction accomplishments of the SPC. The Cash Subsidy drawdown, as an alternative be, given by the GOV at the front end. In this scheme, the SPC could leverage the GOV support in its financing plan. Adherence to the implementation schedule is a key, especially with costs being subjected to volatile inflationary forces. Figure 2 Build-Operate-Transfer with Cash Subsidy Source: Study Team App3-4-2

293 2.3 Segment Divided Scheme The construction pie is cut between the SPC and the GOV (in this case, identified as VEC, with the Private Sector as the SPC). The GOV will upgrade the existing road, as its contribution to the partnership. In turn the SPC will install the toll facilities and be allowed to collect tolls. The second part of the segment division is when the SPC constructs the two additional lanes; and the toll revenue will continue to be forthcoming to the SPC. Figure 3 Segment-Divided Source: Study Team 2.4 Build-Lease-Transfer The SPC will upfront the construction of all the facilities, the upgrading and the additional two (2) lanes. An antecedent lease contract is agreed upon; where the SPC will lease the complete facilities to the GOV for an annual lease fee and for a specified period. After the lease period, the SPG will transfer the ownership of the facilities to the GOV. Capital infusion requirements are normally high as the SPC tends to shift its profits on the construction of works; beyond covering its high financing costs. There are no sovereign guarantees required. The liability of the GOV is contractual. However, this scheme requires a SPC with enormous financial resources especially for infrastructure projects which normally require large capital investments. App3-4-3

294 Figure 4 Build-Lease-Transfer Source: Study Team 2.5 Upgrading and O&M Concession A PPP Scheme is applicable as a prelude approach towards completion of the full-project scope; the construction of the two (2) additional lane. The GOV will upgrade the existing road and the SPC (Private Sector) will install the toll facilities and will be granted an O&M Concession. The SPC will derive toll revenues. The condition is that after some agreed period of time, the SPC can opt for a concession agreement for the construction of the two (2) additional lanes and continue to benefit from the additional revenues from this addition. This type of scheme has been applied to road projects Vietnam; the purpose of which is mainly to transitionally convert freeways into user-pays expressways. Figure 5 Upgrade with O&M Concession Source: Study Team App3-4-4

295 2.6 Build-Own-Operate The BOO Scheme revolves around the GOV (VEC) who engages the services of a Contractor to build the facilities. Upon completion of the works, a buy-back agreement will transfer ownership of the completed expressway back to GOV; and the repayment and its schedule are agreed upon and provided in the contract. The GOV will provide the financing through ODA. This minimizes the construction risk. To effect the legal structure (in order to obtain financing), VEC in this case would enter into a BOO contract with the Ministry of Transport, with support from MPI who will arrange and take out the ODA loan for VEC. Under the BOO contract with MOT, VEC will operate the toll road to effect repayment of the loans. It has been suggested that this BOO scheme be explored. BOO is an investment model with high feasibility, as VEC is allowed to own the completed roads and can implement various methods of fund repayments to finance another investment project. However, this scheme is not recommendable mainly due to the GOV s fiscal policy on ODA loans and the current constraints of the financial status of VEC. Figure 6 Build-Own-Transfer Source: Study Team 3. Selection of Optimum PPP Scheme The selection of the optimal PPP Scheme or Base Case revolves around three (3) major factors, namely, Financing Viability, Minimization of Risks, and Adaptability into the Institutional and Legal Framework. Each alternative PPP Scheme is evaluated against six (6) criterions that reflect the above three (3) factors. These are: Financial and contractual determinants for Best Application, Level of Burden to the Public Sector, Project Development Capability required of the Private Sector, Suitability within the Legal and Institutional Framework, Comfort level based on precedents, and Variety and number of deal-breakers and bottlenecks. The rating of the alternative against the criteria was done based on: A High Compliance B Reasonably resolvable towards Compliance C High Resources Required for Compliance App3-4-5

296 Figure 7 PPP Scheme Matrix & Factors for Selection Source: Study Team Figure 8 PPP Schemes Rating Results Source: Study Team App3-4-6

297 The BOO Scheme was not included in the evaluation matrix because it apparently would not qualify because of the fiscal policy of the GOV on selective use of ODA loans. The major factors that eliminated BOT with GOV Subsidy and the Segment-Divided Schemes are due to the limiting requirement of the use of Public Funds and the implementation difficulty that would be encountered by these two schemes given that there are no precedent schemes in Vietnam. The O&M Outsourcing Scheme was set aside despite ranking high in the evaluation. This is because the GOV has decided that the scope should not be limited to O&M, even as a prelude or enticing mechanism for the full project. The additional two (2) lanes must be included as part of the scope of the Project. Based on the factor analysis above, two (2) PPP Schemes (Base Cases) emerged and can be considered for further development. These are the BOT/BTO Scheme and the BLT Scheme, and compared each other as follows: Table 1 BOT/BTO and BLT Contractual Structure Major Advantages Major Disadvantages BOT/BTO The GOV would want to have nominal capital investments into the Project; and the Private Sector is willing to take up a larger amount of the required investments. The GOV will not provide for any guarantee at all. The Private Sector takes up the risks (to the level which the FIRR can provide but still a Private Sector risk) and ensures coverage of these risks, much as its Lenders would require not only the reduction of the risks; but would want to have its loans covered with a security package from the Private Sector. / Nominal capital requirement from GOV / Project delivery in line with institutional framework / No GOV guarantee (advantage for GOV) / No explicit guarantee (disadvantage for Private Sector) / Hazy recourse mechanism BLT The Private Sector would follow a Design-Built- Lease-Operate-&-Transfer arrangement by first putting in equity with no GOV participation, then construct the facility, after which it is leased to the GOV for an agreed annual fee (inclusive of O&M), and after the project period, the ownership of the facilities is then transferred to the GOV. In this scheme, the Private Sector takes on the repayment risk while the GOV will take on the revenue risk on a contractual basis. This type of PPP Scheme is associated with contentious issues revolving around: Annual Lease Fees, Project Period, Recourses on Default Situations, Actual Cost of Construction of the facilities, and the like. In short, the GOV will frown on carrying such contingent liability. / Nominal capital requirement from GOV / Sensitive to default conditions / Contingent liabilities with GOV In this study, as the result of the foregoing evaluation, it is recommended to adopt the BOT/BTO scheme to the PV-CG Expressway Project on the premise that risks which the Private Sector should shoulder managed to be at the acceptable level. The fact that the Private Sector is willing to take a substantial portion of the risks makes it an Investment Package so attractive to the GOV to allow the Private Sector to undertake the Project within the established legal frameworks of Decree 108 and Decision 71 with exemption to the tendering process. App3-4-7

298 4. Optimum PPP Scheme (Base Case) and its Development within the Institutional and Legal Framework Following the PPP Study Protocol (Inset), the partnership program is developed within the legal and institutional framework of Decree No. 108 and Decision No. 71. A description of the PPP Structure, based on Figure 0 as follows. The GOV, through the Ministry of Transport gave VEC the mandate to develop PV-CG (Decision No. 929/QD-BGTVT) and MD-NB (Decision No. 103/QD-BG-TVT) to be Toll Ways. Currently, the PV-CG is being appraised and the plan is to book it in the asset accounts of VEC. By and large, these signify that the Right-to-Develop is now in VEC s possession. Also, it is foreseen, that with the additional asset of PG-CG, VEC can infuse this in any joint stock company it could participate in; or collateralized as counterpart funds in securing ODA loans. VEC can opt to utilize ODA financing for the project in lieu of a PPP Program. However, negative consequences will result particularly: protracted implementation schedule, increased debt service, and the specter of GOV guarantee requirements. VEC could, however, turn towards the Public-Private Partnership approach and set up a joint stock company, the Special Purpose Company (SPC) together with the Private Investor/s. VEC will bring into the partnership its Right-to-Develop (Concession Right) and a level of capitalized assets. The Private Sector investor/s will bring in their capital investment. A Memorandum of Agreement is concluded towards the formation of the SPC. The SPC will effectively possess the Development or Concession Right by virtue of VEC s participation; and will have the necessary capital to undertake the project. Advantages of using the PPP approach through a SPC are enumerated in the SPC caption shown in Figure 0. And these are: Minimum Capital Infusion from VEC, No VEC Debt Service, No GOV Guarantees, Expeditious Implementation Schedule, Assured Technology Transfer, and Increased Operating Efficiencies. To formalize the Concession Right, a Toll Concession Agreement (this being a suite of interwoven agreements) between the SPC and the MOT will signed. Value is placed on the Concession Right that would require a nominal annual fee based on predetermined financial parameters. The Concession Fees are remitted to the MOF through the DRVN. This forms the Base Case or what is now termed the Investment Package which could be put forward to the GOV for consideration, evaluation, and approval. App3-4-8

299 Figure 9 Institutional Framework for VEC Public-Private-Partnership Source: Study Team 5. The Recommended Concession Architecture (Business Case) Finally, account must be taken of the components that would come into play towards the concession agreement. Thus, a Concession Architecture is presented that will put together the: legal financial, contractual, and operational provisions (and tasks) in the Toll Concession Agreement. This architecture defines the structure and dynamics of the recommended PPP Program shown in Figure 5-5., below. 5.1 Legal A preceding Memorandum of Agreement (MOA) must be concluded between the GOV (represented by the MOT) and principal investor, Japanese Investor-A (JI-A). The intent of this MOA is for the GOV to acknowledge the Development Rights of VEC on the PV-CG and MD-NB projects. The MOA shall document the authorization to be given by the MOT to VEC to engage with JI-A, in a Joint Stock Company the Special Purpose Company (SPC) in exercising its Development Rights on the Project/s. The MOA, by virtue of this authorization calls upon the MOT to provide all necessary support and administrative permissions to obtain approval for the SPC to undertake the Project under the Public-Private Partnership Program, within the framework of Decree No. 108 and Decision No. 71, towards the approval of the Prime Minister. Based on the MOA, VEC and the JI-A/JI-B will form the SPC and complete its registration in compliance with the Law on Investments and the Law on Enterprise, inclusive of its Articles of Joint Venturing, its By-Laws, a their Shareholder s Agreement. The Shareholder s Agreement will specify, among others, proportions of share holdings of each partner, capital subscriptions, capital investment infusions - in forms of cash, capitalized assets, value of Concession Rights, and other relevant provisions to the joint venture and its undertaking. The SPC, will for it organization (Partners and Management Staff), and will continue to act in App3-4-9

300 pursuit of the Toll Concession Agreement 2 with the MOT Financial With the Toll Concession Agreement on hand, SPC with its Principal Partners will initiate and apply for the loans from its lenders. The Toll Concession Agreement is the most important document which the lenders and insurers will examine in determining the terms and conditions, and grant of the loan package. The financial setting is stringent for the following reasons: The GOV will not provide any guarantee whatsoever, The JI-A prefers no liability attachment to its corporate level, Therefore the SPC, JI-A, and their Financial Consultants will examine closely the risks; and flesh out a Security Package that can be presented to the Lenders satisfaction. This would involve a myriad of guarantee issues, insurance against risk, management of default situations, and so on. 5.3 Contractual Work on the Contractual components of the Concession Architecture should be commenced by any of the partners in anticipation of the requirements for the conclusion of the TCA. The Preliminary Design for the PV-CG and MD-NB Expressway Projects provide sufficient reference for the conclusion of the TCA. The Detailed Design could be undertaken at Owner sown-risk to fit into the general schedule of implementation in anticipation of the TCA and financial closure. Construction contracts will be forthcoming, however, preparations for Civil Works Tendering should be initiated in line with the general schedule of implementation. 5.4 Operational Within the context of the Concession Architecture, the operational aspects of the project present two (2) matters of concern for resolution. These are: Management of the O&M There are a number of options available with regards to the management of the O&M. One option for O&M Management Structure is for the SPC partners to decide to manage the O&M as departmental function within the SPC. The 2 nd option is for the SPC to contract the O&M and its management to VEC s O&M Joint Stock Company. The 3 rd option is for the SPC and VEC to establish a separate O&M Company specifically for the PV-CG Project the PV-CG Toll Corporation. These are options which VEC and JI-A can take outside of the provisions of the TCA. Toll Collection Regime The SPC will design and implement a suitable and updated toll collection system most appropriate for the project. The possibility exists that the system may require modifications in the conduct of the existing Toll Collection Regime (as elaborated in an earlier section of this study). A good example of this is the use of Electronic Toll Collection with CICC s in combination with Cuoc Duong Bo (trip tickets). The toll collection system introduced by the SPC may require a re-examination and modification of the selling, collection, and remittance protocols of the existing Toll Collection Regime. This is a matter that has to be resolved at the TCA negotiation table. 2 At this stage, predecessor milestones and task accomplishments must be clearly understood. JI-A must have the MOA to obtain assurance of the Development Rights being passed-on and transferred to the SPC. This MOA assures support from the MOT for the undertaking of the project to be within the framework Decree 108 and Decision 71 with its attendant benefits. It is only on the basis of this MOA that the SPC could be formed. The SPC must be formed right at the outset because it is the SPC that will craft, negotiate, and finalize the Toll Concession Agreement (TCA) with MOT. Without the TCA, the lenders will be timid in discussing or crafting loan agreements with the SPC or JI-A. 3 To reinforce the juridical strength of the pass-on of the Development Rights of VEC to the SPC, the SPC should consider payment of Concession Fees as the consideration in the transfer of the Development Rights the terms of which will be negotiated. App3-4-10

301 Source: Study Team JICA PSIF Figure エラー! 指定したスタイルは使われていません -10 Recommended Concession Architecture App3-4-11