Study on Economic Partnership Projects. in Developing Countries in FY2007. Socialist Republic of Vietnam. ( Project Operation Approach )

Transcription

1 Study on Economic Partnership Projects in Developing Countries in FY2007 Study on Da Nang-Quang Ngai Expressway Project in the Socialist Republic of Vietnam ( Project Operation Approach ) SUMMARY March 2008 Nippon Koei Co., Ltd. West Nippon Expressway Company Limited Central Nippon Expressway Company Limited ITOCHU Corporation

2 Summary 1. Background of the Project Government of Vietnam (GOV) established Vietnam Transport Development Projection by 2010 October 2002 as a master plan of the transport sector in Vietnam. Development of efficient traffic network and mass-transit traffic in the major cities, like Hanoi and HCMC, is given the higest priority in the plan. MOT established Highway Network Plan in Vietnam by 2020 and requested the GOV for approval, by his letter No. 5014/TTg-BGTVT dated 19 August A priority section of 2,113km of North-South Expressway was selected and Vietnam Expressway Corporation (VEC) was established for the materialization of the plan. Two (2) sections of the expressway, Cau Gie - Ninh Binh, and HCMC - Trung Luong are being constructed by VEC. The above master plan was updated by ADB (April 2007), subsequently it again is being updated by MOT himself. A JICA development study titled The Comprehensive Study on Sustainable Development of Transport System in Vietnam (VITRANSS 2) tookover and being conducted with close communication with MOT. The North-South Expressway Construction Program is one of Three Programs of Vietnam-Japan Joint Communique in October 2006, and paid much attection by both governments. Government of Japan (GOJ) had executed the site investigation at the end of February Da Nang - Quang Ngai Section of the North-South Expressway was nominated as one of eight (8) sections of the expressway to be built by Japanese ODA by Prime Minister s letter No. 412/QD-TTg dated 11 April 2007, and its smooth materialization is highly expected among the concerned parties. Under such circumstance, Ministry of Economy, Trade and Industry (METI) of Japan decided to carry out a study under the scheme of Study on Economic Partnership Projects in Developing Countries in FY2007 and the study was sublet to Japan External Trade Organization (JETRO). Table S-1 Sections of North-South Expressway to be built by Japanese ODA No. Section Length (km) Nos of Lanes Cost (MUSD) Start Construction 1 Ninh Binh - Thanh Hoa Thanh Hoa - Vinh , Hue - Da Nang Da Nang - Quang Ngai ,

3 5 HCMC - Long Thanh - Dau Giay Nha Trang - Dau Giay , HCMC - Trung Luong Trung Luong - Can Tho (Source: Prime Minister Letter No. 412/QD-TTg dated 11 April 2007) 2. Necessity of the Project Necessity of the Project can be summarized in the following five (5) aspects: - To Support Nationwide Socio-economic Development - To Promote Socio-economic Development of Central Vietnam - To Promote Traffic Safety - To Promote Environmental Protection - To Promote by Japanese ODA Loan (1) To Support Nationwide Socio-economic Development Socio-economic development rate of Vietnam has been keeping around 7-8 % in last decade and it is forecasted to keep the rate for coming decades. Volume of transport, domestic and international, has been increased remarkably to support such development widely in Vietnam. It is proved, by traffic survey, that 20% of logistics passing in the central Vietnam has their origin and destination in Hanoi and HCMC. More than 40% of traffic between Da Nang - Quang Ngai is long trip traffic connecting Northern Vietnam and Southern Vietnam. Da Nang - Quang Ngai Expressway shall be built timely in order to support the nationwide development of Vietnam.

4 Figure S-1 Origin and Destination of Traffic in Hai Van Pass (Source: Nippon Koei Feasibility Study for 2nd Hai Van Tunnel, 2002) 3,944 vehicles/day (39.6%) North Da Nang City and Northward 407 vehicles/day (4.1%) Quang Ngai City and Southward South Other intera traffic 3,273 vehicles/day (32.8%) 2,341 vehicles/day (23.5%) Total 9,965 vehicles/day Figure S-2 Origin and Destination of Traffic in Central Vietnam (2) To Promote Socio-Economic Development of Central Vietnam Socio-economic development strategy of Vietnam applies harmonized development policy among North, Central and South of Vietnam. Integrated Industrial Area Development Strategy (IIADS) have been planed and executed in the three regions accordingly. Area development consists of the following development components, and good achievement shall be materialized when integration of all components would be performed in harmony:

5 - Seaport and Airport as Trade Gateway - Industrial Zone as Production Base - Stable Supply of Electricity and Water as lifelines - Transportation infrastructure between production point and ports as logistic artery - Comfortable Living Environment As shown in Figure S-3, GDP per capita in the central region is comparatively lower than the other two regions. Da Nang - Quang Ngai expressway shall be built, as soon as possible, in order to promote the industrialization of Da Nang - Quang Ngai Industrial Corridor by functioning as logistic artery. Construction of Da Nang - Quang Ngai Expressway is essential for the socio-economic development of the central region of Vietnam, otherwise, this region would be much delayed and depressed in terms of development in the country and would cause unstable social condition. Figure S-3 Three Focal Economic Areas in Vietnam (Source: JICA VITRANSS 2, 2007) (3) To Promote Traffic Safety Reduction of traffic accident is one of major issues in traffic policy in Vietnam because there are presently more than 13,000 victims per year and still increasing. National Traffic Safety Committee (NTSC) and Traffic Safety PMU under MOT are being active for this mission. One of major reason of traffic accident is Mixed traffic, especially during night time, consists of industrial traffic and living traffic, long trip traffic and short trip traffic. Industrial traffic with long trip shall be carried by expressway and to be separate from living traffic. Da Nang - Quang Ngai expressway shall be built, as soon as possible, in order to reduce number of traffic accidents by provision of industrial logistic corridor separate from living traffic

6 on NH1A. (4) To Promote Environmental Protection Traffic volume in NH1A is getting larger and larger, year by year. Air pollution and traffic noise, caused by such heavy traffic, are getting worse to living condition nearby. Da Nang - Quang Ngai expressway shall be built, as soon as possible, in order to reduce adverse traffic effect to the living environmental condition along the NH1A, especially for air pollution and traffic noise. (5) To Promote by Japanese ODA Loan As shown in Table S-1, the project is expected under funding of Japanese ODA Loan by GOV. Moreover, the result of economic and financial analyses show that this investment should be materialized by the governmental funding scheme because higher EIRR (18.2%) but lower FIRR (8.7%) is not attract private sector to participate investment under the BOT scheme. Da Nang - Quang Ngai expressway shall be built under ODA scheme because the investment return is higher in EIRR but lower in FIRR. 3. Related Policies, Decisions in Vietnam Side Da Nang - Quang Ngai expressway is given the highest priority as shown in Table S-1 above. In addition, the following documents had been issued in Vietnam. Table S-2 Related Official Documents with Da Nang - Quang Ngai Expressway No. Ref. No. Issued Date Issued by Address to 1 487/BGTVT-KHDT 26/1/2007 MOT MPI /BKH-KTDN 14/8/2007 MPI GOV /VPCP-QHQ 30/8/2007 GOV MPI As shown in the table, it is apparent that construction of Da Nang - Quang Ngai expressway is recognized not only one of the highest priority projects but also one of urgent needed projects in Vietnam. Such maturity of the project in Vietnam side had been confirmed during the MOT meeting on 20 December 2007 chaired by MOT Vice Minister.

7 4. Outline of the Project (1) Outline of the Project Study results are summarized in Table S-3. Table S-3 Updated Project Major Features 1 Project Cost JPY143Bil (VND19,927Bil) 2 EIRR 18.2% 3 4 NPV (Discount Rate = 12%) B/C (Discount Rate = 12%) JPY62Bil (VND8,593Bil) FIRR 8.7% 11 Project length 131km (BP at NH14B in Da Nang, EP at Provincial Road 625 in Quang Ngai) 12 Road Classification Class A 13 Design Speed 100km/hr 14 Road Width 26m (Carriageway: 4@3.75m, Shoulder: 2@(0.75m+3.75m), Median: 2.0m) 15 Stage Construction Complete 4-lane in the 1st Stage 16 Major Intersections 9 Interchanges, 11 Flyovers 17 Bridges 115 Bridges (4 Large Bridges, 5.3km Viaducts), Total Length: 14,520.3m 18 Cross Structures 100 Road Culverts, 376 Waterway Culverts 19 Softground Soil Section Approximately 19.5km 20 Traffic Management & ITS Facilities 2 Throughway Toll Barriers, Traffic Management Facilities, 2 Service Areas, 3 Traffic Management Centers, 7 Expressway Bus Stops 21 Capacity Development Establish a O&M Company (a) Application of Stage Construction Method After discussion with MOT on 20 December 2007, during the 2nd Site Study in Vietnam, it was discussed and instructed to build the following structures during the initial construction

8 stage. The instruction was confirmed by MOT letter No. 595/-TB-BGTVT dated 29 December In this study, preliminary design, quantities take-off, and cost estimate were carried out on the basis this MOT instruction. Table S-4 MOT instruction on Stage Construction (20 December 2007) No. Structure Initial Stage Remarks 1 Land Acquisition 20m offset from bottom of slope Cost estimate for 15m offset case is required 2 Embankment For 4 lane 3 Cut For 4 lane 4 Bridges For 4 lane 5 Cross Structures For 4 lane 6 Pavement For 4 lane Cost estimate for 2 Lane pavement case is required 7 Interchanges For 4 lane (b) Alternative Study and Selection of Opitimum Option Through the study, the following alternative studies were carried out and oputimum opitions were selected as the Engineer proposal. km64 to km90 It was newly identified that there are two design controls between km64 to km90 near Tam Ky city in Quang Nam province. One is the Phu Ninh Lake Environmental Presavation Area, and the other is extended area of Chu Lai Economic Zone. The study team prepared several alignment alternatives and propose an optimum alignment. Discussion with Quang Nam Provice People s Committee on 18 January 2008, and the alignment was agreed. Not only the alignment updated, viaduct structure was proposed in order to secure the beautiful sineary of the area and provide sufficient dirainage capacity during flood season. This proposal was also explained during the meeting and agrred by Quang Nam Province.

9 Figure S-4 Alignment Updated near Phu Ninh Lake in Quang Nam Province Structural Solution to Flood Areas In the study area, there are several flood areas where serious damages caused annually to the agriculture. In the previous feasibility study in 2003, flood record was surveyed and Design Flood Level (DFL) was provided. However, no structural solution for the flood areas was proposed. In this study, the following concept for the structural solution for the flood areas was proposed. Figure S-5 Design Concept of Structural Solution to Flood Areas

10 Purpose of the cross structures above is to secure sufficient drainage capacity during/after flood in order to reduce adverse effect to the agricultural products. Required structure types and/or numbers of structures shall be determined based on hydrological analysis. In the further study/design stage, specific and careful estimate of flood water level should be made, and accordingly appropriate structural solution should be provided. (c) Major Expressway Facilities Major expressway facilities, 1) Typical cross sections, 2) Expressway facilities plan, and 3) ITS facilities plan, were as shown below:

11 Figure S-6 Typical Cross Sections

12 Figure S-7 Proposed Expressway Facility Plan

13 TL610 QUOC LO 14E TL616 TL617 TL622 TL623 KM KM KM KM KM KM KM KM KM Control Center O&M Office O&M Office Da Nang Quang Ngai : Parking Area : Service Area KM km KM km KM km KM km Danang IC-2 IC-3 IC-4 IC-5 IC-6 IC-7 IC-8 Quang Ngai Emergency Telephone Every 5 km Every 5 km KM km KM km KM km KM km KM Traffic Detector Meteorologic al Sensor x3 x3 x6 x2 x2 x2 x2 x3 x3 CCTV Camera Every 2 km x2 Every 2 km x2 Every 2 km x2 Every 2 km x2 Every 2 km x2 Every 2 km x2 x2 Every 2 km x2 Every 2 km x2 Every 2 km x2 Every 2 km x2 Every 2 km x2 Every2km Every 2 km x2 x2 Every2km x2 Every2km Overload Monitoring Wireless Radio To be covered all area Variable Message Sign (VSM) Variable Speed Limit Sign Highway Radio VICS x2 ON ON x2 OFF OFF ON x2 OFF ON x2 x2 OFF ON OFF ON x2 OFF ON x2 x2 x2 OFF ON OFF ON OFF OFF OFF OFF OFF OFF Every 5 km at each lane Every 5 km at each lane To be covered all area Future Plan Future Plan ETC & Manual Toll Collection ETC ETC x2 x2 x6 x2 x2 x2 x2 ETC ETC x2 x2 Communicat ion Network Trunk Network [Fiber Optic (DSF)] Local Network [Fiber Optic (SM) and Metallic Cable] To Nha Trang Others Signal Center System Water Level x2 Signal x2 Signal x2 Signal x2 Signal x2 Signal Water Level Signal x2 Signal x2 Water Level Signal Figure S-8 Proposed ITS Facility Plan

14 (d) Operation and Maintenance (O&M) Plan As essential elements for O&M on expressways are; 1) institutions concerned with expressway project, 2) standards necessary for O&M work, 3) O&M organization, 4) facilities and equipment, and 5) agreement concerned with enforcement and regulation providing authority of road or traffic administrators, and all of those must be sufficiently prepared before the expressway open to the public. In this study, Level of Service (LOS), O&M orzanization, facilities and equipment for the Da Nang-Quang Ngai expressway were proposed. Da Nang Operation Center 27 people Da Nang Traffic Control Center 46 people Da Nang ETC Service Center 9 people Da Nang Operation Office 12 people Tam Ky Operation Office 4 people Quang Ngai Operation Office 12 people Card Unit 6 OBU Unit 6 Traffic Operation Unit 12 Road Maintenance Unit 8 ITS Maintenance Unit 8 Road Maintenance Unit 8 ITS Maintenance Unit 8 Traffic Operation Unit 12 Road Maintenance Unit 8 ITS Maintenance Unit 8 Service Unit 6 Account Unit 6 Da Nang Toll Office 108 Ben Den Toll Office 108 Qui Xuan Unit Office 108 Tam Ky Toll Office 108 Nui Tinh Toll Office 108 Dung Quat Toll Office 76 Dac To Toll Office 172 Tinh Son Toll Office 108 Quang Ngai Toll Office 108 Figure S-9 O&M organization proposed for Da Nang - Quang Ngai expressway at the beginning (e) Environmental Considertaions The Project is categorized as Category A in the JBIC Guideline on the Environmental Social Considerations Confirmation because of being a road construction project causing large scale involuntary resettlement. Table S-5 shows preliminary screening results in this study. It was confirmed that there is no serious level impacts to the environment.

15 Table S-5 Screening Result of the Project Environmental Item Impacts 1. Permits and Explanation (1) EIA and Environmental Permits ** to the Affected People (2) Explanation to the Affected People ** (1) Air Quality ** 2. Mitigation Measures (2) Water Quality * (3) Noise and Vibration ** (1) Protected Area Natural Environment (2) Ecosystem --- (3) Hydrology --- (4) Terrain and Geology ** (1) Resettlement ** (2) Life and Livelihood ** 4. Social Environment (3) Cultural Heritage --- (4) Scenery ** (5) Ethnic Minorities and Indigenous People --- (1) Impacts during Construction ** 5. Other (2) Monitoring * Legend: ---: no impacts *: minor impacts **: middle impacts ***: serious impacts 5. Implementation Program (I/P) Considering the project components proposed and jurisdiction of the project site, seven (7) contract packages are proposed, six (6) construction packages and one (1) procurement package. Subsequently, based on the contract packages and following the standard time of procurement procedure under Japanese ODA Loan, a project Implementation Program (I/P) was proposed.

16 Table S-6 Proposed Contract Packaging No. Description Station Distance (km) Remarks 1 Civil Works, Da Nang Section A Civil Works, Quang Nam Section 1/ Large Bridges 1 Tunnel 2B Civil Works, Quang Nam Section 2/ C Civil Works, Quang Nam Section 3/ Civil Works, Quang Ngai Section Large Bridges 4 O&M and ITS Works Procurement of Maintenance Material and Equipment

17 ACTIVITIES DURATIO N Japanese ODA Loan Procedure SAPROF Study 4 Appraisal Loan Agreement L/A in Effect Selection of Supervising Consultant Advertisement, Bid, Selection, and JBIC Concurrence 10 Land Acquisition and Resettlement 20 Consulting Service (64 months) Consulting Service (64 months) Detailed Design (15months) Detailed Design (15months) Tendering Assistance (39 months) Tendering Assistance (39 months) Construction Supervision (38 months) Construction Supervision (38 months) Detailed Design 15 Package 1 (Civil Works, Danang, 8km) 12 Package 2A (Civil Works, Quang Nam 1, 27km) 12 Package 2B (Civil Works, Quang Nam 2, 35km) 12 Package 2C (Civil Works, Quang Nam 3, 29.5km) 12 Package 3 (Civil Works, Quang Ngai, 31.5km) 12 Package 4 (O&M and ITS Works, 131km) 9 Package 5 (O&M Vehicles, 131km) 7 Tendering Assistance 39 Construction Supervision 38 Construction Supervision 37 Training 6 Procurement of Contractors (Civil) 15 PQ Advertisement, Evaluation and JBIC Concurrence 3 JBIC Concurrence on Bidding Documents 1 Bidding 3 Bidding Evaluation and JBIC Concurrence 2.5 Contract Negotiation and JBIC Concurrence 3 L/C Opening and Issuance of L/Com. 1 Procurement of Contractors (ITS) 15 Procurement of Contractors (O&M Vehicles) (Defect Liability Period 2 Years) Construction Works Package 1 (Civil Works, Danang, 8km) 24 Package 2A (Civil Works, Quang Nam 1, 27km) 36 Package 2B (Civil Works, Quang Nam 2, 35km) 30 Package 2C (Civil Works, Quang Nam 3, 29.5km) 30 Package 3 (Civil Works, Quang Ngai, 31.5km) 36 Package 4 (O&M and ITS Works, 131km) 24 Package 5 (O&M Vehicles, 131km) 12 Figure S-10 Proposed Project Implemetation Program

18 6. Feasibility of Japanese ODA (1) Traffic Demand Forecast The present OD matrices were created based on the results of traffic surveys at the five (5) survey stations on the NH1A. Model formulas for estimation of future GDP and future traffic growth rates were also prepared and then future OD matrices were forecasted. Traffic demand of the expressway was obtained applying the network simulations through the traffic assignment procedure. Interchange Section Table S-7 Traffic Demand Forecast (2035, Both Directions) Unit: vehicles/day Bus Bus 4 and 2-axle 3-axle Car (<16 (>16 more Total Truck Truck seats) seats) axle IC 1 - IC 2 18,240 2,570 7,498 7,584 2,407 2,028 40,327 IC 2 - IC 3 18,240 2,570 7,512 6,882 2,191 1,816 39,211 IC 3 - IC 4 22,964 3,378 9,909 7,832 2,527 2,056 48,666 IC 4 - IC 5 13,472 3,028 9,406 6,417 2,070 1,729 36,122 IC 5 - IC 6 13,472 2,794 9,070 7,216 2,286 1,914 36,751 IC 6 - IC 7 11,788 2,473 7,980 6,594 2,064 1,729 32,628 IC 7 - IC 8 13,930 2,473 7,980 8,775 2,836 1,916 37,910 IC 8 - IC 9 13,930 2,473 7,980 9,890 3,084 2,057 39,415 (2) Economic and Financial Analysis (a) Economic Analysis Economic analysis was carried out based on the traditional cost-benefit analysis. All the costs (and benefits as well) were converted into the economic terms applying the Standard Conversion Factor (SCF=0.85) which is generally used in Vietnam. Quantified benefits which will be generated from the Da Nang - Quang Ngai expressway are the following two kinds of benefits: Savings in Vehicle Operating Costs (VOC) Savings in Travel Time Costs (TTC) Results of economic evaluation are summarized as below:

19 Table S-8 Result of the Economic Evaluation Evaluation Indicators EIRR NPV (*) B/C (*) Values 18.2% VND8,592,659Mil 2.20 (*): Discount Rate = 12% The above results indicate that the implementation of Da Nang - Quang Ngai expressway is economically feasible with values of Economic Internal Rate of Return (EIRR) higher than the opportunity cost of capital (>12%), higher B/C ratio than unity (>1), and positive NPV (>0). Results of the sensitivity analysis also showed the robustness of economic feasibility of the project as shown below: Table S-9 Result of the Sensitivity Analysis Tested Cases EIRR (%) B/C NPV (Million VND) Base Case 18.2% ,592,659 Test 1: Cost: 10% up, Benefit 10% down 16.5% ,303,301 Test 2: Cost 20% up, Benefit 20% down 14.8% ,013,943 Test 3: Evaluation Period: 20 years after opening 16.5% ,235,236 Test 4: Lower traffic growth (Lower GDP) 15.0% ,557,022 Discount rate = 12% (b) Financial Analysis Financial Internal Rate of Return (FIRR) was estimated for the four (4) cases by comparing toll revenues and financial investment cost including operation and maintenance costs. Results are as presented below: Table S-10 Result of the Financial Analysis Case Toll Rate Traffic Demand FIRR (%) 1 Constant Basic Rate Base Case 8.7%

20 2 Constant Basic Rate Lower Growth 6.9% 3 Revised at 5 year interval Base Case 9.6% 4 Revised at 5 year interval Lower Growth 7.8% It is noted that FIRRs of 7% to 9% like the above results are not enough to attract private sector to participate investment under the BOT scheme. Therefore, it is recommended to implement the project expressway under the public investment scheme. Repayment programs were prepared assuming JBIC loans for the both cases of General Terms and Special Terms for Economic Partnership (STEP). In all alternative repayment programs, Debt Service Coverage Ratio (DSCR) and Loan Life Coverage Ratio (LLCR) showed higher values than unity (>1.0) and, therefore, annual toll revenues (or accumulated net revenue) will be able to sufficiently cover the annual repayment of loan principal and interest. 7. Technical Advantage of Japanese Companies The Project is located along the beach line in the central Vietnam where mountenious terrain exists neat to the Pacific Ocean. Because of this location, construction to the expressway requires highly consideration of topographical and geological variables and it is similar to the construction condition of the expressways in Japan. Four (4) locations of large-scaled bridges, road tunnel, soft ground treatments are major technical achievements in civil works and those are common in Japan. Planning, establishing standards, design and supply, operation and maintenance of the proposed ITS, consisting of traffic management facilities and toll collection facilities, are the most advantage technology field of Japanese companies because Japan has experienced more than 40 years of experience of construction and operation of the expressway network in Japan. Considering the territory shape of the country, that of Vietnam and Japan is similar as very long for North-South direction and narrow for East-West direction, and natural conditions like climate, geology and rainfall and typhoon, Japanese technology of construction and operation of expressway should be the most suitable application to Vietnam. 8. Location of the Project Refere to Project Location Map.