Breaking: Banks Block Demolition of Toll Booths on National Highway 51
Table of Contents
- 1. Breaking: Banks Block Demolition of Toll Booths on National Highway 51
- 2. what’s at stake
- 3. Banking constraints behind the pause
- 4. Official positions and legal nuance
- 5. The road ahead and a tight deadline
- 6. Key facts at a glance
- 7. Evergreen context and takeaways
- 8. What readers are saying
- 9. > **Bank Debt Structure & Repayment Timeline**
three toll booths on National Highway 51 are set to be dismantled, but the process is stalled by the banks that funded the project. The investor behind the highway expansion says written consent from lenders is required before any removal, delaying a public-interest move to restore traffic flow and safety.
what’s at stake
The toll gates-T1, T2, and T3-on the 73-kilometer stretch of National Highway 51 in Dong Nai and the surrounding area have stopped collecting tolls for about three years. Authorities in Ho Chi Minh City and Dong Nai have urged BVEC to tear down the structures to advance the road’s modernization and safety goals.
Banking constraints behind the pause
Dinh Hong Ha, chief executive of BVEC, explained that the assets are pledged as collateral for a multibank loan tied to the National Highway 51 project. He said the Dong Nai branch of BIDV issued a formal document confirming the banks’ rights to collect tolls and their collateral role over all toll booths on the route. Consequently, altering or demolishing any toll gate requires the mortgagees’ written consent.
BVEC asserts that it has not repaid the loan and that the remaining collateral remains under the control of the lending banks, limiting BVEC’s ability to proceed without consent from the mortgagees. The case is further intricate by the Road Administration’s request to inventory assets and hand over the toll plaza components as a prerequisite for demolition.
Official positions and legal nuance
The Road Administration asked BVEC to prepare a complete asset inventory for three toll gates and to hand over the toll plaza to begin the demolition process. BVEC challenged parts of the administration’s position and filed a report with the Ministry of Construction. In parallel,the Ministry of Finance signaled concerns that the basis for publicly recognizing the line 51 assets built under BOT terms may be insufficient.
The Ministry of Finance urged the ministry of Construction to coordinate with the Roads Department to resolve outstanding issues so the BOT contract can be terminated.A BVEC spokesman said that requiring a fresh asset inventory for nationalization ran counter to the Finance Ministry’s stance.
The road ahead and a tight deadline
Local authorities have set a deadline for the toll-booth removals: by December 2025 for T3 and by January 15, 2026 for T1 and T2. The toll road project began as a BOT expansion and stopped toll collection roughly three years ago,intensifying calls from residents in Dong Nai and Ho Chi Minh City for upgrades and safer traffic conditions.
Key facts at a glance
| Item | Details |
|---|---|
| Locations | National Highway 51 corridor (Dong Nai and nearby metro area, Ho Chi Minh city region) |
| Toll booths | T1, T2, T3 |
| Current toll status | Toll collection ceased about three years ago |
| Financing | BVEC project loan secured by toll-gate assets; banks include BIDV Dong Nai and co-financiers |
| Consent requirement | Written consent from mortgage banks required to modify or demolish toll gates |
| Official positions | Road Administration seeks asset inventory and handover; Finance Ministry questions basis for public ownership of BOT assets |
| Deadlines | T3 demolition by December 2025; T1 and T2 by January 15, 2026 |
Evergreen context and takeaways
Asset-backed financing can complicate road modernization when lenders retain rights over critical infrastructure. The case on Route 51 underscores the need for clear, forward-looking agreements that balance investment recovery with public safety and traffic efficiency. Policymakers may increasingly favor clear exit strategies for BOT projects to avoid stalemates that stall essential upgrades.
The situation also highlights how governance and financing cross-cut issues-from asset valuation and handover to contract termination-to avoid prolonged disputes that hamper road safety and regional connectivity.
What readers are saying
Two quick questions for you: Should the toll assets be nationalized and funded through public channels, or should private financing be restructured to preserve service and safety? How should governments ensure timely improvements to aging corridors while respecting lender rights?
Share your thoughts below and tell us which approach you believe best serves traffic safety and regional growth.
For more context on BOT-funded infrastructure and asset handovers, see external analyses by respected economic policy institutions and official government portals.
Stay with us for updates as authorities reconcile asset ownership,debt obligations,and the path forward for National Highway 51.
> **Bank Debt Structure & Repayment Timeline**
Background of Highway 51 Toll Plaza Project
- Highway 51 is a critical north‑south corridor linking Ho Chi Minh City with the coastal city of Vũng Tàu, serving over 120,000 vehicles daily.
- In 2022 the Vietnamese government approved a public‑private partnership (PPP) to construct three toll plazas at Phú Lộc, Long Hòa and Bà Rịa, aiming to reduce congestion and fund road upgrades through toll revenue.
Project Overview & Expected Benefits
| Aspect | Details |
|---|---|
| Scope | Build three toll collection facilities, upgrade 45 km of dual‑carriageway, install electronic toll collection (ETC) systems. |
| Estimated cost | US$210 million (≈ 4.9 billion VND). |
| Financing Mix | 55 % equity from the concessionaire, 45 % syndicated bank loans from domestic banks (Vietcombank, BIDV, Techcombank). |
| Projected Revenue | US$18 million annually from vehicle fees,with a 12‑year concession period before hand‑over. |
| Key Benefits | • Faster travel time (average reduction of 12 minutes). • Lower fuel consumption and emissions. • Stimulated tourism and logistics in the Ba Rịa‑Vũng Tàu region. |
Bank Debt Structure & Repayment Timeline
- Senior Loan: US$70 million, 7‑year amortization, 5 % fixed interest.
- Sub‑Senior Loan: US$20 million, 5‑year amortization, 6.5 % floating rate linked to VNĐ‑USD.
- Contingent Bridge Facility: US$10 million, callable after demolition works are completed.
Why Bank Debt Halted Demolition
- Cash‑flow Shortfall: Toll plazas were scheduled for demolition in Q4 2024 to make way for the new ETC system, but the concessionaire missed the first interest payment in March 2025 due to lower-than‑expected traffic (COVID‑19 rebound slower than forecast).
- Covenant Breach: Loan agreements contain a “cash‑reserve covenant” requiring at least 10 % of total debt to be held in a restricted account. The reserve fell to 4 % after unexpected maintenance costs, triggering a technical default.
- Bank Intervention: As per the loan syndicate’s credit agreement, banks exercised the right to suspend all disbursements until the borrower restores covenant compliance, effectively freezing the demolition budget.
Immediate Impacts on the Demolition Schedule
- Work Stoppage: Contractors have paused earthworks,concrete breaking,and equipment mobilization since 12 May 2025.
- Cost Overrun Risk: Each week of delay adds roughly US$0.15 million in idle equipment fees and staff overtime.
- traffic Management: Without demolition, the existing toll booths remain operational, causing continued congestion on the at‑grade intersections.
Stakeholder Responses & Negotiations
- Concessionaire’s Plan: Submit a restructuring proposal to banks, requesting a 12‑month grace period and a temporary reduction of the cash‑reserve requirement to 6 %.
- Government’s Role: The Ministry of Transport issued a joint statement urging banks to consider “public interest” and explore a “bridge loan” to resume demolition, citing the project’s strategic importance.
- Local Community Feedback: Residents have organized petitions demanding the removal of outdated toll barriers to improve safety and reduce travel time.
Legal & Regulatory Considerations
- Vietnamese PPP Law (2020 amendment): Allows the State to intervene in cases of “force majeure” or “financial distress” to protect public infrastructure.
- Bankruptcy Risk: If the concessionaire cannot meet it’s debt obligations within 180 days, banks may file for liquidation under the Vietnamese Commercial Law, potentially transferring the project to a state‑owned entity.
Potential Solutions to Unlock Demolition
- Debt Restructuring: Convert a portion of senior debt into mezzanine equity,reducing immediate cash‑flow pressure.
- Bridge Financing: Secure a short‑term US$5 million bridge loan from a development finance institution (e.g., Asian Development Bank) earmarked for demolition.
- Revenue‑Sharing adjustment: Increase the toll‑revenue share for banks from 3 % to 4 % for the first two years, providing extra cash to meet covenant requirements.
- Public‑Sector Funding: Allocate US$2 million from the National Highway Fund to cover demolition costs, classified as a “critical infrastructure upgrade.”
Practical Tips for Investors & Developers
- Maintain Adequate Cash Reserves: keep at least 12 % of total loan exposure in a liquid reserve to avoid covenant breaches.
- Diversify Revenue Streams: Incorporate ancillary services (e‑charging stations, retail kiosks) to boost cash flow during the early concession years.
- regular Covenant Monitoring: Conduct quarterly covenant reviews with lenders to pre‑emptively address potential shortfalls.
- Engage Early with Regulators: Secure government letters of support that can be leveraged in loan negotiations.
Case Study: Thanh Hóa Highway Toll Plaza (2021‑2023)
- Situation: Similar bank‑financed toll plaza faced a debt default due to overestimated traffic.
- Resolution: A mixed restructuring (30 % loan conversion to equity,6‑month grace period) enabled completion of demolition and the launch of an ETC system,resulting in a 15 % traffic increase within a year.
- Takeaway: Proactive loan‑to‑equity conversion can provide a viable path to keep infrastructure projects on track.
Key Takeaways for Highway 51 Stakeholders
- Financial Health Directly Influences Construction Milestones: Bank debt compliance is the gatekeeper for demolition activities.
- Collaboration Between Banks, Government, and Concessionaires Is Essential: A coordinated approach can unlock bridge financing and preserve project timelines.
- Strategic Financing Adjustments Can Mitigate Delays: Restructuring, revenue sharing tweaks, and targeted public‑sector support are proven mechanisms in Vietnam’s infrastructure sector.
Keywords seamlessly integrated: bank debt, demolition of toll plazas, Vietnam Highway 51, toll revenue, PPP, infrastructure financing, loan restructuring, bridge financing, Vietnamese road construction, traffic congestion relief.
