Raising alternative funds expected to save millions of dollars in the long term.
Self-raised capital for upgrades to Da Nang Port is to be preferred over Official Development Assistance (ODA).
Senior figures representing the Tien Sa Port project made the unexpected move by refusing the ODA from the Japanese government for the expansion project. At a meeting with city leaders, they explained the reason for this is confidence in their ability to raise the funds manually. However, there is another story behind that statement.
In a report to the Da Nang Provincial People's Committee, the company estimated that by self-mobilising funds, the investment amount would be about VND1.29 trillion ($59.73 million). On the other hand, by using ODA aid from Japan, it would soar over VND2.16 trillion ($100.01 million) just for the construction of the main site. These figures were calculated by Portcoast – Tedi Port, a leading consultation firm in Vietnam.
The company said that the project would be implemented in two phases. In the first phase from 2016 – 2017, the investment amount will be VND1 trillion, from which, VND400 billion ($18.52 million) is expected to be raised from strategic partners and the stock market. The remaining VND600 billion ($27.78 million) will be from divestment of joint-stock companies or real estate projects and other sources.
In the second phase, the amount needed will be around VND290 billion ($13.43 million). The company is planning to increase charter capital by VND200 billion ($9.26 million)and the remaining VND90 million ($4.17 million) will be from commercial loans.
Having been assisted by ODA over a decade ago, the company's representative said that they can't deny the huge contribution of this aid, especially when the company was enduring a difficult period. Tien Sa Port itself has also benefited from foreign aid.
"However, as we are a public company with healthy finances at the moment, we are confident in our ability to raise capital," said a representative of Da Nang Port.
Da Nang Port officially became a joint-stock company last year. The charter capital of the company is VND660 billion ($30.56 million), of which the State (Vinalines Corporation) holds 75 per cent.