VIETNAM NATIONAL UNIVERSITY, HANOI VIETNAM JAPAN UNIVERSITY DO VIET HUNG INTEGRATING TRAVELERS’ PERCEIVED FACTORS IN MODELLING THE CEILING PRICE OF TOLL ROAD. A CASE STUDY OF B.T PROJECTS IN VIET NAM MASTER’S THESIS Hanoi, 2019 1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com VIETNAM NATIONAL UNIVERSITY, HANOI VIETNAM JAPAN UNIVERSITY DO VIET HUNG INTEGRATING TRAVELERS’ PERCEIVED FACTORS IN MODELLING THE CEILING PRICE OF TOLL ROAD. A CASE STUDY OF B.T PROJECTS IN VIET NAM MAJOR: INFRASTRUCTURE ENGINEERING CODE: PILOT RESEARCH ANNEX 2. LIST SUPERVISOR: OF FORMS FOR MANAGEMENT Dr.
NGUYEN HOANG TUNG Hanoi, 2019 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ACKNOWLEDGMENT During the period of studying to accomplish the topic of master’s thesis, there is not only self effort but also the enthusiastic guidance of teachers, as well as the encouragement of my family and friends. First of all, I would like to express my gratitude sincerely to my supervisor, Lecturer Dr. Nguyễn Hoàng Tùng who instructed directly me to conduct this research by making particular guidance. I also would like to give special thanks to whole teachers at Vietnam Japan University, who have conveyed me the precious knowledge for the duration of my learning here.
Especially Professor Dr.Sci Nguyễn Đình Đức and Dr. Phan Lê Bình who always have stimulated me to try my best and have inspired me a lot of motivations for studying as well as working in the life. Besides that I am grateful to Professor Hironori Kato, the Co-Director of Master's Program in Infrastructure Engineering, for supporting me actively when I had a three- month Internship Program in Japan. Finally, I would like to thank my family and co-workers, who always are beside me during the implementing this master's thesis.
Although there have been lots of my attempts in the research process, due to limited ability and experience of self, this master's thesis still exist some unavoidable shortcomings. So I am looking forward to hear sincere feedbacks from teachers and colleagues in order to supplement and complete more this research in the future. Hà Nội, Jun 2019 Đỗ Việt Hùng i LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ABSTRACT The Build-Operate-Transfer (BOT) scheme is considered as an attractive means by the Vietnamese government to develop new infrastructure projects. They were started to widely carried out from 2011 and it is predicted to continuously increase in the future.
The toll price of BOT road given by investor is set under the ceiling price that is regulated in Circular of Ministry of Transport. It can be seen that most of BOT toll road projects have applied charge that are nearly equal to the given ceiling prices. Nevertheless, the ceiling price at this Circular did not consider the scale of road, as well as did not take into account of travelers’ willingness to pay to toll price. There has not ever researches of the topic to previous studies.
Therefore, this study focused on integrating “willingness to pay of travelers” to model of toll ceiling price in BOT road project by using a bi-level programming model to formulate for a simple two-road network to optimize toll price and propose ceiling pricing for BOT projects. Some important findings of ceiling price include: (1) If government does not restrain toll price on BOT road, that leads to a negative social welfare; and (2) there must exist price which is maximum threshold of toll price for BOT road in order that social welfare becomes positive; and (3) ceiling price is set to be equal to minimum of “willingness to pay” and the threshold of toll price above. ii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com TABLE OF CONTENTS ACKNOWLEDGMENT .ii TABLE OF CONTENTS. iii LIST OF FIGURES.
v LIST OF TABLES. vi LIST OF ABBREVIATIONS. The model setting. Step 1: Determining route choice of travelers.
Step 2: The operators determine the toll prices to maximize their own benefit respectively. Step 3: Evaluation social welfare. Case 1: All two roads get maximum their own benefit at the same time. Case 2: Only BOT road get maximum his own benefit under condition that it is positive social welfare.
Step 4: Integrating the factor named "willingness to pay of travelers" to guarantee users' benefit. Step 5: Determining ceiling price of toll road under condition that optimal benefit of investor and the government, which taking into account "willingness to pay" of travelers. Case 1: If p1’ is less than WTP (i. Case 2: If p1’ is greater than WTP (i.
19 iii LUAN VAN CHAT LUONG download : add luanvanchat@agmail. Recommendation 1: Downscale capacity of BOT road. Recommendation 2: Keep capacity of BOT road. Introduction for case study.
Willingness to pay of travelers choosing this road to travel. Determining toll ceiling price of BOT road. Case 1: Toll ceiling price for vehicle has under 12 seats. Recommendation 1: Downscale capacity of BOT road.
Recommendation 2: Keep capacity of BOT road. Case 2: Toll ceiling price for vehicle has under 30 seats. Recommendation 1: Downscale capacity of BOT road. Recommendation 2: Keep capacity of BOT road.
Estimation WTP as regression function. Case 1: Estimation WTP function of travelers have car under 12 seats. Case 2: Estimation WTP function of travelers have vehicle under 30 seats. 41 iv LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF FIGURES Page Fig 1.
Relationship between government, investor, travelers. Number of BOT projects in Vietnam incl. Rank of Vietnam in the world about service and quality of road transport infrastructure. Comparison of benefit between BOT road vs non-BOT road.
Toll price in BOT scheme in Vietnam. GDP per capita and Toll price of some countries. PV-CG Expressway and NH. 22 v LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF TABLES Page Table 1.
Ceiling Prices in National Highway. Ceiling Prices in Expressway. Major parameters of two roads. Characteristic of interviewees.
Descriptive statistic about WTP of travelers for toll price. Regression Coefficient of WTP function. Regression Coefficient of WTP function. Regression Coefficient of WTP function.
Regression Coefficient of WTP function. 37 vi LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF ABBREVIATIONS BOT Build – Operate - Transfer PPPs Public Private Partnerships PV-CG Expressway Pháp Vân – Cầu Giẽ Expressway NH.1A National Highway No.1A WTP Willingness to pay vii LUAN VAN CHAT LUONG download : add luanvanchat@agmail. INTRODUCTION The more rapidly the economy grows, the more greater demand for infrastructure are. In most countries, infrastructure was built from the state budget.
However, there are many items which need be spent by governmental budget and private capital is a good fund to complement these shortages. Nowadays, more and more governments have encouraged private investor which take part in public investment projects. Therefore, in order to support public infrastructure, Public Private Partnerships (PPPs) have become a major scheme (Hodge and Greve, 2007) and reduce public sector budget shortages (Kwak et al. PPPs are widely used to supply many infrastructure projects in the world.
Infrastructures invested by PPPs make economic efficiency increasing (Zhang, 2005) and facilitates the overall development of social infrastructure (Li et al. In Vietnam, according to Decree No. 63/2018/ND-CP: “PPP” is an investment form which is carried out on the basis of a contract between the State and an investor, in order to construction, renovation, operation, business, management of infrastructure works, provision of public services. Build-Operate-Transfer (BOT) model is a form of PPP which has extensive applications in infrastructure projects.
The BOT scheme is gaining popularity and booming in public infrastructure around the world (Tan, 2012). It is adopted as an innovative way to sponsor for infrastructure construction in both developing and developed countries. In recent years, BOT arrangements have contributed to accelerating economic growth and improve quality service delivery and operation efficiency (Akintola et al. In Vietnam, the Build-Operate-Transfer (BOT) scheme is considered as an attractive means by the Vietnamese government to develop new infrastructure projects.
According to Decree No.63/2018/ND-CP, parties involving in this contract project include: the government, private investor and travelers. 1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Investor Travelers Government Fig 1. Relationship between government, investor, travelers Figure 1 show the relationship whole parties involved in. First, the government and private sector sign an agreement for project.
Then investor constructed project by his own expense. After the construction was completed, the investor carries out to provide service for users and travelers pay charge this serve. When end of concession period, private investor gives project back government and government manages its. In Vietnam, BOT projects were started to widely carried out from 2011.
Although there were only 18 projects in 2011, so they increased to 80 projects in 2015, and it is predicted to continuously increase in the future. Source: Ministry of Transport (Number of projects) 120 ? 80 ? 80 40 18 0 2011 2015 2018 2020 (Year) Fig 1. Number of BOT projects in Vietnam incl. estimation These projects have promoted the road traffic system in our country to develop quickly and synchronously.
According to the World Economic Forum (WEF), the service and quality of Vietnamese road transport infrastructure increased rapidly and ranked in the position of 92/137 countries in the word in 2017. (World Economic Forum, Global competitiveness Report, 2018) 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Source: World Economic Forum 117/ 123 120 102 102 /139 /142 /144 102 104 /134 /148 /144 93 89 92 /133 /140 /138 /137 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Fig 1. Rank of Vietnam in the world about service and quality of road transport infrastructure When choosing to travel on BOT roads, although length of road between BOT road and non BOT road are equivalent and travelers have to pay a significant fee, so they obtain more benefit himself, such as get higher speed, reduce travel time, save fuel consumption, feel comfortably travel as well as restrain collisions can be happened. Thence, it can be raised economic efficiency for businesses and individuals.
Besides that, we can obtain social benefit as decreasing congestion and emissions causing environmental pollution. According to the statistics of the Ministry of Transport, Noi Bai - Lao Cai Expressway is estimated to reduce travel time by 50% and cost by 30%; Hanoi - Vinh National Highway is estimated to reduces about 30% of travel time and 20% of cost; Highway No.14 through Dak Nong province is estimated to reduces about 30% of travel time and 6% of costs,. Length (Km/h) (VND / turn) Smooth consumption Travel time Emissions Charge price Speed traffic (Km) (mins) Fuel Road invested by BOT project Road invested by Non-BOT project Fig 1. Comparison of benefit between BOT road vs non-BOT road 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Many studies have investigated the properties of BOT contracts and their design process.
To design a BOT contract, three critical parameters need to be considered: the length of the concession period, the infrastructure’s capacity and the toll. Three variables are essential to a BOT road project. They determine the social welfare for the whole society during the whole life of the road and the profit of the private firm during the concession period. In the concession period, the private sector receives the revenue of charged tolls (Tam, 1999).
Generally, service charge and capacity decisions are critical in a typical BOT contracting process, and the private sector has the power to determine both of them in the concession period. The private sector aims to maximize its own profit and may charge a high service fee, which eventually hurts the social welfare and not many road users want to patronize the BOT roads (Carpintero and Gomez, 2011). Therefore the optimal BOT contract depends on whether the optimum toll is profitable (Guo and Yang, 2009).