The Government Office has just issued Notice No. 47/TB-VPCP, the conclusion of the Standing Committee of the Government on the Decree detailing the handling of obstacles of BOT transport projects.
Sharing about the draft Decree, the Ministry of Construction said that in the context of difficult state capital sources, before 2020 (the time the Law on Public-Private Partnership Investment - PPP Law - was promulgated), the whole country had mobilized about 318,857 billion VND to invest in 140 public-private partnership projects, contract types Construction - Business - Transfer (hereinafter referred to as BOT traffic projects).
The projects have been put into operation for the right purpose, promoting efficiency, reducing transportation costs, promoting socio-economic development, reducing congestion, traffic accidents, and improving the competitiveness of the economy.
However, before the PPP Law was promulgated, the law on investment in the form of BOT contracts still had some limitations. In the process of contract implementation, having to adjust policies to suit practical requirements has led to problems arising at some BOT transport projects.
Accordingly, out of a total of 140 BOT projects, the list of 11 projects that have been quantified for problems and some potential problems has been identified to date.
On this basis, the Ministry of Construction has coordinated with the State Bank of Vietnam and relevant localities to negotiate with investors and project businesses, agreeing on two groups of solutions to remove obstacles according to the principle of "harmonious benefits, shared risks", including: State sharing to continue contract implementation; State paying compensation costs, terminating contracts ahead of schedule.
Regarding loan interest costs in the operation and business phase, the draft Decree proposes three options for determination.
Option 1: The total loan capital under the PPP project contract is multiplied by the determined interest rate of 4%/year. The time to calculate loan interest costs is from the time the project project is put into operation to the time the contract is terminated.
Option 2: Total loan interest expenses that investors and project businesses have paid to credit banks up to the time the competent authority decides to terminate the contract. Implementing the direction of the Standing Committee of the Government in Notice No. 270/TB-VPCP, the Ministry of Construction has coordinated with the State Bank of Vietnam and relevant localities to organize negotiations with investors, project businesses and credit-providing banks for 6 BOT projects expected to terminate the contract. In the process of collecting opinions, credit banks proposed that the State support a portion of loan interest because banks have to mobilize short-term capital from people and businesses to lend long-term to BOT projects.
Specifically, some banks proposed to support loan interest costs during the operation and business phase at a rate of about 4%/year on the total loan capital invested in the project; some banks proposed the value of payment with interest calculated that the project enterprise has paid and the bank has accounted for, non-retroactively for the collected interest.
The Ministry of Construction assesses that in the two options mentioned above, option 1 has the advantage of ensuring uniformity and synchronization when paying compensation costs and terminating contracts. However, if implemented according to this option, credit banks will encounter obstacles in re-accounting because loan interest collections have been accounted for before.
Option 2 is suitable for the reality of paid loan interest, convenient for credit banks because they do not have to recalculate. However, this option does not ensure consistency because the paid loan interest level depends on the revenue of each project as well as the investor's ability to pay; in which, investors can mobilize other sources of capital to pay bank loan interest, not completely dependent on project revenue.
In addition, the Ministry of Construction also developed Plan 3: 0 VND, which means not including loan interest in the operation and business phase in compensation costs when terminating the contract before the deadline.
This plan is built on the basis of Notice No. 270/TB-VPCP dated June 22, 2024 of the Government Office on the Project to handle difficulties and obstacles at some BOT traffic projects. According to the conclusion of the Standing Committee of the Government, in case of proposing to use state budget to pay investors when terminating contracts ahead of schedule, it is necessary to clearly determine the value under the State's responsibility to pay, the source of use and decision-making authority; the parties are responsible for sharing maximum risks according to the principle of "harmonious benefits, shared risks".
Regarding this option, the Ministry of Construction and the State Bank of Vietnam will work with investors, project enterprises and capital providers to negotiate in the direction of not calculating equity profits and not calculating loan interest in the expected value proposed for payment.
