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| The Thai Nguyen - Cho Moi BOT project is one of the projects expected to have its contract terminated prematurely. |
Not yet in complete agreement.
After much deliberation and numerous meetings with relevant ministries, agencies, investors, and credit institutions, the Ministry of Construction has submitted Report No. 455/BC-BXD to Prime Minister Pham Minh Chinh and Deputy Prime Minister Tran Hong Ha regarding the completion of the Decree detailing the handling of obstacles in BOT transportation projects.
This is the second report the Ministry of Construction has submitted to the Government leadership in the past month or so, primarily aimed at clarifying and explaining the determination of interest costs in the proposed payment value for the group of six BOT transport projects whose contracts had to be terminated due to force majeure events, changes in planning, policies, and related laws.
Sandwiched between the two reports were two meetings directly related to this issue: a meeting at the Government Office on December 26, 2025, chaired by Deputy Prime Minister Tran Hong Ha, and a meeting at the Ministry of Construction chaired by Deputy Minister of Construction Le Anh Tuan and Deputy Governor of the State Bank of Vietnam (SBV) Nguyen Ngoc Canh.
Previously, in Notice No. 270/TB-VPCP dated June 22, 2024, the Standing Committee of the Government assigned the Ministry of Transport (now the Ministry of Construction) to coordinate with the State Bank of Vietnam to work with investors and credit providers on the principle of ensuring a harmonious balance of interests between the State, investors, BOT project enterprises, and capital providers; they must share the risks, and have solutions to restructure loans, reduce interest rates, and adjust repayment plans accordingly.
In cases where a proposal is made to use state budget funds to compensate investors upon early termination of a contract, the Standing Committee of the Government requires that the value for which the State is responsible for payment, the source of funding, and the decision-making authority be clearly defined; the parties are responsible for sharing risks to the maximum extent possible according to the principle of "harmonious benefits, shared risks".
"The Ministry of Transport and the State Bank of Vietnam are working with investors, businesses, and capital providers to negotiate in a way that eliminates equity returns and interest payments from the proposed payment value," Notice No. 270 clearly states.
According to Mr. Le Anh Tuan, in implementing the above directive, during the drafting of the Decree, the Ministry of Construction included detailed regulations on compensation costs for early termination of contracts (including all construction investment costs, interest on loans during the construction phase, operating and maintenance costs...).
Regarding interest rates on loans during the operational and business phase, the draft decree proposes three options for consideration by members of the Government.
In Option 1, the interest cost during the operation and business phase is determined by multiplying the total loan amount under the PPP project contract by an interest rate of 4% per year.
Under Option 2, the interest expense during the operating and business phase is determined by the total interest expense that the investor or project enterprise has paid to the credit bank up to the time the competent authority decides to terminate the contract.
Under Option 3, the interest expense during the operating and business phase is determined to be 0 VND (interest expense during the operating and business phase is not included in the compensation costs for early contract termination).
According to the Ministry of Construction's leadership, all 22 members of the Government unanimously approved the draft Decree.
Regarding interest expenses during the operating and business phase, 3 government members chose option 1; 1 government member chose option 2; 13 government members chose option 3 (excluding interest expenses during the operating and business phase); and 5 government members did not choose any option (including the Governor of the State Bank of Vietnam).
Notably, after the Ministry of Construction completed the process of seeking opinions from government members, several banks, including Techcombank - a co-financing unit for the Thai Nguyen - Cho Moi road construction project, proposed a plan for the State to pay interest costs during the operational phase at an interest rate of approximately 4% per year (while the actual interest rate under the BOT contract is 9-10.14% depending on the phase), in order to partially offset the interest costs of raising capital from the public (according to Techcombank's report, the cost of raising capital is no less than 6% per year).
Specifically, in Document No. 11576/NHNN-TD dated December 29, 2025, sent to the Ministry of Construction, the State Bank of Vietnam stated that it had compiled the opinions of 5 banks regarding the group of 6 BOT projects that must terminate their contracts prematurely. All commercial banks unanimously agreed and recommended that the Ministry of Construction report to the Government to choose Option 1 (interest rate of 4%) to help banks partially offset their capital mobilization costs.
"Therefore, the method of calculating loan interest needs to be agreed upon and unified among the three parties signing the project contract and the credit contract, including the competent authority, the investor, and the credit institution," the representative of the State Bank of Vietnam proposed.
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7 years waiting for support
Report No. 455 indicates that the Ministry of Construction continues to maintain its stance of not charging interest on loans during the operation and business phase (Option 3).
The reason given by the Ministry of Construction is that, among the 6 projects whose contracts were terminated, 2 projects had not yet collected fees, and 4 projects had collected fees but the revenue was very low, insufficient to cover interest payments according to the credit agreement. Therefore, the bank loans have already become, or are at risk of becoming, bad debts (Group 5 debts).
Government Decree No. 86/2024/ND-CP stipulates that for Group 5 loans, credit institutions must set aside provisions equivalent to 100% of the outstanding principal loan amount (excluding provisions for interest); credit institutions may use these provisions to manage risks associated with loans classified as Group 5.
With the above regulations, the Ministry of Construction believes that in the event of bad debts arising, credit institutions must set aside provisions and use those provisions to handle the risks associated with those bad debts.
According to the policy stipulated in the Decree, for projects affected by force majeure events, changes in relevant planning, policies, or laws, where the parties have implemented remedial measures but these do not guarantee the continued implementation of the PPP project contract, the State will pay compensation for early termination of the contract; the investor and lender are responsible for sharing the costs, excluding the return on equity and interest during the exploitation phase from the proposed payment value, in order to ensure the principle of "harmonized benefits, shared risks".
Thus, for BOT transportation projects whose contracts must be terminated, the Draft Decree fully demonstrates the State's responsibility and goodwill in resolving obstacles for BOT transportation projects, ensuring conditions for investors to recover their equity capital, and for credit banks to recover the entire principal and interest lent during the construction phase (approximately 352 billion VND/4 projects that borrowed from banks).
Furthermore, to date, all investors have agreed to share the burden, excluding the return on equity from the proposed payment value; banks are responsible for sharing the burden, excluding interest payments during the operational and business phase, in order to ensure the principle of "harmonious benefits, shared risks" as concluded by the Standing Committee of the Government in Notice No. 270/TB-VPCP.
"According to the Ministry of Finance's view at the meeting on December 26, 2025, choosing option 3 is appropriate and ensures a balance of interests," Report No. 455, signed by Deputy Minister Le Anh Tuan, clearly states.
According to Mr. Tran Chung, Chairman of the Vietnam Association of Road Construction Investors (VARSI), the process of resolving obstacles at 11 struggling BOT transport projects (5 projects are expected to have their contracts continued with state support, and 6 projects must terminate their contracts prematurely) has been underway since 2018.
The Ministry of Transport (now the Ministry of Construction) coordinated with localities to review and assess the obstacles of BOT transport projects and reported to competent authorities for consideration and resolution. However, only when the National Assembly amended the PPP Law did the relevant agencies have sufficient legal basis to definitively resolve the issues.
"After nearly 7 years of implementation, it is time for the competent authorities to promptly issue a Decree to definitively resolve the obstacles of BOT transportation projects, thereby creating confidence and a favorable investment environment to continue mobilizing resources for infrastructure investment through the PPP method," the Chairman of VARSI stated.
Source: https://baodautu.vn/cho-go-nut-that-cuoi-cho-du-an-bot-giao-thong-d490935.html
