Proposal on State sharing ratio for BOT projects with declining revenue

In the draft Decree detailing the removal of obstacles for BOT traffic projects that is being finalized, the Ministry of Construction proposed that the State's sharing rate should not exceed 75% in case the project's revenue decreases compared to the financial plan.

Thai Ha Bridge BOT project's toll revenue declines, needs to be resolved

Draft decree to handle revenue reduction of BOT traffic projects signed before January 1, 2021.

The sharing of reduced revenue is applied when the project meets the conditions specified in Clause 2, Article 99a of the Law on Investment under the Public-Private Partnership (PPP) method, specifically: the project needs to adjust the number of toll stations compared to the project approval decision to comply with relevant policies and laws, ensuring the interests of service users.

Expected sharing: the financial plan after applying adjustment measures has revenue that is not enough to cover the costs of project management, operation and maintenance, and the costs of repaying loan principal and interest according to the financial plan in the project contract; the financial plan after applying adjustment measures has a toll collection period of over 50 years.

The draft clearly states that the State's sharing rate shall not exceed 75% of the average ratio between the reduced revenue and the revenue in the project's financial plan in the last 3 years. The reduced revenue is determined by subtracting the actual revenue from the revenue in the financial plan.

The Minister and Chairman of the Provincial People's Committee shall decide on the ratio and level of State capital shared for projects approved by them according to the above regulations and ensure that the State capital level does not exceed the prescribed ratio.

The draft also proposes to terminate the contract ahead of schedule for BOT transport projects signed before January 1, 2021 in cases where the project has been completed and put into operation for at least 2 years but the investor and project enterprise are not allowed to collect fees to recover capital; the project has a decrease in revenue, the parties have adjusted the financial plan based on the expected State revenue sharing, reducing the rate of return on equity, reducing loan interest rates... but the time to collect fees to recover capital still lasts more than 50 years.

According to government statistics, there are currently 11 BOT traffic projects with declining revenue.

These projects are all ineffective, most of them are stuck due to objective reasons or influenced by decisions of state agencies.

MINH ANH

Source: https://www.sggp.org.vn/de-xuat-ty-le-chia-se-cua-nha-nuoc-voi-du-an-bot-sut-giam-doanh-thu-post805968.html