Removing difficulties for loss-making BOT projects with reduced revenue

Implementing the opinions of the National Assembly Standing Committee and the direction of the Prime Minister and Deputy Prime Minister, the Ministry of Transport has coordinated with localities to review and evaluate the overall difficulties and problems of BOT transport projects nationwide and develop appropriate solutions.

The Ministry of Transport has submitted to the Government Standing Committee a project to handle difficulties and obstacles in BOT transport projects.

Recently, the Ministry has submitted a document to the Prime Minister to supplement the provisions in the amended Law on Investment under the Public-Private Partnership (PPP) method to remove difficulties and obstacles for BOT projects. The Ministry has also submitted to the Government Standing Committee a Project to handle difficulties and obstacles in BOT transport projects.

Need to handle 11 BOT projects

Recently, the Provincial People's Committee Lang Son sent to the Prime Minister a request for support from the central budget to ensure financial solutions and remove difficulties and obstacles in the Bac Giang-Lang Son BOT project. The project was put into operation and collected tolls on the National Highway 1 reinforcement component from June 1, 2018; the expressway component opened to traffic in September 2019, and collected tolls from February 18, 2020.

According to the initial financial plan, the project collected tolls to recover capital at 2 stations on National Highway 1 and stations on the expressway, with an expected revenue of 93 billion VND/month. This is a rather special project implemented under the PPP form but without the participation of State capital, stalled for more than 5 years and toll revenue only reached about 32% of the initial financial plan.

According to the People's Committee of Lang Son province, the reason for the project's low revenue is the reduction of 1 toll station compared to the original plan of 2 stations but there is no alternative support method, leading to a decrease in revenue during the toll collection period; not increasing the toll price on the expressway and National Highway 1 according to the approved financial plan, applying exemptions and reductions to more than 4,200 vehicles around the toll station, causing a decrease in the project's revenue.

This project is one of 11 BOT projects facing many difficulties and problems, requiring appropriate solutions.

Accordingly, to handle difficulties and obstacles in BOT transport projects, the Ministry proposed two solutions: supplementing State capital support (in the exploitation phase) for the parties to continue implementing the contract; terminating the contract and arranging State capital to pay the investor; the investor and the credit providing bank are responsible for sharing the reduction of profits and interest to ensure harmony of interests.

After that, the Government Standing Committee met and concluded in Notice No. 270/TB-VPCP dated June 22, 2024, directing that in cases where it is really necessary to submit a resolution to the National Assembly, the completed projects that have not been charged fees should be reviewed and a specific list of projects with quantified difficulties and problems should be identified. In the long term, the Ministry of Planning and Investment should be assigned to preside over and coordinate with the Ministry of Transport in the process of amending the PPP Law to study and find appropriate solutions to handle PPP projects that have the potential to encounter difficulties and problems.

Implementing the conclusion of the Government Standing Committee, the Ministry of Transport has coordinated with localities to review and develop a list of projects to complete the Project. According to the results compiled to date, out of a total of 140 projects Traffic BOT Nationwide (66 projects with the Ministry of Transport as the competent authority, 74 projects with localities as the competent authority), there are 11 projects that have specifically quantified difficulties and problems that need to be handled.

Deo Ca tunnel, one of 11 BOT projects facing difficulties and problems.

In addition, there are some projects that have the potential risk of revenue decline (mainly due to investment in parallel highways and cross-roads) but cannot be quantified yet, such as the BOT National Highway 26 project, which has the risk of revenue decline due to investment in the Khanh Hoa-Buon Ma Thuot highway; the project to upgrade and expand National Highway 14, section Cau 38-Dong Xoai town (Binh Phuoc) and the project to expand National Highway 14, section Km817-Km887 (Dak Nong) also have the risk of revenue decline due to investment in the Gia Nghia-Chon Thanh highway...

Research on State capital supporting BOT projects

According to the draft revised PPP Law, the Government submitted to the National Assembly at the 8th Session, additional regulations have been added, providing sufficient basis for terminating contracts for BOT transport projects. However, the solution to use State capital support during the exploitation phase to continue implementing the contract is not clearly regulated.

Therefore, during the discussion session in groups and in the hall, a number of National Assembly deputies proposed to study and supplement regulations on the use of State capital support during the exploitation phase to remove difficulties and obstacles for a number of BOT projects signed contracts before the promulgation of the PPP Law.

Based on the opinions of National Assembly deputies, the Economic Committee is currently coordinating with the Law Committee, the Ministry of Planning and Investment, and the Ministry of Transport to study the acceptance plan, including proposing a plan to add to the transitional provisions in the revised PPP Law, and at the same time assigning the Government to stipulate the conditions and criteria for applicable BOT transport projects.

Specifically, the transitional provision is supplemented: “For transport infrastructure investment projects in the form of BOT contracts signed before 2021, using State capital to pay to terminate the contract before the deadline or using State capital to support the project during the exploitation phase to continue implementing the contract, the Government shall specify the conditions and criteria for BOT projects to be applied”.

Some National Assembly deputies proposed to study and supplement regulations on the use of State capital support during the exploitation phase to remove difficulties and obstacles for some BOT projects signed contracts before the PPP Law was promulgated.

The representative of the Ministry of Transport expressed that if the National Assembly passes the above additional regulations, there will be enough legal basis to handle difficulties and obstacles for BOT transport projects and there will be no need to continue implementing the project. According to the viewpoint of the Ministry of Transport's leader, at the time the National Assembly is considering PPP Law The amendment and supplementary plan stipulated in the transitional provisions in the draft revised PPP Law to handle difficulties and obstacles of BOT projects is appropriate, as it only deals with specific groups of projects (BOT traffic projects signed contracts before the PPP Law takes effect).

The Ministry of Transport will closely coordinate with the Ministry of Planning and Investment to advise the Government on developing conditions and criteria for BOT projects to be applied, and shared responsibilities of the parties (investors, credit providing banks) to ensure harmony of interests, not to take advantage of or profit from policies, causing loss and waste.

On that basis, the Ministry recommends that the Prime Minister direct the Ministry of Planning and Investment to complete the report on absorbing the opinions of National Assembly deputies and the Ministry's opinions, and supplement the transitional provisions of the revised PPP Law as stated above.

List of 11 BOT projects facing difficulties and problems that need to be resolved

8 projects with the Ministry of Transport as the competent state agency

- BOT project of National Highway 1, Thanh Hoa city bypass section (including eastern bypass and western bypass section Km0 - Km6)

- Project to build Thai Nguyen - Cho Moi (Bac Kan) route and renovate and upgrade National Highway 3, section Km75 - Km100 under BOT contract

- Project to upgrade and expand Ho Chi Minh road, section Km1738+148 - Km1763+610, Dak Lak province

- Project to improve and upgrade National Highway 91, section Km14 - Km50+889

- Project to improve and upgrade Saigon River channel from Binh Loi bridge to Ben Suc port

- Viet Tri - Ba Vi Bridge Construction Project

- Thai Ha Bridge Construction Project

- Road Tunnel Construction Project through Deo Ca Pass

3 projects by local authorities as competent state agencies

- Bac Giang - Lang Son Expressway Project under BOT form (People's Committee of Lang Son province)