Supporting BOT transportation projects facing financial difficulties.

The draft amended PPP Law proposes an additional option for using state capital to support BOT transport projects currently in operation that are facing financial difficulties, so that investors can continue to fulfill their contracts.

Add transitional provisions

The Ministry of Transport (MOT) has recently sent Official Letter No. 12443/BGTVT-CĐCTVN to the Government leadership regarding the addition of regulations to the Law on Investment under the Public-Private Partnership Method (PPP Law) to address difficulties and obstacles for BOT projects.

In Official Letter No. 12443, the Ministry of Transport proposed that the Prime Minister direct the Ministry of Planning and Investment to add provisions to the transitional clause of the draft PPP Law (amended) currently being considered and approved by the National Assembly at its eighth session.

Specifically, for infrastructure investment projects under the BOT (Build-Operate-Transfer) contract form signed before 2021, using state capital to terminate the contract prematurely, or using state capital to support the project during the operation phase to continue implementing the contract, the Government shall specify the conditions and criteria for BOT projects to be applied.

According to Mr. Nguyen Danh Huy, Deputy Minister of Transport, the draft amended PPP Law has added regulations that provide a sufficient basis for terminating contracts for BOT transport projects. However, there are no clear regulations regarding the use of state capital to support the continued implementation of the contract during the operational phase.

Therefore, during discussions in committees and in the plenary session, some National Assembly deputies proposed studying and supplementing regulations on the use of state capital to support the exploitation phase in order to resolve difficulties and obstacles for some BOT projects that signed contracts before the PPP Law was promulgated.

Based on the opinions of National Assembly deputies, the Economic Committee is currently coordinating with the Legal Committee, the Ministry of Planning and Investment, and the Ministry of Transport to study options for incorporating these suggestions. This includes proposing additions to the transitional provisions in the draft PPP Law (amended), and assigning the Government to regulate the conditions and criteria for applicable BOT transport projects.

Accordingly, the Draft Law on PPP (amended) adds the following provision on the Transitional Provisions: “For infrastructure investment projects in the form of BOT contracts signed before 2021 (the effective date of the PPP Law) that use state capital to terminate the contract prematurely or use state capital to support the project during the operation phase to continue implementing the contract, the Government shall specify the conditions and criteria for applicable BOT projects.”

"If the National Assembly approves it, there will be sufficient legal basis to address the difficulties and obstacles in BOT transport projects, and we will not have to continue implementing the Plan for solutions to address difficulties and obstacles in some transport infrastructure investment projects under the BOT form," a leader of the Ministry of Transport assessed.

Ensuring a balance of interests

According to the Ministry of Transport, at the time the National Assembly was considering the draft PPP Law (amended), the option of adding a transitional provision in the draft to address difficulties and obstacles in BOT projects was appropriate because it only dealt with a specific group of projects (BOT transport projects with contracts signed before the PPP Law came into effect).

Currently, there are 140 BOT (Build-Operate-Transfer) transportation projects nationwide, including 66 projects under the authority of the Ministry of Transport and 74 projects under the authority of local governments.

"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, and the responsibilities shared by all parties (investors, banks providing credit) to ensure a balance of interests, prevent exploitation and abuse of policies, and avoid losses and waste," Official Document No. 12443 clearly states.

Previously, at the end of May 2024, the Ministry of Transport submitted Document No. 5671/TTg-BGTVT to the Standing Committee of the Government on the plan to address difficulties and obstacles in BOT transport projects.

In the proposal, the Ministry of Transport suggests two solutions to address the difficulties and obstacles in BOT transport projects.

Firstly, additional state funding should be provided (during the exploitation phase) to enable the parties to continue fulfilling the contract.

Secondly, terminate the contract and allocate state funds to pay the investor; the investor and the bank providing the credit are responsible for sharing the reduced profits and interest payments, ensuring a balance of interests.

Also in Report No. 5671, the Ministry of Transport proposed that the Government agree on solutions to address difficulties and obstacles for 8 BOT projects managed by the Ministry of Transport and submit to the Standing Committee of the National Assembly for approval a plan to use approximately 10,650 billion VND from increased revenue and savings in the central budget in 2023 to implement them.

Of these, the State will use budget funds to support the termination of contracts for 5 projects; and use budget funds to support the continuation of contracts for 3 other projects.

However, in reality, there are still some projects with the potential risk of revenue decline (mainly due to investment in parallel and cross-river highways) that cannot yet be quantified, such as: the BOT National Highway 26 project, which risks revenue decline due to investment in the Khanh Hoa – Buon Ma Thuot expressway; the upgrading and expansion project of National Highway 14, section from Bridge 38 to Dong Xoai town (Binh Phuoc) and the expansion project of National Highway 14, section from Km817 to Km887 (Dak Nong), which risks revenue decline due to investment in the Gia Nghia – Chon Thanh expressway; the Bac Giang – Lang Son expressway project and National Highway 1, which risk revenue decline due to the removal of one toll station…

"The number of projects of this type is not large, but if there is no definitive solution, it will have a significant impact on project businesses, especially credit institutions, and on the level of trust and the investment attraction environment," a leader of the Ministry of Transport said.

Source: https://baodautu.vn/ho-tro-du-an-bot-giao-thong-gap-kho-ve-tai-chinh-d230605.html