Difficulty in refunding costs to investors of Phan Dinh Phung Stadium BT Project

The reimbursement of costs to investors for the Phan Dinh Phung Gymnasium Project (Ho Chi Minh City) is facing many obstacles as the investor and the Ho Chi Minh City People's Committee have not yet agreed on the reimbursement amount.

Investors are demanding a refund of 171 billion VND.

The Phan Dinh Phung Sports Center construction project (Phan Dinh Phung Gymnasium Project) received investment approval in principle under the BT (Build-Transfer) model in 2010 and project approval in 2016. However, before construction could begin, the BT investment model was abolished under the Law on Public-Private Partnership (PPP) Investment, leaving the project stalled ever since.

After the Ho Chi Minh City People's Committee decided to halt the BT (Build-Transfer) project and switch to public investment at the end of April 2024, the project still has unresolved issues with the investor.

According to Document No. 6248/SKHĐT-PPP sent by the Ho Chi Minh City Department of Planning and Investment to the Joint Venture of the Compensation and Resettlement Corporation and Phat Dat Real Estate Development Corporation (the project investor) in early June 2024, the City will reimburse the costs incurred by the investor in implementing the project.

To reimburse the investor for the costs incurred, the Ho Chi Minh City Department of Culture and Sports sent two written requests to the investor to submit a report on the total costs incurred for the Project, along with relevant legal documents and records. By early July 2024, the consortium of investors finally submitted a report to the Ho Chi Minh City People's Committee detailing the total project costs incurred by the investor, amounting to 171.6 billion VND.

The investors argue that throughout the nearly 14 years of participating in the investment and carrying out legal procedures, the consortium has been very dedicated to pursuing the project and has invested significant costs and resources. The delay in progress stems from objective reasons, namely changes, adjustments, and new regulations on payment for BT projects under the PPP investment model.

According to information obtained by Investment Newspaper, in 2019, the consortium of investors reported to the Ho Chi Minh City People's Committee that the total cost incurred by the investors in implementing the Project was 33.9 billion VND. In early 2024, according to the consolidated financial report for the first quarter of 2024 of Phat Dat Real Estate Development Joint Stock Company (an investor in the consortium), the Project incurred costs exceeding 77.1 billion VND.

At the 2024 Annual Shareholders' Meeting held in April 2024, in response to shareholders' questions about the project's fate, Mr. Nguyen Van Dat, Chairman of the Board of Directors of Phat Dat, stated that the company very much wishes to continue with this project. According to current law, the company is still eligible to continue the project. However, the company is complying with legal regulations and is awaiting further discussions with relevant authorities in Ho Chi Minh City regarding the project.

Many fees are unpayable.

Upon receiving the report on compensation costs listed by the investor, the Task Force, comprising departments and agencies of Ho Chi Minh City, reviewed the work already performed by the investor. Based on the documents and records provided by the investor consortium, the Task Force found that many of the costs listed by the investor consortium would be impossible to pay.

According to the Task Force, the Project has not yet carried out any on-site construction work, therefore only investment preparation costs can be paid in accordance with the law, such as the costs of preparing pre-feasibility and feasibility study reports. At the same time, other payments to the investor consortium can be made if the City People's Committee has given its approval.

Before deciding to terminate the BT (Build-Transfer) project, the Ho Chi Minh City Task Force held numerous meetings and considered many options. In particular, the Task Force concluded that negotiating and reimbursing the investor for the costs incurred in implementing the project would be difficult, as these costs were not covered by the state budget.

Currently, the Department of Culture and Sports is coordinating with the Ho Chi Minh City Project Management Board for Civil and Industrial Construction Projects to develop design plans and calculate investment costs. Following the directive of the Chairman of the Ho Chi Minh City People's Committee, Phan Van Mai, relevant departments and agencies are accelerating the procedures to commence the project before April 30, 2025.

Source: https://baodautu.vn/nan-giai-viec-hoan-tra-chi-phi-cho-nha-dau-tu-du-an-bt-nha-thi-dau-phan-dinh-phung-d224326.html