Review of Feasibility Study Report of Tan Phu Expressway

Review of the Feasibility Study Report of Tan Phu - Bao Loc Expressway: Proposal to use investor's capital

Regarding the selection of a consulting unit to review the Feasibility Study Report of the Tan Phu - Bao Loc Expressway Project under the public-private partnership (PPP) method, the proposed investor's capital use plan for the Project is recommended for selection.

Two options are proposed

Lam Dong Provincial Transport Project Management Board (Project Management Board) has just worked with the representative of the investor consortium proposing the Tan Phu - Bao Loc Expressway Project on selecting a consulting unit to review the Project Feasibility Study Report.

After examining and reviewing the provisions in Clause 3, Article 16, Decree No. 35/2021/ND-CP dated March 29, 2021 of the Government (Decree 35) and at the request of the Interdisciplinary Appraisal Council on hiring appraisal consultants in Decision No. 2111/QD-HDTĐLN dated December 29, 2023 (Decision 2111), the Project Management Board proposed 2 options.

Option 1, using the capital of the investor proposing the Project. Accordingly, the investor proposing the Project hires a consultant to review the project using the investor's capital. This cost will be calculated in the total investment of the Project and will be refunded to the investor proposing the Project when the Project is approved.

Option 2, using public investment capital. This cost will be calculated in the total investment of the Project as a basis for payment and settlement, and will not pay the cost of hiring a consulting unit for appraisal as proposed by the investor.

According to the opinion of the representative of the investor consortium proposing the Project, based on the Agreement Document No. 3479/UBND-VBTT dated April 19, 2023 (Document 3479), the investor has signed an appraisal contract with the appraisal consulting unit (Tan Phat Joint Stock Company) with a contract value of VND 1,644 billion, and has made an advance payment of VND 450 million.

This consulting unit has submitted the first Appraisal Report (August 24, 2023). Lam Dong Provincial People's Committee has submitted the basic design to the Ministry of Transport (MOT) for appraisal and the appraisal content of the consulting unit has been assessed by the Vietnam Expressway Administration as basically suitable according to the provisions of Decree No. 15/2021/ND-CP (Decree 15).

The appraisal consultant is conducting the second appraisal according to the opinions of the Ministry of Transport and the Interdisciplinary Appraisal Council. Up to now, the contract has completed about 80% of the work. However, the Interdisciplinary Appraisal Council has commented in Decision 2111 that it will not hire a consultant to appraise the Project Feasibility Study Report. Lam Dong Provincial People's Committee (the agency receiving the investor's proposal) is responsible for hiring a consultant to appraise the Project Feasibility Study Report as a basis for appraisal.

The representative of the investor consortium proposed to adjust the signed consulting contract (with Tan Phat Company) to review the technical part, keeping the form of designated bidding and the date signed, adding the Institute of Economics to review the estimate and possibly signing with 3 parties to ensure that according to Clause 3, Article 15, Decree 35, the cost of review is paid by the investor and is included in the total investment of the Project in accordance with Document 3479.

"In case Lam Dong Provincial People's Committee conducts the appraisal of the Feasibility Study Report from the province's state budget, it is proposed to refund the advance payment as well as the expenses already made to the signed investor consultant", the representative of the investor consortium proposed.

Recommend Option 1

The representative of the Project Management Board said that Option 1 is basically in accordance with the Law on Investment under the PPP method; meets the appraisal requirements as prescribed in Decree 15; inherits the appraisal results of the Vietnam Expressway Administration in Report No. 1299/CĐCTVN-KHTC dated November 24, 2023 to continue implementation; at the same time, it removes the problem of the investor having signed the appraisal contract and made an advance payment of VND 450 million.

However, Option 1 still has problems, such as not being consistent with the opinion of the Interdisciplinary Appraisal Council in Decision 2111; not being consistent with point b, section 4, Part III in Document 3479.

Through reviewing the provisions of the Law on Investment under the PPP method and Decree 35, there is no provision stating that: "In case the Interdisciplinary Appraisal Council does not hire an appraisal consultant, this cost will not be paid according to regulations".

Therefore, to resolve the above problem, it is necessary to adjust point b, section 4, Part III in Document 3479 and Lam Dong Provincial People's Committee assigns the investor proposing the Project to be responsible for selecting and signing a contract to hire a consulting unit to review the Project Feasibility Study Report to ensure capacity and experience according to regulations.

The Project Management Board recognizes that Option 2 is consistent with the opinion of the Interdisciplinary Appraisal Council in Decision 2111; meeting the appraisal requirements as prescribed in Decree No. 15/2021/ND-CP.

Option 2 also has problems, such as not being in accordance with the provisions of Clause 1, Article 69, Law on Investment under the PPP method because there is no cost for hiring an appraisal from a competent authority (Lam Dong Provincial People's Committee). This is a project proposed by the investor. The project will bear all the costs of investment preparation, so the Project Management Board hiring an appraisal will conduct 2 inappropriate appraisals; not inheriting the appraisal results of the Vietnam Expressway Administration in Report No. 1299, having to re-appraise from the beginning, affecting the progress.

Mr. Vo Ngoc Minh Phat, Deputy Director of Lam Dong Provincial Traffic Project Management Board, said that after discussion, the Board and the investor proposed that the Project unanimously report to the Provincial People's Committee for consideration and approval of Option 1 and adjust Point b, Section 4, Part III in Document 3479 as the basis for payment and settlement of this cost.

At the same time, to ensure the opinion of the Inter-sectoral Appraisal Council in Decision 2111, it is recommended that the Lam Dong Provincial People's Committee assign the investor proposing the Project to be responsible for selecting and signing a contract to hire a consulting unit to review the Project Feasibility Study Report that meets the capacity and experience according to regulations, inherits the appraisal of the Vietnam Expressway Administration and ensures objectivity in developing a financial plan as a basis for appraisal work.

Source: https://baodautu.vn/tham-tra-bao-cao-nghien-cuu-kha-thi-cao-toc-tan-phu---bao-loc-de-xuat-su-dung-nguon-von-cua-nha-dau-tu-d222903.html