The Ministry of Transport has submitted to the Government a solution to handle difficulties and problems in eight BOT transport projects by using 10,650 billion Viet Nam dong from the State budget. The form of rescue includes sharing the revenue shortfall compared to the investor’s financial plan as well as terminating the contract and buying back the project. Are these solutions from the State reasonable, feasible and in accordance with legal regulations?
In fact, for many years, when negotiating to sign and implement BOT contracts, this issue has always been of concern to investors and has become a sensitive factor both financially and legally. That is to say, once the private sector arranges money to replace the State’s role in investing in infrastructure projects and taking on risks, will the State compensate or share anything? Because this investment sector is not competitive in the market, it is reasonable for investors to be afraid of risks leading to losses and loss of money. However, for the State, this is not easy, because if compensating for losses or sharing risks becomes natural, different from the principle of “taking the loss and taking the profit” when transferring investment and infrastructure exploitation rights to the private sector, how will the relevant State agencies have to explain to the elected agencies representing taxpayers?
Anyway, in the Law on Investment under the Public-Private Partnership (PPP) method, the State has stipulated a commitment to investors on this matter. Accordingly, “When actual revenue is lower than 75% of the revenue in the financial plan in the PPP project contract, the State will share with investors and PPP project enterprises 50% of the difference between 75% of the revenue in the financial plan and actual revenue”.
The question is, can things be that simple and be solved that way?
Mr. Nguyen Tien Lap – Senior Executive Partner
Published in Saigon Times on March 29, 2024
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