ON ELABORATION OF RESOLUTION OF ISSUES IN BUILD-OPERATE-TRANSFER TRANSPORT PROJECTS

1. This Decree provides for elaboration of:

a) Resolution of revenue shortfall issues of Build-Operate-Transfer ("BOT") road projects with contracts signed before January 1, 2021 in accordance with Article 99a of the Law on Investment in the form of public-private partnership (hereinafter referred to as the Law on PPP);

b) Conditions for payment and principles for determining compensation costs, early termination of the contract in accordance with point a clause 2a Article 52 of the Law on PPP for BOT transport projects in the operation and business phase with contracts signed before January 1, 2021.

2. Other public-private partnership investment projects shall comply with regulations of the Government on elaboration of the Law on PPP.

This Decree applies to agencies, organizations, and individuals participating in or related to transport infrastructure investment projects in the form of BOT contracts signed before January 1, 2021.

1. “Parties” means the parties signing the BOT project contract, including: the contracting authority, the investor, and the project company.

2. “BOT transport project” means a transport infrastructure investment project implemented under a BOT contract.

3. BOT road project means a road infrastructure investment project implemented under a BOT contract.

Projects specified at point a clause 2 Article 99a of the Law on PPP shall be determined as having non-viable financial plans when falling into one of the following cases:

1. The project must reduce the number of toll stations due to changes in planning, policies, or relevant laws of the State as proposed by one of the contracting parties and approved by the competent authority.

2. The financial plan, after applying measures for adjustment in accordance with point c clause 2 Article 82 of the Law on PPP and adjusting the road service fee with a collection period of up to 50 years, still fails to ensure sufficient revenue to pay: taxes and fees payable; costs of management, operation, utilization, and maintenance of the project works; loan principal and interest in accordance with the financial plan in the project contract.

The contracting authority, investor, project company, and lender in accordance with point c clause 2 Article 99a of the Law on PPP shall negotiate and agree on the following:

1. Determination of the reduction in the return on equity, lending interest rate, and adjustment of the debt repayment plan in the financial plan in accordance with clause 1 and clause 2 Article 7 of this Decree;

2. Update of the ratio and amount of state capital for revenue shortfall sharing as prescribed in Article 6 of this Decree; return on equity, lending interest rate, and adjustment of the debt repayment plan prescribed in clause 1 of this Article, and calculation of an adjusted financial plan ensuring feasibility.

1. For projects meeting the conditions prescribed in clause 2 Article 99a of the Law on PPP and elaborated in Article 4 and Article 5 of this Decree, the State shall share the revenue shortfall with the investor and the project company based on the difference between the revenue in the financial plan and the actual revenue determined in clause 2 of this Article; such sharing shall be implemented once.

2. The State shall share the revenue shortfall at a ratio (k) determined not exceeding 75% of the average ratio between the reduced revenue and the revenue in the financial plan of the project over the most recent 3 years; in which the reduced revenue is determined as the revenue in the financial plan minus the actual revenue.

In which:

a_i: revenue of year i in the financial plan under the contract signed prior to the time the project is affected by changes in planning, policies, or relevant laws of the State.

b_i: actual revenue in year i.

n: 3 (3 most recent years prior to the calculation time).

3. Amount of state capital for revenue shortfall sharing

a) The amount of state capital for revenue shortfall sharing shall be determined as the revenue shortfall sharing ratio prescribed in clause 2 of this Article multiplied by the total investment of the project.

State capital for revenue shortfall sharing = k x T

In which:

k is determined in accordance with clause 2 of this Article;

T is the total investment of the project determined under the project approval decision or decision on adjustment of the project, adjustment of total investment (if any). The total investment of the project prescribed in this clause does not include the state capital in the project prescribed at point a and point c clause 1 Article 69 of the Law on PPP.

b) The amount of state capital for revenue shortfall sharing prescribed at point a of this clause shall ensure that the total state capital in the project (including the state capital prescribed at point a and point c clause 1 Article 69 of the Law on PPP and the state capital for revenue shortfall sharing prescribed at point a of this clause) does not exceed 50% of the total investment of the project or does not exceed 70% of the total investment of the project in the cases prescribed at point a, point b clause 2a and clause 2b Article 69 of the Law on PPP.

1. Based on actual revenue and the calculated amount of state capital for revenue shortfall sharing prescribed in clause 3 Article 6 of this Decree, the investor, project company, and lender shall calculate the reduction in return on equity, reduction in lending interest rate, and adjustment of the debt repayment plan in the financial plan, ensuring a viable financial plan, no increase in road service fee compared to the signed contract, and no extension of the toll collection period compared to the signed contract.

2. The contracting authority and the investor, project company shall calculate the adjusted financial plan based on:

a) Updating the actual revenue and costs of the project, the amount of state capital for revenue shortfall sharing in accordance with clause 3 Article 6 of this Decree, the return on equity, and the lending interest rate in accordance with clause 1 of this Article.

b) Determining the debt repayment plan in the adjusted financial plan in the following order of priority: taxes payable; costs of management, operation, utilization, and maintenance of the project works; repayment of loan principal, loan interest, equity capital, and return on equity.

3. Based on the adjusted financial plan prescribed in clause 2 of this Article, the investor and the project company shall negotiate with the lender and adjust the debt repayment plan in the credit agreement to ensure that no loan interest arrears arise in the calculation year and no reclassification of the project loan occurs.

4. During the performance of the contract under the adjusted financial plan prescribed in clause 2 of this Article, where actual revenue increases higher than the projected revenue in the adjusted financial plan, the contracting parties shall update the financial plan to shorten the toll collection period of the project. The contracting authority shall monitor the increased revenue (if any) and update the financial plan to shorten the toll collection period of the project.

1. Based on the actual revenue of the most recent 3 years, the investor and the project company shall:

a) Review and reconcile the actual revenue of the project with the revenue stipulated in the project contract;

b) Where the project suffers revenue shortfall due to changes in planning, policies, or relevant laws of the State, calculate adjustment measures in accordance with clause 2 Article 4 of this Decree.

2. After calculation in accordance with point b clause 1 of this Article, where the actual revenue of the most recent 3 years is below 75% of the revenue in the financial plan under the project contract and falls within the cases prescribed in Article 4 of this Decree, the investor and the project company shall negotiate and agree with the lender on the following contents:

a) Calculation and determination of the ratio and amount of state capital for revenue shortfall sharing in accordance with Article 6 of this Decree;

b) Calculation and determination of the reduction in return on equity, reduction in lending interest rate, and proposed adjustment of the debt repayment plan in the financial plan in accordance with Article 7 of this Decree;

c) Calculation of the proposed adjusted financial plan based on updates under point a and point b of this clause;

d) Proposed adjustment of the debt repayment plan in the credit agreement in accordance with clause 3 Article 7 of this Decree;

dd) The results of negotiation of the contents prescribed in this clause shall be recorded in minutes and signed and sealed by the legal representatives of the investor, the project company, and the lender.

3. Where the adjusted financial plan prescribed in clause 2 of this Article ensures viability, the investor and the project company shall submit a written request for revenue shortfall sharing to the contracting authority, enclosed with an application including:

a) Explanatory report on the following contents: general information of the project; process of contract performance; report on the rate of revenue reduction between the revenue in the financial plan and the actual revenue in the most recent 3 years; assessment of causes of revenue shortfall; explanation of satisfaction of conditions for revenue shortfall sharing prescribed in Article 99a of the Law on PPP and Article 4 of this Decree; determination of the ratio and amount of state capital for revenue shortfall sharing prescribed in Article 6 of this Decree; determination of the sharing responsibilities of the investor, project company, and lender in accordance with clause 1 Article 7 of this Decree; results of calculation of the adjusted financial plan; agreed contents between the lender and the investor, project company in accordance with clause 2 of this Article; other necessary contents (if any);

b) Accompanying documents: the proposed adjusted financial plan; minutes of agreement among the investor, project company, and lender in accordance with point d clause 2 of this Article.

4. Within 45 days from the date of receipt of a complete application, the contracting authority shall review the application in accordance with Article 4, Article 5, Article 6, and Article 7 of this Decree:

a) Where compliant, the contracting authority shall cooperate with the investor, project company, and lender to sign minutes of agreement determining the ratio and amount of state capital for revenue shortfall sharing in accordance with Article 6 of this Decree and the responsibilities of the investor, project company, and lender in accordance with Article 7 of this Decree;

b) Where non-compliant, the contracting authority shall notify the refusal of revenue shortfall sharing to the investor and the project company (clearly stating the reasons for refusal of revenue shortfall sharing).

5. Within 10 days from the date the parties sign the minutes of agreement prescribed in clause 4 of this Article, the contracting authority shall request the State Audit to audit the revenue shortfall and the amount of state capital for revenue shortfall sharing. The application includes:

a) Written request to the State Audit to audit the revenue shortfall and the amount of state capital for revenue shortfall sharing;

b) Application prescribed in clause 3 of this Article;

c) Minutes of agreement prescribed at point a clause 4 of this Article;

d) Documents of the competent authority on investment policy; project approval decision; decision on adjustment of the project, adjustment of total investment (if any); BOT project contract; other relevant documents and materials (if any).

6. Where necessary, the contracting authority shall request the investor and the project company to negotiate and agree with the lender to update the contents prescribed in clause 2 of this Article to ensure consistency with the audit report of the State Audit.

7. Within 10 days from the date of receipt of the audit report of the State Audit (or the date of receipt of the updated report prescribed in clause 6 of this Article), the contracting authority shall report to the competent authority for decision on the application of revenue shortfall sharing, the ratio and amount of state capital for revenue sharing, and the sharing responsibilities of the investor, the project company, and the lender. The competent authority shall consider and decide within 15 days from the date of receipt of the report of the contracting authority.

8. The contracting authority shall cooperate with the investor and the project company to adjust the project contract; the investor and the project company shall cooperate with the lender to adjust the credit agreement.

9. Based on the practical situation of sectors and local areas regarding the availability of each funding source and the priority amount of state budget expenditures in each period, the competent authority of the project shall determine feasible funding sources to pay for the revenue shortfall, and report to the competent authority in accordance with regulations applicable to each funding source in the order of priority prescribed at point a, point b, and point c clause 3 Article 82 of the Law on PPP, ensuring compliance with clause 3a Article 82 of the Law on PPP.

10. Procedures for allocation and payment of state capital for revenue shortfall sharing shall comply with regulations of the Government on financial management mechanisms for public-private partnership investment projects and payment and settlement mechanisms for projects applying BT contracts. State capital for revenue shortfall sharing shall be disbursed to the account of the project company or the account of the investor (in case the project does not establish a project company) opened at the lending bank in accordance with the project contract. The contracting authority shall monitor the use of state capital for revenue shortfall sharing to ensure compliance with the project objectives.

For BOT transport projects in the operation and business phase with contracts signed before January 1, 2021, the investor and the project company shall be entitled to payment of compensation costs and early termination of the contract in accordance with point a clause 2a Article 52 of the Law on PPP when meeting one of the following conditions:

1. The project or a work item of the project has been completed in accordance with construction laws and put into operation and use for at least 2 years, but the investor and the project company are not allowed to collect tolls to recover capital in accordance with the project contract.

2. The project suffers revenue shortfall, and the parties have calculated the adjusted financial plan based on the expected amount of state capital for revenue shortfall sharing under Article 6 of this Decree, reduction in return on equity, and reduction in lending interest rate under Article 7 of this Decree. After such calculation, the project has a toll collection period of up to 50 years but still fails to ensure sufficient revenue to pay: taxes and fees payable; costs of management, operation, utilization, and maintenance of the project works; loan principal and loan interest in accordance with the adjusted financial plan.

1. Compensation costs and early termination costs shall be determined based on the following parameters:

a) Total investment in construction of the project works (including loan interest during the construction phase, excluding state capital participating in project execution) determined based on the finalized value after deduction of refundable value-added tax of the project company and deduction of costs in accordance with conclusions of inspection authorities and the State Audit (if any);

b) Costs of management, operation, utilization, and maintenance of the project works determined based on confirmation of the contracting authority;

c) Taxes and fees of the project company based on actual performance after deduction of value-added tax in accordance with regulations (if any);

d) Revenue from service fees and other sources of revenue (if any) determined based on confirmation of the contracting authority;

dd) Independent audit costs (if any);

e) Loan mobilization costs determined in accordance with clause 3 of this Article.

2. Compensation costs and early termination costs shall be calculated as the total of costs prescribed at points a, b, c, dd, and e clause 1 of this Article after deduction of revenue from service fees and other sources of revenue (if any) prescribed at point d clause 1 of this Article.

3. Loan mobilization costs prescribed at point e clause 1 of this Article shall be determined as the loan amount multiplied by rate P. The period for calculating loan mobilization costs is from the time the project works are put into operation and business until the time the competent authority decides on early termination of the contract.

In which:

Rate P (%/year): determined based on the negotiation results between the investor, the project company, and the credit institution (lender) but not exceeding 4%/year.

Vi: loan amount in year i, determined based on the actual disbursed loan amount and the finalized investment value, ensuring compliance with the ratio prescribed in the PPP project contract. The loan amount does not include the portion of loan already repaid from revenue sources prescribed at point d clause 1 of this Article (if any).

n: number of years, determined from the time the project works are put into operation and business until the time the competent authority decides on early termination of the contract. Where a portion of the loan is disbursed after the project is put into operation and business, the number of years shall be determined from the time of disbursement of such loan portion to the time the competent authority decides on early termination of the contract.

4. Return on equity of the investor shall not be included in compensation costs and early termination costs.

1. The investor and the project company shall submit a written request to the contracting authority for early termination of the PPP project contract in accordance with regulations of the Government on elaboration of the Law on PPP, enclosed with:

a) Report and explanation of the following contents: a) Report and explanation of the following contents: general information of the project, process of contract performance; causes leading to early termination of the contract; explanation of conditions for application and calculation results in accordance with Article 9 of this Decree (for projects prescribed in clause 2 Article 9 of this Decree, explanation and calculation of the adjusted financial plan in accordance with Article 6 and Article 7 of this Decree are required); provisions of the project contract on the payment responsibilities of the contracting authority in case of early termination of the contract under point a clause 2a Article 52 of the Law on PPP; results of negotiation between the investor, the project company, and the lender on loan mobilization costs in accordance with clause 3 Article 10 of this Decree; proposed value of state capital for compensation and early termination determined in accordance with Article 10 of this Decree;

b) Accompanying documents: documents related to costs prescribed in clause 1 and clause 3 Article 10 of this Decree; audit report of independent audit (if any); minutes of negotiation between the investor, the project company, and the lender on loan mobilization costs in accordance with clause 3 Article 10 of this Decree and the payment plan for compensation costs and early termination; other relevant documents and materials.

2. Within 45 days from the date of receipt of a complete application, the contracting authority shall review the application prescribed in clause 1 of this Article.

a) Where compliant with Article 9 and Article 10 of this Decree, the contracting authority shall cooperate with the investor, the project company, and the lender to sign minutes of agreement on conditions for early termination of the project contract in accordance with regulations of the Government on elaboration of the Law on PPP.

b) Where not compliant with Article 9 and Article 10 of this Decree, the contracting authority shall notify the refusal of payment and early termination of the contract to the investor and the project company (clearly stating the reasons for refusal of payment and early termination of the contract).

3. Based on the minutes of agreement on conditions for early termination of the project contract prescribed in clause 2 of this Article, the contracting authority shall cooperate with the investor and the project company to sign a contract appendix to amend and supplement the contents of the project contract in accordance with clause 4 Article 101 of the Law on PPP, ensuring compliance with regulations of the Government on elaboration of the Law on PPP.

4. Within 10 days from the date of signing the contract appendix prescribed in clause 3 of this Article, the contracting authority shall send a written request to the State Audit to audit compensation costs and early termination of the contract, enclosed with the application prescribed in clause 1 of this Article and the minutes of agreement prescribed at point a clause 2 of this Article.

5. Where necessary, the contracting authority shall request the investor, the project company, and the lender to update the proposed value of state capital for compensation and early termination of the contract in accordance with point a clause 1 of this Article and the contents of the minutes of agreement between the lender and the investor, the project company prescribed at point b clause 1 of this Article to ensure consistency with the audit report of the State Audit.

6. Within 10 days from the date of receipt of the audit report of the State Audit (or the date of receipt of the updated report prescribed in clause 5 of this Article), the contracting authority shall report to the competent authority for decision on early termination of the contract and compensation costs for early termination of the contract The competent authority shall consider and decide within 15 days from the date of receipt of the report of the contracting authority.

7. The use of public investment capital for compensation and early termination of the contract shall comply with point b clause 6a Article 52 of the Law on PPP. State capital for payment of compensation costs and early termination of the contract shall be disbursed to the account of the project company or the account of the investor (in case the project does not establish a project company) opened at the lending bank in accordance with the project contract.

8. Payment of compensation costs for early termination of the contract shall comply with regulations of the Government on financial management mechanisms for public-private partnership investment projects and payment and settlement mechanisms for projects applying BT contracts.

9. After termination of the contract, the contracting authority shall cooperate with the investor and the project company to carry out procedures for handover and receipt of the project, and carry out procedures for establishment of public ownership rights in accordance with laws on management and use of public assets.

1. This Decree comes into force as of the date of signing.

2. Where issues arise related to increase, reduction, or support of lending interest rates, the State Bank of Vietnam shall guide credit institutions in accordance with its competence and applicable laws.

3. Ministers, Heads of ministerial agencies, Heads of Governmental agencies, and Presidents of People’s Committees of provinces and centrally-affiliated cities shall, within their functions and powers, guide and shall implement this Decree./.