CIRCULAR

GUIDELINES ON SOME CONTENTS OF PRE-FEASIBILITY STUDY REPORTS AMD FEASIBILITY STUDY REPORTS OF INVESTMENT PROJECTS IN THE FORMS OF PUBLIC-PRIVATE PARTNERSHIP, BUILD- OPERATE-TRANSFER CONTRACTS IN TRANSPORT SECTOR

Pursuant to the Law on Public-Private Partnership Investment dated June 18, 2020;

Pursuant to the Law providing amendments to the Law on Public Investment, the Law on Public-Private Partnership Investment, the Investment Law, the Housing Law, the Law on Electricity, the Law on Enterprises, the Law on Excise Duties, and the Law on Civil Judgment Enforcement dated January 11, 2022;

Pursuant to the Government’s Decree No. 28/2021/ND-CP dated March 26, 2021 prescribing financial management mechanism of public-private partnership projects;

Pursuant to the Government’s Decree No. 35/2021/ND-CP dated March 29, 2021 providing guidelines for implementation of the Law on public-private partnership investment;

Pursuant to the Government’s Decree No. 12/2017/ND-CP dated February 10, 2017 defining the functions, tasks, powers and organizational structure of the Ministry of Transport;

At the request of the Director of the Public - Private Partnership Investment Project Management Department;

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Chapter I

GENERAL PROVISIONS

Article 1. Scope

1. This Circular provides guidelines on some contents of pre-feasibility study reports and feasibility study reports of investment projects in the forms of public-private partnership (PPP), build- operate-transfer contracts (hereinafter referred to as “BOT contract”) in transport sector, including: socio-economic efficiency indicators; rates of return on equity of investors; indicators for evaluation of quality of infrastructure works/systems provided by project enterprises; depreciation periods of infrastructure works/systems.

2. With regard to BTO (Build-Transfer-Operate) contracts, BOO (Build-Own-Operate) contracts, O&M (Operate & Manage) contracts, BTL (Build-Transfer-Lease) contracts, BLT (Build-Lease-Transfer) contracts, and mixed contract, pre-feasibility study reports and feasibility study reports shall be formulated in accordance with the provisions of this Circular and relevant laws, and include contents suitable for the type of contract, specific characteristics of each sector and of each project.

Article 2. Regulated entities

This Circular applies to organizations and individuals involved in the formulation of pre-feasibility study reports and feasibility study reports of investment projects in the forms of PPP and BOT contract in the transport sector.

Chapter II

SOCIO-ECONOMIC EFFICIENCY INDICATORS; RATES OF RETURN ON EQUITY OF INVESTORS; INDICATORS FOR EVALUATION OF QUALITY OF INFRASTRUCTURE WORKS/SYSTEMS PROVIDED BY PROJECT ENTERPRISES; DEPRECIATION PERIODS OF INFRASTRUCTURE WORKS/SYSTEMS

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1. Socio-economic efficiency indicators of a project include: Economic Net Present Value (ENPV), Benefit-Cost Ratio (BCR), and Economic Internal Rate of Return (EIRR). The values of these indicators shall be calculated in accordance with the provisions of Part IV Form No. 01 in Appendix II and Part IV Form No. 01 in Appendix III enclosed with the Government’s Decree No. 35/2021/ND-CP dated March 29, 2021.

2. Socio-economic benefits of projects

Socio-economic benefits of a project are divided into the following groups:

a) Group of benefits which can be quantified and converted into monetary values, including: benefits of reduction of costs of vehicle operation, benefits of time savings for goods and passenger transport.

b) Group of benefits which can be quantified but cannot be valued, including: benefits of environmental improvement due to minimization of environmental impacts regarding emissions, dust, and noise, benefits of promotion of economic growth, creation of jobs, promotion of movement capacity of goods an passengers, and benefits of reduction of traffic accidents.

c) Group of qualitative benefits, including: benefits of the increased connectivity between regions, benefits of job creation and improvement of living standards of residents in areas where the project is located.

d) The entities in charge of formulating pre-feasibility study reports and feasibility study reports may include in such reports the benefits other than those specified in Points a, b, c Clause 2 of this Article which must be suitable for the type of contract, specific characteristics of each sector/project and comply with relevant laws.

e) In case there are ungrounded for determining benefits which can be quantified and converted into monetary values for calculating socio-economic efficiency indicators of a project, the entities in charge of formulating pre-feasibility study reports and feasibility study reports may evaluate socio-economic efficiency of the project based on other groups of socio-economic benefits.

Article 4. Rates of return on equity of investors

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Costs of equity with due account taken of risk and inflation element shall be calculated using the following formula:

i = i_v + f

Where:

i: costs of equity of investors;

i_v: interest on borrowed investment fund, which shall be determined on the basis of the lending interest rates on medium and long-term loans quoted by at least 03 commercial banks, and interest rates on borrowed fund of similar projects which are employed for formulating the financial plan included in the pre-feasibility study report/ feasibility study report (if any). The interest on borrowed investment fund shall be determined at the nearest time within 03 months before formulating the pre-feasibility study report/feasibility study report;

f: inflation rate which is determined according to the average CPI (consumer price index) of the latest 10 years quoted by the General Statistics Office of Vietnam while excluding the years in which the CPI value changes significantly.

2. Rate of return on equity of investors

Pursuant to regulations of law and based on socio-economic conditions as well as specific characteristics of the project, the entity in charge of preparing the project shall calculate the return on equity of the investor under the financial plan which is included in the pre-feasibility study report/feasibility study report, provided that:

a) The return on equity shall not exceed the costs of equity of investors (i) prescribed in Clause 1 of this Article;

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Article 5. Indicators for evaluation of quality of infrastructure works/systems provided by project enterprises

The indicators for evaluation of quality of infrastructure works/systems provided by project enterprises include the level of compliance of the infrastructure work/system with regulations on survey, design, construction, operation and maintenance laid down in technical regulation/standard applicable to each project and regulations of law on quality of construction works. Such level of compliance shall be evaluated in accordance with specialized laws.

Article 6. Depreciation periods of infrastructure works/systems

Depreciation periods of infrastructure works/systems shall comply with Clause 5 Article 1 of the Circular No. 147/2016/TT-BTC dated October 13, 2016 of the Ministry of Finance of Vietnam.

Chapter III

IMPLEMENTATION

Article 7. Transition

1. In case investment guidelines of a project have been decided by competent authorities but the project has yet to be approved before the effective date of this Circular, the entity in charge of formulating the project shall make revisions to the project’s feasibility study report in accordance with the provisions of this Circular provided such revisions shall not cause changes in the project’s investment guidelines.

2. In case investment guidelines of a project have been decided by competent authorities and the project has been approved before the effective date of this Circular, such decision on investment guidelines and the project approval decision shall prevail.

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1. This Circular comes into force from November 01, 2022.

2. If any legislative documents referred to in this Circular are amended, supplemented or superseded, the new ones shall prevail.

Article 9. Implementation organization

Chief of the Ministry Office, Chief Inspector of the Ministry, Director General of Directorate for Roads of Vietnam, Directors of Departments/ Administrations affiliated to the Ministry of Transport, Directors of Project Management Boards affiliated to the Ministry of Transport, Directors of Provincial Departments of Transports, heads of relevant authorities/agencies and relevant individuals shall implement this Circular./.

PP. MINISTER
DEPUTY MINISTER




Nguyen Duy Lam