Content of the Financial Plan for the PPP Project
Article 11 of Circular 88/2018/TT-BTC stipulates the contents of the financial plan for a PPP project as follows:
Total investment capital;
Structure of investment capital sources:
a) State-contributed capital (including public investment capital or public assets according to the provisions of the law on public investment) to support the construction of works to ensure the feasibility of the project; support for the construction of auxiliary works, compensation, site clearance, and resettlement as prescribed in Clause 1, Article 11 of Decree No. 63/2018/ND-CP;
b) Equity capital;
c) Capital mobilized by the investor.
Capital mobilization plan:
a) State contribution support (if any) and capital support for the construction of auxiliary works, compensation, site clearance, and resettlement (if any) as prescribed in Clause 1, Article 11 of Decree No. 63/2018/ND-CP:
- Total capital;
- Public investment capital, capital from public assets according to the provisions of the law on the management and use of public assets (if any);
- Content of support;
- Disbursement progress of public investment capital, time of capital contribution via public assets.
b) Equity capital:
- Total capital;
- Disbursement progress.
c) Mobilized capital (commercial loans, preferential credit loans, external loans, other capital sources):
- Total mobilized capital (by each type of capital);
- Loan term, repayment, grace period (by each type of capital);
- Capital mobilization costs including: interest rates of loans from each capital source, average loan interest rate, and necessary related costs permitted by law (guarantee costs, commitment fees, credit insurance, brokerage);
- Loan currency and exchange rate;
- Conditions for securing mobilized capital;
- Disbursement progress (by each type of capital);
- Repayment plan for mobilized capital (by each type of capital).
Proposals for preferential treatment to ensure the financial plan of the project (if any).
Profit on investor's equity capital.
Estimated project costs during operation.
Plan for recovering investment capital and investor profit:
a) Estimated legal revenues;
b) Estimated levels of service prices, fees;
c) Expected revenue from each legal source;
d) Implementation, operation time, recovery of capital and profit of the PPP project;
e) For PPP projects implemented in the form of BTL, BLT contracts, a payment plan by the State to the investor on an annual basis and detailed by each source of funds must be predicted:
- Public investment capital;
- Regular expenditure to maintain public service activity;
- Revenue from public service activities (including evaluation of the situation of the previous two consecutive years at the time of formulation of the pre-feasibility study report, feasibility study report).
e) For PPP projects executed in the form of BT contracts, it is necessary to estimate the land fund, office buildings, infrastructure assets, rights to business, or exploitation of works, services that are franchised to the BT investor according to the regulations of the Government of Vietnam on payment for public assets when implementing investment projects in the form of BT contracts.
Criteria for assessing the feasibility of the financial plan:
a) The competent authority makes the investment project selection based on the following criteria:
- Net Present Value (NPV);
- Internal Rate of Return (IRR);
- Benefit-Cost Ratio (B/C);
- Return on Equity (ROE);
- Contract duration;
- Sensitivity of the financial indicators (mentioned above) due to changes in total investment capital, operating costs, revenue, contract duration.
b) Based on specific characteristics, state management agencies are allowed to stipulate additional financial criteria such as: debt-to-equity ratio, debt service coverage ratio, quick asset conversion ratio, liquidity ratio, measures to safeguard capital according to current laws for selecting effective investment projects.
The above are the contents of the financial plan for the PPP project.
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