04 Purposes of Using State Capital in PPP Projects

04 purposes of using state capital in PPP projects (illustrative image)

Law on Investment by Public-Private Partnership Method 2020 stipulates the purposes of using state capital as follows:

1. Use of state capital in PPP projects includes the following details:

- State capital is used for the following purposes:- Supporting the construction of buildings and infrastructure systems within the PPP project;- Payment to PPP project enterprises providing public products and services;- Payment of compensation expenses, clearance, resettlement support expenses; support for constructing temporary facilities;- Payment for revenue diminution;- Expenses of competent authorities, contract-signing authorities, PPP project preparation units, and bid invitation parties to perform their tasks as specified in Article 11 of this Law;- Expenses of the PPP Project Assessment Council, the units assigned to assess PPP projects.

- The rate of state capital participating in PPP projects specified in point a and point c of clause 1 of this Article shall not exceed 50% of the total investment capital of the project. For projects with multiple component projects, including component projects invested under the PPP method, the rate of state capital prescribed in this clause is determined based on the total investment capital of that component project.

2. Regarding support for the construction of buildings and infrastructure systems, this includes the following details:

- Support during the construction phase to increase the project's financial efficiency.- The capital rate is determined based on the preliminary financial plan in the pre-feasibility study report when deciding the investment policy.- Payment is made according to the PPP project contract.- State capital supporting the construction of buildings and infrastructure systems is arranged from the following capital sources:- Public investment capital as per the law on public investment;- Public asset value as per the law on managing and using public assets.

- To be implemented in one of the following methods:- Split into sub-projects within the PPP project. The management and use of state capital are implemented as per the law on public investment;- Allocate it to specific items according to the rate and value, progress, and conditions specified in the contract.

3. Regarding state capital payment to PPP project enterprises providing public products and services:

- It is used in BTL contracts, BLT contracts based on the quality of public products and services and is allocated from state capital in PPP projects and other lawful funds as prescribed by law.

4. State capital compensation, clearance, resettlement support, support for constructing temporary facilities are stipulated as follows:

- This capital is arranged from public investment capital as per the law on public investment.- Based on the scale and nature of each project, the contract-signing authority considers separating the state capital for compensation, clearance, resettlement support, and support for constructing temporary facilities into component projects or sub-projects and implementing it according to the law on public investment and the law on land.

More details can be found in Law on Investment by Public-Private Partnership Method 2020, effective from January 1, 2021.

Thanh Thao

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