08 contents of financial plan for O&M project in Vietnam as of March 1, 2024

Regarding this issue, LawNet would like to answer as follows:

On December 31, 2023, the Minister of Transport issued Circular 55/2023/TT-BGTVT providing guidance on expressway investment projects in the public-private partnership form and under operation and management contract in Vietnam.

08 contents of financial plan for O&M project in Vietnam as of March 1, 2024

Contents of financial plan for O&M project in Vietnam as of March 1, 2024 include:

(1) The financial plan of an O&M project complies with the provisions of Section 1 Chapter II of Decree 28/2021/ND-CP prescribing financial management mechanism of public-private partnership projects.

(2) Total investment of the project complies with the provisions of Article 6 of Circular 55/2023/TT-BGTVT.

(3) Return on equity (ROE) of investors is determined according to ROE rates prescribed in Article 7 of Circular 55/2023/TT-BGTVT.

(4) Costs incurred during operation of projects are determined according to provisions of Article 8 of Circular 55/2023/TT-BGTVT.

(5) Plan for recovery of investment capital and profits of investors complies with provisions of Article 9 of Circular 55/2023/TT-BGTVT.

(6) Costs incurred during the life cycle of a project includes total investment of the project determined according to Article 6 of Circular 55/2023/TT-BGTVT and costs incurred during operation of the project determined according to Article 8 of Circular 55/2023/TT-BGTVT.

(7)Minimum amount paid to state budget in pre-feasibility study report and feasibility study report is determined on the basis of calculation of the financial plan.

(8) Duration of a project shall not exceed the land allocation or land lease term as prescribed by the Land Law and be calculated on the basis of:

- Current conditions of infrastructure works/facilities of the project;

- Engineering and technological requirements of each type of infrastructure works/facilities, periodic repair frequency or useful life of such infrastructure works/facilities as prescribed by law;

- Financial plan and minimum amount paid to state budget.

Regulations on expressway O&M contract in Vietnam as of March 1, 2024

The O&M project enterprise must provide performance security for the project contract as prescribed in Article 48 of the Law on Public – Private Partnership Investment 2020.

An expressway O&M contract is composed of contract agreement between the parties, general conditions of contract, special conditions of contract, and contract appendix (if any).

- Contract agreement made between the parties

The contract agreement made between the parties shall, inter alia, include the following contents: legal grounds for conclusion of the project contract; general information on the parties of the project contract (contracting authority, investor or project enterprise); contract documents and order of priority thereof; duration and start date of validity of the project contract.

- General conditions of contract

General conditions of contract include general contents required for expressway O&M contracts.

- Special conditions of contract

Special conditions of contract clarify corresponding contents of the general conditions of the expressway O&M contract of a specific project.

- Contract appendix

An appendix to the contract shall be considered an integral part of the project contract. Where necessary, the contract may be accompanied by appendixes which elaborate its clauses and conditions.

Investor/project enterprise shall take charge of management, operation and maintenance of expressway infrastructure facilities in accordance with regulations of law and the signed contract. Management, operation and maintenance costs shall be covered by the investor/project enterprise, unless otherwise prescribed by laws.

More details can be found in Circular 55/2023/TT-BGTVT taking effect on  March 1, 2024.

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