Amending Financial Management Regulations for Investment Projects under Public-Private Partnership

Circular 75/2017/TT-BTC amends multiple articles and clauses related to financial management for investment projects in the form of public-private partnerships and the costs associated with selecting investors. Specifically, it amends and supplements Clauses 3 and 4, Article 17 of Circular 55/2016/TT-BTC. To be specific, the loan interest rate is calculated in two cases: tender selection of investors and investor appointment.

For the case of tender selection of investors, the loan interest rate is determined based on the bidding documents of the selected investor. In the case of investor appointment, the loan interest rate is determined through negotiations and agreements between the competent state authority and the investor.

The loan interest rate used as a reference for negotiations and agreements must ensure that it does not exceed 1.5 times the simple average rate of the Government of Vietnam's bonds with the corresponding term to the duration of the PPP project contract (project contract) in the last 10 successful bidding sessions before the project contract negotiation.

If the number of successful bidding sessions of the Government of Vietnam's bonds with a term corresponding to the duration of the project contract in the six months before the project contract negotiation is less than 10 sessions, the referred loan interest rate for negotiations and agreements should not exceed 1.5 times the simple average rate of the Government of Vietnam's bonds with a corresponding term in the six months preceding the project contract negotiation.

Additionally, the loan interest rate must not exceed the average medium and long-term lending rates of the four state-owned commercial banks at the time of the project contract negotiation.

The Government of Vietnam's bonds with a term corresponding to the project duration is determined in the following scenarios: for project contracts with a duration of 10 years or less, the interest rate of the Government of Vietnam's 10-year bonds is used to determine the loan interest rate.

For project contracts with a duration of over 10 years and up to 15 years, the interest rate of the Government of Vietnam's 15-year bonds is used to determine the loan interest rate. Another scenario is for project contracts with a duration of over 15 years, the interest rate of the Government of Vietnam's 20-year bonds is used to determine the loan interest rate.

The loan interest rate stipulated in Points b and c, Clause 3 of this Article serves as a basis for calculating the loan interest rate in the project proposal, feasibility study report, and bidding documents for approval by competent authorities. Projects which have signed contracts and contract appendices before the effective date of this Circular will continue to be implemented according to the signed project contracts and appendices.

For projects with an approved project proposal or feasibility study report before this Circular takes effect, the competent state authority shall review and adjust the financial plan in accordance with this Circular to implement the next steps.

For project contracts and contract appendices that are still under negotiation and have not been signed by the effective date of this Circular, the competent state authority shall review, adjust, and update the relevant articles and clauses in the project contract based on the provisions of this Circular.

This Circular comes into effect on September 5, 2017.

Source: Vietnam Financial Times Online

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