What documents are required for lease agreement for the right to exploit infrastructure assets of railways in Vietnam?

What documents are required for lease agreement for the right to exploit infrastructure assets of railways in Vietnam? (Image from the Internet)

On February 3, 2025, the Government of Vietnam issued Decree 15/2025/ND-CP stipulating the management, use, and exploitation of railway infrastructure assets.

What documents are required for lease agreement for the right to exploit infrastructure assets of railways in Vietnam?

The lease agreement for the right to exploit infrastructure assets of railways in Vietnam includes the main contents stipulated in Clause 7, Article 33 of Decree 15/2025/ND-CP as follows:

- Information about the Lessor of the exploitation rights of the asset (urban railway asset management enterprise).

- Information about the Lessee of the exploitation rights of the asset (auction-winning organization).

- List of assets leased for exploitation rights (asset name, route name, address, year of use; basic specifications (length, area, volume,...); original cost, remaining value; asset usage status).

- Term for leasing the exploitation rights of the asset.

- Revenue according to the starting price scheme (hereinafter referred to as reference revenue).

- Rental price to be paid.

- Method of payment for leasing the exploitation rights of the asset; payment deadline for leasing the exploitation rights of the asset. The payment deadline is implemented according to the provisions at Point g, Clause 7, Article 17 of Decree 15/2025/ND-CP.

- Deposit to ensure contract performance (in addition to the rental value under the contract): The deposit amount is sent to a blocked account at a credit institution by the Lessee. The deposit must be made within 15 days from the contract signing date. The deposit duration corresponds to the lease term. The deposit is calculated as 5% of the total rental over the lease term based on the auction-winning price.

In the event the Lessee cannot fulfill obligations (payment of rental fees, contract violations concerning asset handover back to the Lessor) at the lease term's end, the deposit will be deducted from the lessee's unfinished obligations, with any excess (if any) handled according to civil law.

- Responsibilities and technical maintenance requirements for leased urban railway infrastructure, and other necessary maintenance-related content.

- Deadline for the Lessor to hand over exploitation rights to the Lessee; deadline for the Lessee to return exploitation rights to the Lessor.

- Handling the case of significant deviations in actual exploitation revenue compared to reference revenue if the exploitation rights are leased with a lump-sum payment for the entire lease term:

Annually, if actual revenue from asset exploitation exceeds 125% of the reference revenue according to the audited Financial Statements (for enterprises) or approved, appraised Report on the final settlement (for public service providers) under regulations, the Lessee must contribute an additional 50% of the surplus revenue over 125% into a temporary account as prescribed at Point a, Clause 2, Article 36 of Decree 15/2025/ND-CP; where reference revenue is the asset exploitation revenue for the corresponding year of the leasing period in the starting price scheme for auction.

Lessor and Lessee are responsible for identifying the required additional amount (if any) based on audited Financial Statements (for enterprises) or approved, appraised Report on final settlement (for public service providers) under regulations, submitting it into the temporary account. The Lessor must report to authorities and the escrow account owner defined at Point a, Clause 2, Article 36 of Decree 15/2025/ND-CP and the Lessee for tracking and handling the collection, deposit, and management of the amount.

The deadline to determine, notify, and pay into the temporary account is 30 days maximum from receiving the Lessor's report, and no later than October 31 of the following year of the additional revenue generation. For the final year, payment into the temporary account must be completed before the contract's liquidation.

- Conditions for contract termination.

- Rights and obligations of the parties.

- Handling of contract violations, dispute resolution according to civil law and other related laws:

- Handling cases where, during the leasing term, enhancement, improvement, or expansion of assets occur under state-funded projects approved by authorities.

The contract for leasing the right to exploit urban railway infrastructure assets and appendices (if applicable) are sent to the escrow account owner specified at Point a, Clause 2, Article 36 of Decree 15/2025/ND-CP to monitor and manage the revenue from the leasing of exploitation rights.

More details can be found in Decree 15/2025/ND-CP effective from February 3, 2025.

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