Basic information of PPP project contract in Vietnam

Basic information of PPP project contract in Vietnam (Internet image)

1. What is a PPP project contract?

According to Clause 6, Article 3 of the Law on Public – Private Partnership Investment 2020, PPP project contract means a written agreement between a contracting authority and a PPP project investor or enterprise on the State's concession to that investor or PPP project enterprise to execute a PPP project according to provisions of the Law on Public – Private Partnership Investment 2020, including the following types of contracts:

- Build – Operate – Transfer contract (hereinafter referred to as BOT contract);

- Build - Transfer - Operate contract (hereinafter referred to as BTO contract);

- Build - Own - Operate contract (hereinafter referred to as BOO contract);

- Operate - Manage contract (hereinafter referred to as O&M contract);

- Build - Transfer - Lease contract (hereinafter referred to as BTL contract);

- Build - Lease - Transfer contract (hereinafter referred to as BLT contract);

- Mixed contract prescribed in Clause 3 of Article 45 of the Law on Public – Private Partnership Investment 2020.

2. Basic information of PPP project contract in Vietnam

Specifically, in Clause 1, Article 47 of the Law on Public – Private Partnership Investment 2020, a PPP contract in Vietnam shall contain the following information:

- Objectives, scale, location and schedule of implementation of a project; time and duration of a infrastructure work or system; the effective date of the contract; contract term;

- Scope of and requirements concerning engineering, technology and quality of the infrastructure work or system, supplied public products or services;

- Total investment; capital structure; financial plan, including the financial arrangement plan; public product and service prices and charges, including methods and formulas for setting or adjusting them; state capital invested in a PPP project and the corresponding form of management and use (if any);

- Conditions for use of land and other natural resources; plans to organize the construction of auxiliary works; requirements for compensation, support and resettlement; assurance of safety and environmental protection; force majeure cases and plans for response to force majeure events;

- Responsibilities for carrying out licensing procedures according to regulations of relevant laws; design; organization of construction; quality inspection, supervision and management at the construction phase; acceptance testing, settlement of investment capital and confirmation of the completion of infrastructure works and systems; provision of main input materials used for production and business activities of the project;

- Responsibilities for the operation and commercial use of infrastructure works and systems so that public products and services are provided in a continuous and stable manner; conditions, order and procedures for transfer of infrastructure works and systems;

- Performance security; rights of ownership, management, and exploitation of assets related to the project; rights and obligations of the PPP project investor or enterprise; the agreement on use of a third-party guarantee service with respect to the obligations of the contract signatory;

- Plans for response to the circumstances substantially changing in accordance with civil law to continue to perform the contract; response, compensation and punitive measures in case one of the contracting parties breaches the contract;

- Responsibilities of parties related to information security; reporting regime; provision of information, related documents and explanation about the contract performance at the request of competent authorities, inspection, examination, auditing, and supervising authorities;

- Principles and conditions for amendment, supplementation and termination of the contract before its expiry; assignment of rights and obligations of the parties; the lender's rights; procedures, rights and obligations of the parties upon contract discharge;

- Investment incentives, guarantees, plans to share the revenue increase and decrease, assurance of balancing of foreign currencies, types of insurance (if any);

- Laws governing the contract and dispute resolution mechanism.

Thanh Rin

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