What are the types of PPP project contract?

What are the types of PPP project contract?

Pursuant to the provisions 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.

What are the types of PPP project contract? (Internet image)

What are authorities signing PPP contracts in Vietnam?

Pursuant to the provisions of Clause 2, Article 5 of the Law on Public – Private Partnership Investment 2020, authorities signing PPP contracts, including:

- Competent authorities prescribed in clause 1 of Article 5 of the Law on Public – Private Partnership Investment 2020;

= Ministries, Ministry-level agencies, governmental agencies, central bodies affiliated to political organizations, Supreme People’s Procuracy, Supreme People’s Court, State Audit, Office of the President, Office of the National Assembly, and central bodies of Vietnam Fatherland Front and socio-political organizations (hereinafter referred to as Ministries and/or central authorities);

= Provincial People’s Committees;

= Agencies and organizations set up by the Government and the Prime Minister, and assigned make state budget estimates according to the provisions of law on state budget (hereinafter referred to as other authorities).

- Entities and units authorized by competent authorities to sign contracts as prescribed.

Basics of project execution contracts in Vietnam

Basics of project execution contracts in Vietnam specified in Article 47 of the Law on Public – Private Partnership Investment 2020, include:

- 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.

PPP contract must specify rights and obligations of the contracting authority, the investor and the PPP project enterprise.

Mai Thanh Loi

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