Circular No. 09/2018/TT-BKHDT dated December 28, 2018 of the Ministry of Planning and Investment on guiding the implementation of a number of articles of the Government’s Decree No. 63/2018/ND-CP of May 4, 2018, on investment in the form of public-private partnership

THE MINISTRY OF PLANNING AND INVESTMENT

Circular No. 09/2018/TT-BKHDT dated December 28, 2018 of the Ministry of Planning and Investment on providing guidance on the implementation of a number of articles of Government’s Decree No. 63/2018/ND-CP dated May 4, 2018 on investment in a public-private partnership form

Pursuant to the Law on Public Investment No. 49/2014/QH13 dated June 18, 2014;

Pursuant to the Law on Investment No. 67/2014/QH13 dated November 26, 2014;

Pursuant to the Law on Bidding No. 43/2013/QH13 dated November 26, 2013;

Pursuant to the Law on Construction No. 50/2014/QH13 dated June 18, 2014;

Pursuant to the Government s Decree No. 63/2018/ND-CP dated May 4, 2018 on investment made in a Public-Private Partnership form;

Pursuant to the Government s Decree No. 86/2017/ND-CP dated July 25, 2017 defining the functions, tasks, powers and organizational structure of the Ministry of Planning and Investment;

The Minister of Planning and Investment promulgates the Circular providing guidance on the implementation of a number of articles of the Government’s Decree No. 63/2018/ND-CP dated May 4, 2018 on investment in a public-private partnership form.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation and subjects of application

1. This Circular provides instructions about information to be provided upon preparation and assessment of pre-feasibility study reports and feasibility study reports of PPP projects, contents of PPP project contracts and other information prescribed in clause 2 of Article 68 in the Decree No. 63/2018/ND-CP.

2. This Circular shall apply to Ministries, Ministry-level and Governmental bodies (hereinafter referred to as ministry and sectoral administrations), People’s Committees of centrally-affiliated cities and provinces (hereinafter referred to as provincial People’s Committee); entities, organizations or units entrusted with tasks or authorized under the provisions of clause 3 and clause 4 of Article 8 in the Decree No. 63/2018/ND-CP; investors and project management enterprises; lenders and organizations, entities or individuals related to the implementation of PPP projects.

Article 2. Information to be included upon preparation and assessment of pre-feasibility study reports, feasibility study reports and contents of project contracts

1. Pre-feasibility study reports and feasibility study reports shall be prepared under the provisions of Article 18 and Article 29 in the Decree No. 63/2018/ND-CP and instructions given in Appendix I and III hereto. As for group-C projects proposed by investors, proposal documentation shall be prepared in accordance with Article 23 of the Decree No. 63/2018/ND-CP, including information contained in feasibility study reports which are prepared based on instructions given in the Appendix III hereto.

2. Reports on assessment of pre-feasibility study reports shall be prepared according to instructions given in the Appendix II hereto.

3. Reports on assessment of feasibility study reports shall be prepared under the provisions of clause 2 and clause 3 of Article 30 in the Decree No. 63/2018/ND-CP and instructions given in the Appendix IV hereto.

4. PPP contracts shall be prepared based on the instructions given in Appendix V.a and Appendix V.b hereto.

5. Based on the nature, scale and sector of each project, organizations and individuals must used Appendix I, II, III, IV, V.a and V.b hereto for preparing and assessing pre-feasibility study reports, feasibility study reports and draft PPP contracts. In addition to provisions laid down in these Appendices, pre-feasibility study reports, reports on assessment of pre-feasibility study reports, feasibility study reports, reports on assessment of feasibility study reports and project contracts may be prepared and may contain other agreements on conditions that these agreements are not in breach of provisions laid down in the Decree No. 63/2018/ND-CP, this Circular and other relevant legislative documents.

Article 3. State agencies having authority over signing and implementation of project contracts delegated by the Prime Minister in accordance with clause 1 of Article 8 in the Decree No. 63/2018/ND-CP

In case where projects are put under the duties and powers of Ministries, Sectoral Administrations or provincial People’s Committees, they shall seek an agreement and appeal to the Prime Minister to assign one Ministry, sectoral administration of provincial People’s Committee to serve as a state agency having competence in signing and implementing project contracts.

Article 4. Selection of project proposal documentation in case there is at least one investor submitting proposal documentations for a project under clause 2 of Article 24 in the Decree No. 63/2018/ND-CP

1. After receipt of proposal documentation for a project submitted by an investor, the Ministry, sectoral administration and provincial People s Committee may receive project proposal documentation from another investor within the maximum duration of 10 working days of receipt of proposal documentation from the first investor if that project has the same objectives and locations, and conforms to the planning scheme.

2. Criteria for selection of project proposal documentation which is judged the most feasible and efficient shall be composed of the followings:

a) Requirements set out in clause 1 of Article 20 in the Decree No. 63/2018/ND-CP;

b) Necessity for investment to be made;

c) Technical feasibility, including land use plans;

d) Socio-economic efficiency of a project;

dd) Financial feasibility of a project;

e) Investor’s capabilities of and experience in undertaking preparation of the pre-feasibility study report and the feasibility study report for the project that such investor proposes.

3. Based on specific conditions and requirements for implementation of projects, ministries, sectoral administrations and provincial People’s Committee shall decide on the evaluation method for comparison and selection of project proposal documentation which is the most feasible and efficient, including the determination of ratio between elements prescribed in point c, d, dd and e of clause 2 in this Article.

Article 5. Approval of transformation policies and feasibility study reports of transformation projects under clause 1 of Article 27 in the Decree No. 63/2018/ND-CP.

Competent authorities shall grant the approval of transformation policies and feasibility study reports of transformation projects under clause 1 of Article 27 in the Decree No. 63/2018/ND-CP. In case preexisting projects are subject to investment decisions issued by district- or commune-level People’s Committees, these Committees shall report to provincial People’s Committees to request their review and approval of transformation policies and feasibility study reports of transformation projects.

Article 6. Implementation of projects implemented under BT contracts in accordance with Article 33 in the Decree No. 63/2018/ND-CP

1. As for group-C projects implemented under BT contracts, procedures for implementation of these projects shall be subject to clause 2 of Article 9 in the Decree No. 63/2018/ND-CP; concurrently, projects need to be prepared and assessed for approval of their designs or cost estimates before selection of contractors as prescribed in points c, d and dd of clause 1 of Article 33 in the Decree No. 63/2018/ND-CP.

2. In case of transformation of projects from the public investment form into PPP investment form by applying BT contracts, after competent authorities approve the policies on transformation and feasibility study reports of transformation projects, procedures for implementation of these transformation projects shall be subject to provisions laid down in point c, d and dd of clause 1 of Article 33 in the Decree No. 63/2018/ND-CP.

Article 7. Mixed contracts subject to provisions laid down in clause 3 of Article 40 in the Decree No. 63/2018/ND-CP

1. In case of proposal for application of mixed contracts, entities preparing projects or investors must give the detailed interpretations of the following information:

a) Necessity of and advantages in applying mixed contracts in comparison to other contracts prescribed in clause 3, 4, 5, 6, 7, 8 and 9 of Article 3 in the Decree No. 63/2018/ND-CP;

b) Main objectives and purposes of a projects; sequences for implementation of a projects and authority to grant the decision on corresponding contents;

c) Feasibility of the method for construction, ownership, management, business, operation, use and transfer of project works; financial plans;

d) Recommended principles of consideration of grant of a decision on award of contracts to investors upon selection of contractors in conformity with proposed contracts.

2. In case a project applies a mixed contract constituted by a BT contract, the detailed interpretation of preparation, assessment, approval and supervision of the quality of project works, and transfer of project items applying BT contracts to a competent regulatory authority, must be given.

Article 8. Public disclosure of project information and project contract

1. Within duration of 07 working days of receipt of a competent authority’s decision on investment policy or approval of feasibility study reports of group-C projects, project information and list of projects may be disclosed under Article 21 in the Decree No. 63/2018/ND-CP.

2. Within duration of 07 working days of signing of a project contract, the procuring party shall be responsible for making information about the project contract known to the public under Article 41 in the Decree No. 63/2018/ND-CP, except contents of project contracts that need to be kept confidential according to agreements or laws on information security.

Article 9. Implementation

1. This Circular takes effect on February 15, 2019.

2. This Circular shall replace the Circular No. 02/2016/TT-BKHDT dated March 1, 2016 of the Minister of Planning and Investment providing guidance on the initial selection of projects, preparation, assessment and approval of proposals for projects and feasibility study reports of projects implemented in a PPP investment form and the Circular No. 06/2016/TT-BKHDT dated June 28, 2016 of the Minister of Planning and Investment providing guidance on implementation of certain articles of the Government’s Decree No. 15/2015/ND-CP dated February 14, 2015 on investment in a PPP form.

3. Ministries, Ministry-level agencies, Governmental bodies, other central agencies, People’s Committees at all levels, and other entities, organizations or individuals concerned, shall be responsible for implementing this Circular.

4. In the course of implementation of this Circular, if there is any difficulty likely to arise, Ministries, Ministry-level agencies, Governmental bodies, other central bodies, People s Committees at all levels, and other entities or individuals concerned, should send their feedbacks to the Ministry of Planning and Investment for its timely consideration and decision of proper actions to be taken. In case other issues which are not specifically regulated arise, it shall be obligatory to report to the Prime Minister to seek his consideration and decision under the provisions of Article 77 in the Decree No. 63/2018/ND-CP./.

Minister

Nguyen Chi Dung

APPENDIX I

INSTRUCTIONS ON PREPARATION OF PRE-FEASIBILITY STUDY REPORTS FOR PPP PROJECTS

Pre-feasibility study report refers to a document describing preliminary study contents relating to the necessity, feasibility and efficiency of a project. This Appendix contains instructions on what is included in a pre-feasibility study report in order for competent authorities referred to in Article 16 of the Decree No. 63/2018/ND-CP to decide on investment policies for PPP projects and determine the portion of the State participation in a PPP project (if any).

Depending on the nature, size of a project and the industry in which a project involves, the entity preparing that project or the investor can complete a pre-feasibility study report (PSR) containing the following information:

A. GENERAL INFORMATION ABOUT THE PROJECT

Summarizing and interpreting basic information about a project, including:

- Project name;

- Name of the competent regulatory authority signing a contract with the investor;

- Name of the entity preparing the project or the investor proposing the project;

- Location, scale and capacity of the project and area of land available for use as the project site;

- Engineering requirements;

- Total estimated investment;

- Portion of State participation in a PPP project (if any);

- Project contract type;

- Main indices in a preliminary financial plan;

- Project contract period;

- Investment incentives and guarantee;

- Other related information.

B. BASES FOR PREPARATION OF PRE-FEASIBILITY STUDY REPORT

Listing out legislative documents used as bases for preparing PSR, including:

- Laws, Decrees and Circulars giving instructions concerning implementation of a PPP project;

- Laws, Decrees and Circulars providing instructions concerning investment industries and sectors in which a project is involved;

- Resolutions and Decisions on approval of relevant planning schemes according to legislative regulations on national planning schemes and plans for socio-economic development, sectoral, industrial, regional and local development plans related to a project;

- Other relevant legislative documents.

C. DOCUMENTATION INCLUDED IN THE APPLICATION PACKAGE FOR EVALUATION OF PSR

Documentation included in the application package for evaluation of PSR comprise:

- Application form for approval of the decision on an investment policy;

- Full texts of the pre-feasibility study report;

- Decision to use public property for participation in a PPP project under laws on management and use of public property;

- Full texts of the environmental impact assessment report prepared in accordance with law on environmental protection;

- Other relevant legislative materials and documents.

If a project is proposed by an investor, documentation included in the proposal for that project shall be subject to Article 23 of the Decree No. 63/2018/ND-CP.

D. INCLUSIONS IN A PRE-FEASIBILITY STUDY REPORT

I. Necessity of an investment project

1. General context

- Making the preliminary interpretation of general socio-economic contexts of the entire country and/or locality in the stage of implementation of the project.

- Giving the general overview on sectors or industries proposed by the project, direct and indirect effects of specialized laws on the project.

- Making the analysis of relevance of the project to planning schemes according to laws on national planning schemes and plans for socio-economic development, sectoral, industrial, regional and local development plans.

- Making the evaluation of effects of a PPP project on the community and population living within the vicinity of the project site.

2. Current conditions of the project site

In case of initiation of a new project, explanatory notes on the reality and current status of the region or location where that project will be implemented must be given. With respect to a renovation, repair or improvement project, the supplementary assessment of the existing project that needs to be renovated, repaired or improved must be made.

3. Other related projects

Providing basic information about related projects and positive or negative effects thereof on the proposed project.

4. Objectives of a project

Giving the preliminary interpretation of general and specific objectives that the project must achieve in the contexts and current conditions that have been analyzed above.

5. Advantages of making investment in a PPP form

Giving the analysis of advantages of the PPP investment form compared with other investment form based on the following data about: Capability of calling for funding sources, technologies and experience in management of the private sector; competence in dividing risks between involved parties and other matters.

II. Technical Interpretation¹

1. Project scale and capacity

Giving the preliminary analysis of total demand for works to be developed by the project, products or services provided on the basis of planning, actual survey data or forecast data; making the interpretation of the project scale and capacity.

2. Project location

Describing the location and land plot used for implementation of the project, other projects or works currently developed or to be developed in the adjacent regions with planning schemes or those related to the project (if any).

3. Compensation, support and resettlement methods

In case the land plot intended for a project has not been cleared for use as a project site, the preliminary interpretation of the compensation, support and resettlement method to be used for the proposed project or other project (if the BT contract is made) must be made in accordance with applicable regulations.

4. Engineering and technological requirements and requirements concerning the quality of project works, products or services

Based on the project scale, capacity, standards and norms of each industry, availability and practicality of the technology created by the project, PSR may analyze certain likely methods and suggest the method relevant to technical requirements and requirements concerning the quality of works, products or services as a basis for calculation of total investment.   PSR needs to clearly state that the investor is entitled to propose other technical and technological methods that are conformable to technical requirements and requirements concerning the quality of works, products or services, and improve the effectiveness of the project.

5. Preliminary design plans

Contents of each preliminary design plan in the PSR must be subject to laws on construction (with respect to a project with construction packages) or other specialized regulations (with respect to a project without construction packages).

6. Total investment

Based on interpretations of selected engineering solutions, PSR must make an estimate of total investment, including: Total investment outlay and initial working capital.

Both are defined as follows:

- Total investment outlay is defined according to laws on construction with respect to projects with construction packages or specialized laws with respect to projects without construction packages.

- The initial working capital needed for use and operation of PPP projects is defined as the amount of capital necessary to make payments in the initial stage of operation, business and management of infrastructure facilities, provision of public services and assurance of continuity and stability of each project.  The initial working capital must be relevant to the investment sector, specific conditions and progress of implementation of each project.

7. Other projects (only applicable to BT projects)

PSR needs to provide initial information about other projects, specifically including:

- As for BT projects using unoccupied land, working offices and real property for making payments to investors, giving initial information about the proposed location, estimated size and value thereof and other necessary information (if any).

- As for BT projects that make payments to investors in a form of assignment of the rights of business and operation of works and services, giving initial information about the proposed scope and duration of assignment of such rights to investors, value of assigned rights and other information (if any).

III. Impacts on environment, society, national defence and security

Making the preliminary assessment of environmental impacts under laws on environmental protection; impacts of the project on society, national defence and security and others (if any).

IV. Demand forecasting

Analyzing the number of users and demands for works, products or services; making a forecast about the speed of growth in demands in the future, using this forecast as a basis for evaluation of socio-economic efficiency and preliminary analysis of the financial plan.

V. Preliminary analysis of socio-economic effectiveness of the project

1. Determining socio-economic costs and benefits

Making the preliminary estimate of socio-economic costs and benefits classified by the following groups of elements:

- Group of elements that are quantifiable and convertible into monetary value (may be used for calculation of the benefit-cost ratio in economic aspects according to the instructions given in Section V.2 in this Part).

- Group of elements that may be quantified but cannot be valued (ex: Benefits obtained owing to environmental improvements and those obtained due to enhancement of the economic growth and creation of more jobs, etc.).

- Group of qualitative elements (ex: Benefits gained due to the increased connectivity between manufacturing areas and hubs that consume and improve the living standards of people residing within the project site, etc.).

2. Making the preliminary analysis of socio-economic efficiency of a project by calculating the benefit-cost ratio (BCR)

The benefit-cost ratio (BCR) refers to the ratio of the benefits generated from the project compared to the costs incurred from investment in and operation of the project, which is converted into the present value.   The project will be deemed to achieve the socio-economic efficiency if BCR is greater than 1 (>1). BCR is preliminarily calculated at the step of preparation of PSR according to the following formula:

Where:

B_t= Initial value of the benefits generated in the t^thyear;

C_t= Initial value of the costs incurred in the t^thyear;

t = Year in the life cycle of the project (0, 1, 2,..., n);

n = Number of years during which the project is operated (project contract duration);

r_e= Economic discount rate of the project².

3. Drawing the preliminary conclusion of socio-economic efficiency of the project

Based on the analysis made according to instructions given in Section V.1 and Section V.2 in this Part, PSR gives the preliminary conclusion of socio-economic efficiency of the project.

In case of lack of prerequisites for determination of elements, such as costs and benefits, which may be quantified and converted into monetary values as a basis for calculation of the BCR, PSR should give the preliminary conclusion on the socio-economic efficiency of the project based on other remaining groups of elements.

VI. Financial analysis

1. Input parameters used in financial models

- Costs incurred during the entire life cycle of a project:Costs incurred during the entire life cycle of a project are constituted by total investment outlay and costs incurred from exploiting and operating the project during its entire life cycle.  Total investment outlay is defined according to laws on construction with respect to projects with construction packages or specialized laws with respect to projects without construction packages.  Costs incurred from exploiting and operating a project during its life cycle are equal to those related to operation and maintenance of works belonging to the project; costs incurred from remunerations paid to employees operating and servicing works belonging to the project; project management costs; supervision consultancy costs and provisional costs, etc.

- Revenues:Determining revenues generated from the project in each year (basic-, maximum- and minimum-level revenues) on a basis of demand forecasting data (which are analyzed in detail in Section IV of this Part); prices and charges of commodities, services and other revenues of the project (taking into consideration legal bases for determination of prices and charges; the proposed schedule of increase in prices and charges).

- Other input parameters:Loan interest and maturity; inflation rate; exchange rate; depreciation rate and other parameters.

2. Preliminary analysis of financial plans

Representing the preliminary financial plan under the instructions of the Ministry of Finance, including:

- Total investment;

- Structure of funding sources and presumptive capital mobilization plan;

- Recommended preferential treatment for assurance of the financial plan of a project (if any);

- The investor’s return on equity ratio;

- Estimated costs incurred during the entire period of operation of the project;

- Plan for recovery of investments and profits of the investor;

- Portion of State participation in the project (if any);

- Other financial indices referred to in Section VI.3 in this Part.

3. Financial indices for assessment of the feasibility of a project

3.1.Except projects implemented under BT contracts, based on initial data of financial plans and input data of financial models, the financial feasibility of a project may be assessed on the basis of the index measuring the net present value (NPV).

NPV of a project is the present value of the net cash flow during the entire life cycle of a project.   The project will be deemed to achieve the financial efficiency if NPV is positive (>0). NPV is calculated according to the following formula:

Where:

CF_t= Value of net cash flow denoting the difference between the amount of cash received (cash inflow) and the amount of cash spent (cash outflow) of a project in the t^thyear;

t = Year in the life cycle of the project (0, 1, 2,..., n);

n = Number of years during which the project is operated (project contract duration);

r = Discount rate (determined under the instructions of the Ministry of Finance).

Based on particular conditions of each project, PSR can include indices measuring the feasibility of a financial plan under the instructions of the Ministry of Finance.

3.2. Projects implemented under BT contracts

- As for BT projects using unoccupied land, office buildings and other infrastructure facilities as payments to investors under laws on management and utilization of public property, taking the preliminary inventory of unoccupied land plots, office buildings and other infrastructure facilities (including information about location, size, value and others) intended as payments to investors.  A project will be proved financially feasible only if unoccupied land, office buildings and other infrastructure facilities are defined clearly and compliant with laws, and adhere to payment principles prescribed by laws on management and usage of public property.

- As for BT projects that make payments to investors in a form of assignment of the rights of business and operation of works and services created by a project, giving preliminary information about the scope, duration and value of such rights assigned to investors as a basis for analysis of a financial plan.

4. Preliminary conclusion on the financial feasibility of a project

Based on analyses referred to in the aforesaid Sections, and the nature of each project contract, PSR must give the preliminary conclusion on the financial feasibility of the project.

VII. Project contract type

Based on interpretations of technical plans, demand projections and financial plans, specifying the contract type most suitable to the project.

The selected type of contract must describe roles, responsibilities, distribution and management of risks related to implementation of the project of and between competent regulatory authorities and investors during the life cycle of a project, including: Responsibilities of competent regulatory authorities and project management units; responsibilities of investors, project management enterprises and responsibilities of other bodies involved (such as lenders, input product or service providers, product underwriters and contractors, etc.).

VIII. Analysis of risks arising during the project implementation period

PSR needs to give the preliminary interpretation of certain major risks likely to arise during the life cycle of a project, including legal risks, risks in land tenure, environmental risks, risks in selected techniques or technologies, design and construction-related risks, financial risks and risks related to market demands and operational risks, etc.

Analyzing the mechanism for distribution and management of risks and responsibilities that involved parties may assume with respect to management of risks and determination of certain risk minimization measures.

IX. State support measures

1. Portion of State participation in a project (if any)

Based on results of the preliminary analysis of the socio-economic efficiency, the financial analysis of a project and the selected type of project contract, making the interpretation of information related to the portion of State participation in the project, including:

- As for projects that need the State capital contribution to ensure their financial feasibility, giving initial information about value of the portion of state-owned investment or value of the public property; mid-term and annual public investment plans with respect to funding sources used for public investment purposes; proposed methods, plans and schedules of disbursement of funds to investors.

- As for projects using public property that the state contributes as capital participation in these projects, the entity preparing each project must specify value of public property stated in the decision on use of public property as capital participation in a PPP project under laws on management and usage of public property; methods, plans and schedules of transfer or assignment of public property to the project investor.

- As for projects that need funds for payments to investors, giving initial information about the values of capital contribution portions, estimates of funds and balancing capabilities (proposed mid-term and annual plans for use of state budget revenues as public investments or funding plans or estimates of regular state budget expenditures used for maintaining provision of public utilities, estimates of state budget revenues generated from provision of public utilities); approaches, plans and schedules of disbursement of funds to investors.

- As for projects applying BT contracts, giving initial information about unoccupied land, office buildings and infrastructure facilities (including their location, measurement, value and other related information); scope and duration of assignment of the rights of business and operation of project-related works and services to investors.

- As for projects that need funds for support for construction of auxiliary works, compensation, support and resettlement, based on plans for compensation, support or resettlement which are analyzed at II.3 in this Part, specifying the values of funds; proposed mid-term and annual public investment plans; proposed plans and schedules of disbursement of funds.

2. Investment incentives and guarantee

Making recommendations about investment incentives (including those tailor-made to industries, fields or localities), types of guarantee or assurance of the Government and associated conditions as well as other required obligations assumed during the project contract implementation period.

X. Project implementation plan

Making recommendations about the timelength of preparation of a project (including the duration of preparation and assessment of PSR and the decision on investment policy; preparation, assessment and approval of feasibility study report; selection of investors and signing of project contracts); implementation duration; point of time of completion of the project under discussion and other projects (in case of use of BT contracts).

XI. Management of project implementation

1. Form and organization structure of management of implementation of PPP projects

PSR must make the interpretation of form and organization structure of management of implementation of projects by competent regulatory authorities, investors and project management enterprises over specific periods of time; the method of cooperation among competent regulatory authorities, investors and project management enterprises during the project implementation period.

As for projects with construction packages, investors and project management enterprises may choose the form of management of project under laws on construction. As for projects without construction packages, the form of management of project must be subject to relevant legislative regulations.

2. Tasks of management of implementation of projects

PSR gives the preliminary interpretation of tasks to be performed in the process of management of implementation of a project, including tasks and methods of supervision of quality of project works; supervision of implementation of the project contract, assurance of stable and continuing provision of products and services; the method of the investor’s business and operation of project works and provision of services.

3. Management of implementation of BT projects

PSR should define competent regulatory authorities charged with directly managing or authorizing other entities to manage a project and the project management board which has been established, have appropriate competence and professional qualifications to cooperate with investors in supervision of quality of the project. Tasks, scope of and responsibilities for management of compliance with laws on construction must be specified.

E. CONCLUSIONS AND RECOMMENDATIONS

This section presents conclusions on whether PSR meets requirements stated in the decision on investment policy prescribed in clause 1 of Article 20 in the Decree No. 63/2018/ND-CP and is suitable for use as a basis for investments made in a PPP form.

It must give recommendations to competent regulatory authorities for implementation of procedures for carrying out assessments and making decisions on investment policies and must identify matters that need to be mentioned in detail in the feasibility study report.

APPENDIX II

INSTRUCTIONS ON ASSESSMENT OF PRE-FEASIBILITY STUDY REPORTS FOR PPP PROJECTS

Based on the nature, scale, field and contents of the PSR, the report on assessment of PSR shall contain the followings. As for PSR prepared by an investor, it shall be necessary to consider elements in the investor’s interpretation. The assessment body needs to give their comments in detail on each information field and suggest recommended actions to be taken in case there are contrary opinions or it is necessary to work with the entity preparing the project or the investor proposing the project in making any necessary amendment or correction.

A. PROJECT OVERVIEW

This section must give general information about a project, including: Project name; name of the regulatory authority having competence in signing the project contract with the investor; the entity preparing the project or the investor proposing the project; location, scale and capacity of the project, area of land to be used; technical requirements; total investment; state participation in the project (if any); project contract type; major indices presented in a financial plan; project contract period; investment incentives and guarantee; other relevant information.

B. SYNTHESIS OF OPINIONS FROM RELATED ENTITIES AND BODIES

The assessment body shall consolidate opinions from related entities on PSR documentation of a project.

C. CONSOLIDATION OF ASSESSMENT RESULTS

I. Preliminary checking of documentation

The assessment body shall give its assessment of:

- Adequacy of required documents and data or information.

- Relevance of legal bases for preparation of PSR.

- Compliance with laws during the period of preparation of PSR.

II. Assessment of contents of documentation

1. Necessity of an investment project

The assessment body shall assess the relevance of a PSR in terms of the following contents:

- Relevance of the project to the planning scheme and plan for economic and social development of an industry, region and the local socio-economic development plan.

- Urgency and necessity of an investment project.

- Effects of a project on a community and population living within the project site.

- Relevance of general and specific objectives to the current status of an industry, sector or locality, and capability of solving issues to meet the demands of a community or population.

- Advantages in implementing a project in a PPP form compared with other investment form.

2. Feasibility of a project

a) Technical feasibility

- Project scale and capacity: Assessing the rationality of bases for selection of project scale and capacity; the alignment of project scale and capacity with the capability of providing inputs and outputs of a project; the stability of services that a project provides.

- Engineering and technological plans: Assessing the relevance of an engineering or technological plan to the project scale or capacity, standards, norms and technical requirements concerning inputs; the availability and practicality of the chosen technology; the clarity and adequacy in the determination of main technical risks and the rationality of the risk minimization plan.

- The suitability of the location where a project is implemented based on geographical, administrative, social, economic, technical conditions, infrastructure and survey results (if such survey has already been conducted).

- Preliminary design plans: Collecting assessment opinions from specialized construction bodies according to laws on construction with respect to projects with construction packages or specialized laws with respect to projects without construction packages.

- Compensation, support and resettlement plans: Assessing the relevance and feasibility of a plan in accordance with legislation on land.

b) Socio-economic efficiency of a project

- Contributions of a project to accomplishment of socio-economic tasks: The analysis of the socio-economic efficiency of a project serves the purpose of comparing benefits that may be obtained by implementation of the plan for investment in the project and those that may be obtained by implementation of the plan for maintenance of the current status and making none of investments. Additionally, in case where there are a lot of projects that need investments, the project proving the higher socio-economic efficiency than others will be preferred and will be selected depending on the capability of balancing state budget allocations for investment in the project.    Therefore, the assessment body needs to assess the relevance and accuracy of socio-economic costs and benefits, and the BCR. The project will be deemed to achieve the socio-economic efficiency if BCR of that project is greater than 1 (>1). In case where BCR is not determined in the PSR, the assessment body may assess the rationality of other elements.

- Impacts of a project on environment, society, national defence and security (if any): Assessing the relevance of the interpretation of impacts of a project on environment, society, national defence and security as well as other issues.

c) Financial feasibility

- Except BT projects, the assessment body may assess the relevance and accuracy of financial input elements, financial indices and may preliminarily assess the financial plan of a project. A project will be deemed to achieve the financial efficiency if NPV is positive (>0). In addition, if a PSR inserts other indices in order to assess the feasibility of a financial plan under the instructions of the Ministry of Finance, the assessment body may carry out the supplementary assessment of these indices in order to assess the feasibility of that project.

- As for projects that use state capital contributions or state funds for payment to investors, making the assessment of the relevance of the value of such capital contributions, fund balancing and allocation capabilities, methods, plans and schedules of disbursement of funds to investors.

- As for projects using public property as state capital participation, making a general report on values of public property determined in the decision on use of public property as capital participation in a PPP project.

- As for BT projects that uses unoccupied land, office buildings, other infrastructure facilities or rights of commercial use and operation of project works and services as payments to investors, a project will be deemed financially feasible if unoccupied land plots, office buildings or infrastructure facilities are specified, meet regulations of laws and adhere to payment principles prescribed in laws on management and use of public property and specialized laws.

- Making the assessment of the relevance of investment incentives and guarantee policies.

3. Relevance of the project contract type

The assessment body shall assess the relevance of a PSR in terms of the following contents:

- Relevance of the project contract type and contract term.

- Rationality of the division of responsibilities between parties involved in implementation of the project, risk prevention and minimization measures.

4. Relevance of the plan for implementation of a project, mechanism for supervision and management of a project

The assessment body needs to carry out the assessment and give specific opinions on the relevance of the plan for implementation of the project and the mechanism for supervision and management of the project which are represented in the PSR.

APPENDIX III

INSTRUCTIONS ON PREPARATION OF FEASIBILITY STUDY REPORTS FOR PPP PROJECTS

Feasibility study report refers to a document describing subject matters of the study relating to the necessity, feasibility and efficiency of a PPP project. This Appendix provides instructions about inclusions in a feasibility study report in order for a competent regulatory authority to consider granting its approval which is a basis for arranging bids to select contractors.

Depending on the nature and size of a project and the industry in which a project involves, the entity preparing that project or an investor can prepare the feasibility study report (FSR) according to the following information fields:

A. BASIC INFORMATION ABOUT A PROJECT

Summarizing and interpreting basic information about a project, including:

- Project name;

- Name of the competent regulatory authority signing a contract with the investor;

- Name of the entity preparing the project or the investor proposing the project;

- Location, scale and capacity of the project and measurement of land available for use as the project site;

- Engineering requirements;

- Total estimated investment;

- Portion of State participation in a PPP project (if any);

- Project contract type;

- Main indices presented in the financial plan;

- Project contract period;

- Investment incentives and guarantee;

- Other related information.

B. BASES FOR PREPARATION OF FEASIBILITY STUDY REPORT

Listing out legislative documents used as bases for preparing FSR, including:

- Laws, Decrees and Circulars giving instructions concerning implementation of a PPP project;

- Laws, Decrees and Circulars providing instructions concerning investment industries and sectors in which a project is involved;

- Resolutions and Decisions on approval of relevant planning schemes according to legislative regulations on national planning schemes and plans for socio-economic development, sectoral, industrial, regional and local development plans related to a project;

- Decisions and documents of competent regulatory authorities used as referents in steps of preparation, assessment of and decision on investment policies (except group-C PPP projects);

- Other relevant legislative documents.

C. DOCUMENTATION INCLUDED IN THE APPLICATION PACKAGE FOR EVALUATION OF FSR

Documentation included in the application package for evaluation of FSR shall comprise:

- Application document for approval of the feasibility study report;

- Full texts of the feasibility study report;

- Full texts of the written agreements between Ministries, sectoral administrations or provincial-level People’s Committees and investors to authorize investors to prepare feasibility study reports (with respect to projects proposed by investors);

- Decision on approval of the policy on investment in a project (except group-C projects);

- Other relevant legislative materials and documents.

D. INCLUSIONS IN A FEASIBILITY STUDY REPORT

I. Necessity of an investment project

1. General context

- Making the thorough interpretation of general socio-economic contexts of the entire country and/or locality in the stage of implementation of the project; natural and environmental conditions likely to affect the project;

- Giving the general overview on sectors or industries proposed by the project, direct and indirect effects of specialized laws on the project;

- Making the analysis of relevance of the project to relevant planning schemes according to laws on national planning schemes and plans for socio-economic development, sectoral, industrial, regional and local development plans;

- Making judgements about benefits that a project is expected to bring to the entire country and/or a locality.

2. Current status of the project site

In case of initiation of a new project, explanatory notes on the reality and current status or conditions of the region or location where that project will be implemented must be given. With respect to a renovation, repair or improvement project, FSR should give the supplementary interpretation of the current status of works that need to be renovated, repaired or improved.

3. Other related projects

Giving basic information about related projects (including ancillary projects and competing projects) likely to affect revenues, profits or costs, etc., of the proposed project; making the interpretation of both positive and negative impacts of these projects on the proposed project.

4. Objectives of a project

Determining general and particular objectives of a project, including:

- General objectives: Determining contributions to accomplishing the national general objectives; socio-economic benefits that the project brings to the entire country, locality, sector or industry.

- Specific objectives: Determining issues and current situations that may be solved; the number of beneficiaries of the project; the objectives regarding the scale and capacity that the project is expected to reach in order to meet the demands of users.

5. Advantages of making investment in a PPP form

Giving the thorough analysis of advantages of the PPP investment form compared with others based on the following indicators: Capability of calling for funding sources, technologies and experience in management of the private sector; results of the practical survey on the private sector’s capability of implementation of the project; plans to divide risks between involved parties and other related matters.

6. Opinions on impacts of investment in a project

Synthesizing consulting opinions on investment in completion of the project made by one or more entities such as People’s Councils, People’s Committees and National Assembly Deputy Delegations of cities and provinces where projects are implemented; trade and professional associations related to investment sectors of the project.

II. Technical Interpretation of a project

1. Project scale and capacity

Making the analysis of the demands for infrastructure facilities and public services based on planning schemes, practical survey data or other forecast data; making the interpretation of the project scale and capacity; in case the investment phasing is needed, specifying the scale and capacity of the project in each phase according to the forecast of increase in demands.

2. Project location

Describing information about project location and land plot used as the project site, including the scope, measurement of land used for the project, current status of the land plot which is used, safety corridor (if any), construction area of land and advantages in terms of project location³. In case other projects or works that are being developed or are going to be developed are located within the vicinity or boundary of the project, making the analysis of the extent of impacts of these projects or works on the proposed project.

3. Compensation, support and resettlement plans

- In case the land plot intended for the project has not been cleared for use as the project site, the interpretation of the compensation, support and resettlement plan to be used for the proposed project must be made in accordance with applicable regulations.

- If the project is implemented under a BT contract, making the interpretation of the compensation, support and resettlement plan intended for other projects based on the 1/2,000 or 1/500-scale construction planning map in accordance with applicable regulations.

4. Technical requirements and requirements concerning the quality of project works, products or services

- Determining engineering and technological plans based on the scale and capacity of a project; standards and norms of an industry that the project involves; the availability and practicability of the technology used in the project; engineering and technological risks (if any); input and output requirements of the project.

- Giving details about technical requirements and requirements concerning the quality of project works, products or services based on the index measuring the technical quality of the project.

- Describing the engineering and technological plan selected in the FSR. This is the basis for calculation of total investment in the project. FSR needs to clearly state that the investor is entitled to propose other engineering and technological plans that are conformable to technical requirements and requirements concerning the technical quality of works, products or services, and improve the effectiveness of the project.

5. Basic design

Each basic design plan in the FSR must contain data and information subject to laws on construction (with respect to a project with construction packages) or other specialized legislative regulations (with respect to a project without construction packages).

6. Total investment in a project

Based on interpretations of the selected technical solution, FSR must make an estimate of total investment in the project, including: Total investment and initial working capital that fund the exploitation and operation of the project. Where:

- Total investment outlay is defined according to laws on construction with respect to projects with construction items or specialized laws with respect to projects without construction packages.

- Initial working capital needed for exploitation and operation of projectsis defined as the amount of capital necessary to make payments in the initial stage of operation, business and management of infrastructure facilities, provision of public services and assurance of continuity and stability of the project.The initial working capital must be relevant to the investment sector, specific conditions and progress of each project.

7. Other projects (only applicable to BT projects)

a) BT projects using unoccupied land for payments to investors

Based on the 1/2,000 or 1/500-scale construction planning map (if any) of the unoccupied land plot intended for payments to investors, FSR should give certain information about other projects implemented at available land plots intended for use as such payments, specifically including:

- Project location;

- Current status of the site or unoccupied land lot; planning indices; purposes for which the land is used; land use structure;

- Initial information about usefulness and size of the project;

- Initial information about total cost of implementation of the project (exclusive of costs of compensation, support and resettlement incurred by unoccupied land intended for use as payments to investors but not cleared yet);

- Preliminary plans for compensation, support and resettlement (with respect to unoccupied land intended for use as payments to investors but not cleared yet);

- Proposed deadline for allocation or lending of land;

- Other information (if any).

b) BT projects using office buildings or infrastructure facilities as payments to investors

Based on the decision on use of office buildings or infrastructure facilities as payments to investors in a BT project by a competent authority under laws on management and usage of public property, FSR should provide certain information about other projects as follows:

- Project location;

- Indices linked to the land use planning and the construction planning;

- Initial information about usefulness and size of the project;

- Initial information about project costs;

- Proposed deadline of transfer or lending of land associated with office buildings or infrastructure facilities;

- Other information (if any).

c) BT projects implemented according to the method of assignment of rights of business and operation of project works or services to investors

FSR needs to provide basic information about other projects, specifically including:

- Project location;

- Scope, duration or value of assignment of rights of business and operation of project works or services to investors;

- Initial information about usefulness and size of the project;

- Initial information about project costs;

- Other information (if any).

III. Impacts on environment, society, national defence and security

1. Environmental impacts

Preparing documentation on environmental impact assessment in accordance with law on environmental protection. In case where a project uses natural resources as main inputs (for example, energy, electricity, water, etc.), giving the thorough analysis of impacts of the project on natural resources and actions to be taken to minimize negative impacts.

2. Social impacts

Making the interpretation of elements affecting society during the project implementation period, such as resettlement support, gender equality, labor or job creation, etc., and measures to minimize negative impacts.

3. Impacts on national defence and security (if any)

In case where a project causes impacts on national defence and security, making the full analysis of these impacts and recommending measures to mitigate negative impacts.

IV. Demand forecasting

As a basis for assessment of the socio-economic efficiency and analysis of the financial plan of a project, FSR should analyze the number of users and demands for project works, products or services; make a forecast about the speed of growth in demands in the future, specifically including:

- Analyzing current demands: Based on the current state, scale and capacity of the project, determining the number of beneficiaries of the project.

- Forecasting future demands: Constructing (maximum, average or minimum) demand scenarios during the entire life cycle of the project.

V. Analysis of socio-economic effectiveness

1. Determining socio-economic costs and benefits

Making the detailed calculation of socio-economic costs and benefits of the project classified by the following groups of elements:

- Group of elements that are quantifiable and convertible into monetary value (may be used for calculation of socio-economic efficiency indices of the project according to the instructions given in Section V.2 in this Part).

- Group of elements that may be quantified but cannot be valuated (e.g. Benefits obtained owing to environmental improvements and those obtained due to enhancement of the economic growth and creation of more jobs, etc.).

- Group of qualitative elements (e.g. Benefits gained due to the increased connectivity between manufacturing areas and hubs that consume and improve the living standards of people residing within the project site, etc.).

2. Indices measuring the socio-economic efficiency of a project

a) Economic Net Present Value (ENPV)

ENPV is defined as the difference between benefits and costs arising in a computation period, which is converted into the present value.  The project will be deemed to achieve the socio-economic efficiency if ENPV is positive (>0). NPV is calculated according to the following formula:

Where:

B_t= Benefit of the t^thyear;

C_t= Cost of the t^thyear;

t = Year in the life cycle of the project (0, 1, 2,..., n);

n = Number of years during which the project is operated (project contract duration);

r_e= Economic discount rate of the project⁴.

b) Benefit-cost ratio (BCR)

BCR refers to the ratio of total benefit generated from investments to total cost incurred from investment in and operation of the project, which is converted into the present value.   The project will be deemed to achieve the socio-economic efficiency if BCR is greater than 1 (>1). BCR is calculated according to the following formula:

Where: B_t, C_t, t, n and r_eare the same as the above-stated ENPV calculation formula.

c) Economic Internal Rate of Return (EIRR)

EIRR refers to the maximum economic discount rate at which a project recovers its investment and operational costs, and breaks even.  EIRR will equal the discount rate (r_e) if ENPV = 0 and will be calculated by solving the following equation:

Where: Bt, Ct, t and n are the same as the above-stated ENPV calculation formula.

The project will be deemed to achieve the socio-economic efficiency if EIRR is greater than the Social Discount Rate (SDR): EIRR > SDR. SDR is defined according to regulations in each industry. In the absence of specific regulations, the entity preparing FSR may adopt SDR=10% or may suggest using other value by giving proper explanations about its selection.

3. Conclusions on the socio-economic efficiency of a project

Based on the analysis made according to instructions given in Section V.1 and Section V.2 in this Part, FSR should give conclusions on the socio-economic efficiency of the project.

In case of lack of prerequisites for determination of cost and benefit elements which may be quantified and converted into monetary values as a basis for calculation of indices measuring the socio-economic efficiency of the project, FSR should give conclusions on the socio-economic efficiency of the project based on other remaining elements.

VI. Financial analysis

1. Input parameters used in financial models

- Costs incurred during the life cycle of a project:Costs incurred during the entire life cycle of a project are constituted by total investment outlay and costs incurred from exploiting and operating the project during its entire life cycle.  Total investment outlay is defined according to laws on construction with respect to projects with construction packages or specialized laws with respect to projects without construction packages.  Costs incurred from exploiting and operating a project during its entire life cycle are equal to those related to operation and maintenance of works belonging to the project; costs incurred from remunerations paid to employees operating and servicing works belonging to the project; project management costs; supervision consultancy costs and provisional costs, etc.

- Revenues:Determining revenues generated from the project in each year (basic-, maximum- and minimum-level revenues) based on demand forecasting data (which are analyzed in detail in Section IV); prices and charges of commodities, services and other revenues of the project (taking into consideration legal bases for determination of prices and charges; the proposed schedule of increase in prices and charges).

- Other input parameters: Loan interest and maturity; inflation rate; exchange rate; depreciation rate and other parameters.

2. Analysis of financial plans:

Presenting the preliminary financial plan under the instructions of the Ministry of Finance, including the following information:

- Total investment;

- Structure of funding sources and presumptive capital mobilization plan;

- Recommended preferential treatment for assurance of the financial plan of a project (if any);

- The investor’s return on equity ratio;

- Estimated costs incurred during the entire period of operation of the project;

- Plan for recovery of investments and profits of the investor;

- Portion of State participation in the project (if any);

- Other financial indices referred to in Section VI.3 in this Part.

3. Financial indices used for assessment of the feasibility of a project

a)Except projects implemented under BT contracts, based on data of the financial plan and input parameters of the financial model, the financial feasibility of a project may be assessed by calculating the following indices:

- Net Present Value (NPV)

NPV of a project is the present value of the net cash flow during the entire life cycle of a project.   The project will be deemed to achieve the financial efficiency if NPV is positive (>0). NPV is calculated according to the following formula:

Where:

CF_t= Value of net cash flow refers to the difference between the amount of cash received (cash inflow) and the amount of cash spent (cash outflow) of a project in the t^thyear;

t = Year in the life cycle of the project (0, 1, 2,..., n);

n = Number of years during which the project is operated (project contract duration);

r = Discount rate (determined under the instructions of the Ministry of Finance).

- Internal Rate of Return (IRR)

This index indicates profits of a project, exclusive of the capital mobilization structure. IRR will be the discount rate (r) if NPV margin = 0, and may be calculated by solving the following equation:

Where: CF_t, t and n are the same as the above-stated NPV calculation formula.

For the purpose of assessment of the financial feasibility of a project, after being calculated, IRR needs to be compared with the following values:  (i) Weighted Average Cost of Capital (WACC); (ii) IRR of other similar projects or those in the same sectors; (iii) Minimum expected IRR of potential investors in projects – through conducting market tests during the project research and preparation period.  A project will be deemed financially feasible if IRR is greater than the (i) value and matches (ii) and (iii) values.

Based on particular conditions of each project, FSR can add indices measuring the feasibility of a financial plan under the instructions of the Ministry of Finance.

b) Projects implemented under BT contracts

- As for BT projects using unoccupied land, office buildings and other infrastructure facilities as payments to investors under laws on management and utilization of public property, taking the detailed inventory of unoccupied land plots, office buildings and other infrastructure facilities (including information about location, size, value and others) intended as payments to investors.  A project will be proved financially feasible only if unoccupied land, office buildings and other infrastructure facilities are defined clearly and compliant with laws, conform to 1/2,000 or 1/500-scale planning map (if any) with respect to projects using unoccupied land as payments to investors, and adheres to payment principles prescribed by laws on management and usage of public property.

- As for BT projects that make payments to investors in a form of assignment of the rights of business and operation of works and services created by the project, determining the scope, duration and value of such rights assigned to investors.

4. Conclusions on the financial feasibility of a project

Based on analyses referred to in the aforesaid Sections, and the nature of each project contract, FSR must give conclusions on the financial feasibility of the project.

VII. Project contract type

1. Bases for selection of project contract type

Based on interpretations of engineering proposals, demand forecasts and financial plans of the project, FSR shall determine whether the project is implemented in the model of investment made for business purposes or payments to investors are based on the quality of services, and concurrently, analyse the relevance of the project contract type to project conditions.

2. Responsibilities of parties involved in implementation of the project contract

Making the detailed interpretation of roles and responsibilities of involved parties during the entire life cycle of the project, including such parties as competent regulatory authorities, investors, project management enterprises and other related entities (e.g. lenders, input product or service suppliers, product underwriters and contractors, etc.).

In case of application of a BT contract, providing supplementary information about certain obligations to investors, possibly including: advance payments, compensation, support or resettlement with respect to unoccupied land used for implementation of other projects, and commitments to implementing other projects, etc.

VIII. Analysis of risks arising during the project implementation period

1. Analysis of major risks

Describing and assessing major risks likely to incur during the entire life cycle of a project, such as legal risks, risk in macroeconomic situations, social risks, risks in land tenure, environmental risks, market demand risks, design and construction risks, financial risks, operational risks and contract termination risks.  Making the analysis of probability and level of impacts caused by these risks on the project.

2. Mechanism for distribution and management of risks

Giving the detailed interpretation of the mechanism for distribution and management of risks (including risk minimization solutions), responsibilities shared between competent regulatory authorities and private partners (e.g. investors, project management enterprises, lenders, etc.) during the project implementation period.

IX. State support measures

1. Portion of State participation in a project (if any)

Based on the financial analysis results and the selected type of contract on the approved project, FSR should give the detailed interpretation of the following information:

- As for projects that need the State capital contribution to ensure their financial feasibility, giving information about the funding source and the value of the portion of the state investment according to the mid-term and annual public investment plan; the proposed method, plan and schedule of disbursement of funds to investorst⁵.

- As for projects using public property that the state contributes as capital participation in these projects, the entity preparing the project must specify value of public property stated in the decision on use of public property as capital participation in a PPP project under laws on management and usage of public property; methods, plans and schedules of transfer or assignment of public property to the investor.

- As for projects that need funds for payments to investors, giving information about the funding source and the value of the capital contribution portion according to the mid-term and annual public investment plan with respect to the source of funding for public investment, and the funding plan or the estimate with respect to recurrent state budget expenditures used for maintaining provision of public utilities, and state budget revenues generated from provision of public utilities; the method, plan and schedule of disbursement of funds to investors.

- As for projects applying BT contracts, giving information about unoccupied land, office buildings and infrastructure facilities (including information about their location, measurement, value and other related information); scope and duration of assignment of the rights of business and operation of project-related works and services to investors.

- As for projects that need funds for support for construction of auxiliary works, compensation, support and resettlement, based on the plan for compensation, support or resettlement which are analyzed at II.3 in this Part, specifying the funding source and the value of funds according to the mid-term and annual public investment plan; plan and schedule of disbursement of funds.

2. Investment incentives and guarantee

FSR must give the detailed interpretation of recommendations about investment incentives (including those tailor-made to industries, sectors or localities), types of guarantee or assurance of the Government and associated conditions as well as other required obligations assumed during the project contract implementation period.

X. Project implementation plan

1. Project preparation

Identifying the aggregate time of preparation of a project, including:

- Phase of preparation and assessment of FSR and investment policy decision (already completed).

- Phase of preparation, assessment and approval of FSR.

- Phase of selection of contractors (prequalification, bidding, negotiation and signing of the project contract; finalization of finances for the project and commencement of the project contract).

2. Project execution

Determining the duration of implementation of the project contract (including the date of termination of the project contract). With respect to projects with construction packages, specifying the duration of construction of works, the time of commencement of operation and transfer of project works.

In case where it is necessary to divide stages of implementation of the project for the purpose of decreasing the complexity of investment or increasing the feasibility of finances and the attractiveness of the project, FSR should analyse staging causes, give information about the project staging proposal and describe staging methods.

XI. Management of project implementation

1. Form and organization structure of management of implementation of PPP projects

FSR must make the interpretation of form and organization structure of management of implementation of projects by competent regulatory authorities, investors and project management enterprises over specific periods of time; the method of cooperation among competent regulatory authorities, investors and project management enterprises during the project implementation period.

As for projects with construction packages, investors and project management enterprises may choose the form of management of project under laws on construction. As for projects without construction packages, the form of management of project must be subject to relevant legislative regulations.

2. Tasks of management of implementation of projects

FSR may give the interpretation of tasks to be performed in the process of management of implementation of a project, including tasks and methods of supervision of the quality of project works; supervision of implementation of the project contract, assurance of the stable and continuing provision of products and services; the method of business and operation of project works and provision of services by the investor.

FSR should provide indices measuring the quality of a project in terms of engineering, operational, environmental, social, financial and implementation progress issues, etc., as a basis for preparing the invitation for bid documentation, request documentation, project contract, supervising the quality of the project work, product or service provided by an investor or the project management enterprise.

3. Management of implementation of BT projects

FSR should define competent regulatory authorities charged with directly managing or authorizing other entities to manage a project and the project management board which has been established, have appropriate competence and professional qualifications to cooperate with investors in supervision of quality of the project. Tasks, scope of and responsibilities for management of compliance with laws on construction must be specified.

E. CONCLUSIONS AND RECOMMENDATIONS

Summarizing main conclusions that have been analyzed above and concluding that the project is appropriate and feasible to be developed in a PPP model.  Then, recommending the competent authority to grant approval of FSR or giving other recommendations (if any). With respect to projects implemented under BT contracts, determining which issues need to be studied in detail at the project design and cost estimation phase.

APPENDIX IV

INSTRUCTIONS ON ASSESSMENT OF FEASIBILITY STUDY REPORTS FOR PPP PROJECTS

Based on the nature, scale, sector and contents of the FSR, the report on assessment of FSR shall be prepared by completing the information stated hereunder. As for FSR prepared by an investor, it shall be necessary to take into consideration other elements interpreted by the investor. The assessment body needs to give their comments in detail on each matter and suggest recommended actions to be taken in case there are contrary opinions or it is necessary to work with the entity preparing the project or the investor preparing FSR in making any necessary amendment or correction.

A. PROJECT OVERVIEW

This section must give general information about a project, including: Project name; name of the competent regulatory authority; name of the entity preparing the project or the investor authorized to prepare FSR; location, scale and capacity of the project, measurement of land to be used; technical requirements; total investment; state participation in the project (if any); project contract type; financial plan; project contract period; investment incentives and guarantee; other relevant information.

B. SYNTHESIS OF OPINIONS FROM RELATED ENTITIES AND BODIES

1. Synthesizing opinions from related entities and bodies.

2. Synthesizing judgements on impacts of the project according to information items given in Section I.6 of Part D in the Appendix III herein.

C. CONSOLIDATION OF ASSESSMENT RESULTS

I. Documentation checking

The assessment body shall give its assessment of:

- Adequacy of required documents and data or information.

- Relevance of legal bases for preparation of FSR.

- Compliance with laws during the period of preparation of FSR.

II. Assessment of contents of documentation

1. Necessity of an investment project

The assessment body shall assess the relevance of a FSR in terms of the following contents:

- Relevance of the project to the planning scheme and plan for economic and social development of an industry, region and the local socio-economic development plan.

- Urgency and necessity of an investment project.

- Effects of a project on a community and population living within the project site.

- Relevance of general and specific objectives to the current status of an industry, sector or locality, and capability of solving issues to meet the demands of a community or population.

- Advantages in implementing a project in a PPP form compared with other investment form.

- Level of effects of related projects.

2. Feasibility of a project

a) Assessment of technical feasibility

- Engineering and technological requirements: Assessing the relevance of an engineering or technological plan to the project scale or capacity, standards, norms and technical requirements concerning inputs; the availability and practicality of the chosen technology; the clarity and adequacy in the determination of main technical risks and the rationality of risk minimization plans; the applicability of indices measuring the technical quality of the project.

- Basic design: Collecting assessment opinions from specialized construction bodies according to laws on construction with respect to projects with construction packages or specialized laws with respect to projects without construction packages.

- Input elements: Assessing the relevance of capability of providing inputs to the scale and capacity of the project in each stage in order to ensure that inputs are aligned with the forecast about increase in demands.

- Output elements: Assessing the relevance of output elements to the scale, capacity of and demands for project works, products or services; assessing the relevance of indices measuring the quality of the project which are included in FSR.

b) Socio-economic efficiency of a project

- Contributions of a project to accomplishment of socio-economic tasks: The analysis of the socio-economic efficiency of a project serves the purpose of comparing benefits that may be obtained by implementation of the plan for investment in the project and those that may be obtained by implementation of the plan for maintenance of the current status and making none of investments. Additionally, in case where there are a lot of projects that need investments, the project proving the higher socio-economic efficiency than others will be preferred and will be selected depending on the capability of balancing state budget allocations for investment in the project.    Therefore, the assessment body needs to assess the relevance and accuracy of socio-economic costs and benefits, and economic indices (e.g. ENPV, BCR and EIRR). A project will be deemed to achieve the socio-economic efficiency if the above-mentioned indices meet the following requirements:

ENPV is positive (>0); BCR is greater than 1 (>1); EIRR is greater than the Social Discount Rate (SDR).

- Impacts of the project on environment: Documentation on assessment of environmental impacts of the project must be prepared and approved in conformity with applicable legislative regulations on environmental protection.  The assessment body must synthesize assessment opinions on the aforesaid documentation from specialized entities under laws on environment.

- Impacts of the project on society: Assessing the relevance of impacts in the FSR interpretation on different persons in the society, local community, disadvantaged persons incapable of paying fees or charges for project products or services, such as women, poor or disabled persons, etc.

- Impacts of the project on national defence and security (if any): With respect to projects in which national defence and security issues are addressed, assessing the appropriacy of impacts and minimization measures specified in FSR.

c) Financial feasibility

- Except BT projects, the assessment body may assess the relevance and accuracy of financial input elements, financial indices (e.g. NPV, IRR) and the preliminary financial plan of the project. A project will be deemed to achieve the financial efficiency if:

+ NPV is positive (>0).

+ IRR is greater than the value of (i) WACC and matches such values as (ii) IRR of other projects that are of similar kinds or in the same sector; (iii) minimum expected IRR of potential investors in the project.

+ In addition, with respect to FSR adding other indices measuring the feasibility of a financial plan of a project according to the instructions of the Ministry of Finance, the assessment body may carry out the supplementary assessment of these indices in order to assess the feasibility of that project.

- As for BT projects that uses unoccupied land, office buildings, other infrastructure facilities or rights of commercial use and operation of project works and services as payments to investors, a project will be deemed financially feasible if unoccupied land plots, office buildings or infrastructure facilities or rights of business and operation of project works and services are clearly specified, meet regulations of laws and adhere to payment principles prescribed in laws on management and use of public property and specialized laws.

- With respect to projects using state capital participation, assessing the relevance of the value of the portion of such participation and the amount of fund allocations specified in mid-term public investment plans; the relevance of value and purposes of use of public property specified in the decision on use of public property as capital participation in PPP projects under laws on management and use of public property or funds derived from retained revenues generated from provision of public services for payment to investors, or according to funding plans and estimate of regular expenditures, methods, plans and schedules of disbursement of funds to investors.

- As for group-C projects using public investments, delegation of authority to carry out the assessment of funding sources and capital balancing capabilities with respect to public investments shall be subject to law on public investment. This assessment shall be used as a basis for approval of FSR;

- Making the assessment of the relevance of investment incentives and guarantee policies.

3. Relevance of the project contract type

The assessment body shall assess the following contents of FSR:

- Relevance of the project contract type and contract term which are selected.

- Rationality of the division of responsibilities between parties involved in implementation of the project.

- Major risks which must be fully determined and consistent with those mentioned in financial scenarios;

- Likelihood of incurring risks and level of impacts of these risks on the project which must be identified in a full and duly manner;

- Risk minimization measures which must be determined in a duly manner.

4. Relevance of the plan for implementation of a project, mechanism for supervision and management of a project

The assessment body needs to carry out the assessment and give specific opinions on the relevance of the plan for implementation of the project and the mechanism for supervision and management of the project which are represented in the FSR.

D. REMARKS AND RECOMMENDATIONS

I. Remarks

Based on the aforesaid analyses, the assessment body shall consolidate remarks on FSR.

II. Recommendations

- If a FSR conforms to laws and is judged feasible to receive investments in a PPP form, the assessment body may recommend a competent authority to grant approval of this FSR. As for group-C projects, if there are at least two investors submitting project proposal documentation as prescribed in clause 2 of Article 24 in the Decree No. 63/2018/ND-CP and Article 4 herein, the assessment body may submit the selected project proposal documentation to the competent authority to seek its approval of the FSR.

- In case where such documentation is not consistent with contents of the FSR, the assessment body may report to the competent authority to consider granting its decision to choose either following plans:

+ Plan 1: Requesting the entity preparing the project and the investor to adjust the FSR.

+ Plan 2: Refuse to approve the FSR.

APPENDIX V.A

MAJOR OF PPP PROJECT CONTRACTS (EXEPT FOR BT PROJECT CONTRACTS)

Based on the nature, size and field of each PPP project (except for BT project contracts), the state competent authority shall arrange, amend and supplement articles of the contract in comply with each type of contract according to the following contents:

I. BASIS FOR SIGNING THE PROJECT CONTRACT

List out the legal documents used as basis of the contract signing such as:

- Laws, Decree and Circular on guiding the implementation of the PPP projects;

- Laws, Decree and Circular on guidance of relevant investment field of the project;

- Decrees of Decisions on approval of relevant plan in accordance with law on national of local socio-economic development plan related to the project;

- Decisions and other related documents of the competent agencies in the pre-investment period of the project;

- Other relevant legal documents.

II. THE CONTRACT’S PARTIES

Required information of the contract’s Parties includes:

a) The State competent agencies (Ministries, Sectors, Provincial People’s Committees or agencies authorized for signing and implementing contract of type B and C project according to regulation in Clause 4 Article 8 of the Government’s Decree No. 63/2018/ND-CP)

- Name of the state competent authority;

- Address;

- Phone and Fax number;

- Name and position of the representative;

- Authorization document (if any);

b) The investor

- Name of the investor (in Vietnamese, English and abbreviations, if any);

- Address;

- Phone and Fax number;

- Information of the enterprise registration certificate or investment registration certificates(Number, date and place of issuance, issuance authority) (if the investor is Vietnamese enterprise or foreign-invested enterprises established in Vietnam);

- Name and position of the legal representative;

(In case one of the contract’s parties is foreign investor, specify the name, nationality and identity papers of the investor; number of Enterprise registration Certificate or Investment registration Certificates, if any; address, phone number, fax number, name and position of the authorized representative).

c) The project enterprise (in case the investor and project enterprise join into one party to sign the contract with the state competent authority)

- Enterprise’s name (in Vietnamese, English and abbreviations, if any);

- Address;

- Phone and Fax number;

- Information of the enterprise registration certificate or investment registration certificates (Number, date and place of issuance, issuance authority);

- Name and position of the legal representative;

III. CONTENT OF THE PROJECT CONTRACT

IV. Attached appendixes and documents

Attached appendixes and documents agreed by the Parties in accordance with the type of contract, field, scale, features and requirements of the project implementation, include:

- Details on standards and requirement to implement the project (such as technical and technological standards and requirements; requirements on operation, business, exploitation of project works; requirements on safety and environmental protection etc.);

- Details of the project financial plan;

- Detailed content of project implementation progress.

APPENDIX V.B

MAJOR CONTENTS OF BT PROJECT CONTRACT

Based on the nature, size and field of the project, the BT project contract shall include the following contents:

I. BASIS FOR SIGNING THE PROJECT CONTRACT

List out the legal documents used as basis of the contract signing such as:

- Laws, Decree and Circular on guiding the implementation of the PPP projects;

- Laws, Decree and Circular on guidance of relevant investment field of the project;

- Decrees of Decisions on approval of relevant plan in accordance with law on national of local socio-economic development plan related to the project;

- Decisions and other related documents of the competent agencies in the pre-investment period of the project;

- Other relevant legal documents.

II. THE CONTRACT’S PARTIES

Required information of the contract’s parties includes:

a) The state competent authority (Ministry, Sector, Provincial People’s Committee or agency authorized for signing and implementing contract of type B and C project according to regulation in Clause 4 Article 8 of the Government’s Decree No. 63/2018/ND-CP).

- Name of the state competent authority;

- Address;

- Phone and Fax number;

- Name and position of the representative;

- Written authorization to sign and implement project contracts (if any);

b) The investor

- Name of the investor (in Vietnamese, English and abbreviation, if any);

- Address;

- Phone and Fax number;

- Information of the enterprise registration certificate or investment registration certificates(Number, date and place of issuance, issuance authority) (if the investor is Vietnamese enterprise or foreign-invested enterprises established in Vietnam);

- Name and position of the legal representative;

(In case one of the contract’s parties is foreign investor, specify the name, nationality and identity papers of the investor; number of Enterprise registration Certificate or Investment registration Certificates, if any; address, phone number, fax number, name and position of the authorized representative).

c) The project enterprise (in case the investor and project enterprise join into one party to sign the contract with the state competent authority)

- Enterprise’s name (in Vietnamese, English and abbreviations, if any);

- - Address;

- Phone and Fax number;

- Information of the enterprise registration certificate or investment registration certificates (Number, date and place of issuance, issuance authority);

- Name and position of the legal representative;

III. CONTENT OF THE PROJECT CONTRACT

IV. Attached appendixes and documents

Attached appendixes and documents agreed by the Parties in accordance with the type of contract, field, scale, features and requirements of the project implementation, include:

- Details on standards and requirement to implement the project (such as technical and technological standards and requirements; requirements on operation, business, exploitation of project works; requirements on safety and environmental protection etc.);

- Details on land fund, working office, infrastructure asset, rights of investor on franchising, exploitation of works and services;

- Details of the 1/2000 or 1/500 ratio construction planning of the land used as payment for investors applicable to projects using land funds for payment;

- Detailed content of project implementation progress.