Circular No. 120/2018/TT-BTC dated December 10, 2018 of the Ministry of Finance on prescribing return on equity of investors, State contribution to projects and financial statement of completed PPP work items of projects on construction of Eastern Sections of the North – South expressway during 2017 – 2020

CIRCULAR

Prescribing return on equity of investors, payment of the State-contributed investment capital, and finalization of completed items of public-private partnership projects under the project on construction of a number of sections of the eastern North-South Expressway during 2017-2020^[1]

Pursuant to the November 26, 2013 Bidding Law;

Pursuant to the June 18, 2014 Law on Public Investment;

Pursuant to the June 18, 2014 Construction Law;

Pursuant to the November 26, 2014 Law on Investment;

Pursuant to the June 25, 2015 Law on the State Budget;

Pursuant to the National Assembly’s Resolution No. 52/2017/QH14 of November 22, 2017, on the policy on investment in the project on construction of a number of sections of the eastern North-South Expressway during 2017-2020;

Pursuant to the Government’s Decree No. 163/2016/ND-CP of December 21, 2016, detailing and guiding the Law on the State Budget;

Pursuant to the Government’s Decree No. 63/2018/ND-CP of May 4, 2018, on investment in the form of public-private partnership;

Pursuant to the Government’s Decree No. 30/2015/ND-CP of March 17, 2015, detailing a number of articles of the Law on Bidding regarding investor selection;

Pursuant to the Government’s Decree No. 32/2015/ND-CP of March 25, 2015, on management of construction investment costs;

Pursuant to the Government’s Decree No. 59/2015/ND-CP of June 18, 2015, on management of construction investment projects;

Pursuant to the Government’s Decree No. 42/2017/ND-CP of April 5, 2017, amending and supplementing a number of articles of the Government’s Decree No. 59/2015/ND-CP of June 18, 2015, on management of construction investment projects; 

Pursuant to the Government’s Decree No. 77/2015/ND-CP of September 10, 2015, on medium-term and annual public investment plans;

Pursuant to the Government’s Decree No. 87/2017/ND-CP of July 26, 2017, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

In furtherance of the Government’s Resolution No. 20/NQ-CP of March 28, 2018, on the project on construction of a number of sections of the eastern North-South Expressway during 2017-2020;

At the proposal of the Director of the Department of Investment;

The Minister of Finance promulgates the Circular prescribing return on equity of investors, payment of the State-contributed investment capital, and finalization of completed items of public-private partnership projects under the project on construction of a number of sections of the eastern North-South Expressway during 2017-2020.

Chapter I

GENERAL PROVISIONS

Article 1.Scope of regulation

This Circular prescribes return on equity of investors, payment of the State-contributed investment capital, and finalization of completed items of public-private partnership projects under the project on construction of a number of sections of the eastern North-South Expressway during 2017-2020 (below referred to as PPP projects) prescribed in the Government’s Resolution No. 20/NQ-CP of March 28, 2018 (below referred to as Resolution No. 20/NQ-CP).

Article 2.Subjects of application

This Circular applies to competent state agencies, and agencies and units assigned to manage the State-contributed investment capital in PPP projects (bellowed referred to as agencies assigned to manage the State-contributed investment capital), investors, project enterprises, and agencies, organizations and individuals involved in the implementation of PPP projects under the project on construction of a number of sections of the eastern North-South Expressway during 2017-2020 prescribed in Resolution No. 20/NQ-CP.

Chapter II

SPECIFIC PROVISIONS

Article 3.Determination of investors’ return on equity

1. The Ministry of Transport shall determine and be responsible for the profit of each PPP project in conformity with the profit levels prescribed by the Ministry of Transport under Clause 2, Article 73 of the Government’s Decree No. 63/2018/ND-CP of May 4, 2018, on investment in the form of public-private partnership, to serve as a basis for formulation and approval of feasibility study reports and bidding dossiers for investor selection.

2. The profit level prescribed in Clause 1 of this Article shall be calculated based on the average return on equity (%) of an investor as prescribed in Clause 3, Article 1 of Resolution No. 20/NQ-CP. The investor’s return on equity shall be calculated from the time a PPP project is commissioned as permitted by a competent authority.

3. The investor’s return on equity prescribed in the project contract shall be determined via bidding for investor selection. In case there is only one investor having passed prequalification, a competent state agency shall report to the Government for consideration and decision on the investor’s return on equity.

Article 4.The State-contributed investment capital in PPP projects

1. The State-contributed investment capital in PPP projects must comply with Clause 1, Article 1 of Resolution No. 20/NQ-CP.

2. The State’s capital amount contributed as partial financial support for construction expenses shall be determined based on the result of bidding for selection of an investor to implement a PPP project.

3. The State-contributed investment capital in PPP projects shall be included in the state budget-funded medium-term public investment plan for the 2016-2020 period allocated for national important projects under the National Assembly’s Resolution No. 26/2016/QH14 of November 10, 2016, on the 2016-2020 medium-term public investment plan, and Resolution No. 52/2017/QH14 of November 22, 2017, on the policy on investment in the project on construction of a number of sections of the eastern North-South Expressway during 2017-2020.

Article 5.Management of payment of the State-contributed investment capital in PPP projects

1. The management and payment of public investment capital allocated for construction items performed by state agencies must comply with the regulations on management and payment of state budget-funded investment capital.

2. For the State’s capital amount contributed as partial support for construction expenses, the State shall make payment for the value of the completed construction volume after an investor has disbursed 50% of its/his/her equity, and fully satisfies the conditions for loan disbursement as prescribed in Clause 1, Article 1 of Resolution No. 20/NQ-CP, in adherence to the following principles:

a/ The pro rata co-payment for the State’s investment capital, commercial loan, and investor’s equity shall be stated in the project contract between the competent state agency and the investor;

b/ The payment shall be made according to the completed construction volume or value which was tested for acceptance, and included in the state budget-funded medium-term and annual public investment capital plans approved by competent authorities for implementation of PPP projects.

3. The allocation and inspection of allocation of public investment capital as partial support for construction expenses must comply with the regulations on management and payment of state budget-funded investment capital.

Article 6.Control of payment

1. For construction items performed by state agencies

Dossiers and documents on advance payment and payment; contents of advance payment and payment for the completed construction volume; the State Treasury’s principles of payment control; and the time limits for advance payment and payment must comply with the Ministry of Finance’s Circular No. 08/2016/TT-BTC of January 18, 2016, on management and payment of state budget-funded investment capital; Circular No. 108/2016/TT-BTC of June 30, 2016, amending and supplementing a number of articles of Circular No. 08/2016/TT-BTC of January 18, 2016, on management and payment of state budget-funded investment capital; and Circular No. 52/2018/TT-BTC of May 24, 2018, amending and supplementing Circular No. 08/2016/TT-BTC of January 18, 2016, and Circular No. 108/2016/TT-BTC of June 30, 2016, on management and payment of state budget-funded investment capital.

2. For the State’s investment capital amount contributed as partial support for construction expenses:

a/ The agency assigned to manage the State-contributed investment capital shall send a legal dossier to the State Treasury office where it opens its account, which must comprise:

- A project contract and payment-related contract annexes (if any) (which shall be submitted only once at the time of request for initial payment);

- A plan on public investment capital allocated by a competent authority to implement the PPP project;

- A table summarizing the value of completed construction volume requested for payment under the project contract, made by the investor and certified by the agency assigned to manage the State-contributed investment capital in the PPP project (Appendix No. 01);

- A written request for payment of investment capital, made by the agency assigned to manage the State-contributed investment capital in the PPP project (Appendix No. 02);

- A money transfer document in accordance with the Ministry of Finance’s regulations on the system of accounting documents;

- The document certifying the investor’s full disbursement of equity prescribed in Clause 1, Article 1 of Resolution No. 20/NQ-CP and full satisfaction of loan disbursement conditions under the project contract, made by the agency assigned to manage the State-contributed investment capital.

b/ Payment principles

- The allocation and inspection of allocation of public investment capital as partial support for construction expenses of PPP projects must comply with the regulations applicable to the state budget-funded investment capital;

- After receiving documents on detailed allocation of public investment capital plans of ministries, sectors and localities, the State Treasury shall control the payment in accordance with this Circular;

- The State Treasury shall base itself on dossiers of request for payment submitted by agencies assigned to manage the State-contributed investment capital and project contracts to control the payment under regulations;

- In case a dossier of request for payment is required to be supplemented, the State Treasury shall, within 4 working days after receiving such dossier, issue a notice on payment refusal or send a notice to the agency assigned to manage the State-contributed investment capital for completion of the dossier under regulations;

- The total capital amount to be paid to investors must not exceed the State-contributed investment capital approved by a competent authority. The capital amount to be paid to investors in a year must not exceed the capital plan allocated for PPP projects in that year. The accumulated capital amount to be paid for PPP projects must not exceed the assigned medium-term public investment plan;

- The time limit for payment of a capital plan must comply with the Ministry of Finance’s regulations on management and payment of state budget-funded investment capital;

- Agencies requesting the payment of the State-contributed investment capital shall take responsibility before law and competent persons for the identification of investors that have fully disbursed their equity amounts and satisfy loan disbursement conditions in accordance with project contracts; take responsibility for the accuracy of construction volume completed and value requested for payment; and ensure the validity of statistics and documents in dossiers submitted to the State Treasury and competent state agencies.

Article 7.Finalization of completed items of PPP projects

1. Finalization principles

After a PPP project is completed, tested for acceptance, handed over and commissioned, its construction investment capital shall be finalized according to the Ministry of Finance’s Circular No. 09/2016/TT-BTC of January 18, 2016, and Circular No. 64/2018/TT-BTC of July 30, 2018, on finalization of state-funded completed projects, and this Circular.

2. Making, submission and approval of finalization reports

a/ Agencies making finalization reports:

- Agencies and units assigned by the Ministry of Transport to manage the State-contributed investment capital shall make finalization reports for the investment capital amounts covering construction items performed by state agencies.

- Investors shall make finalization reports for the completed project items they perform;

b/ A dossier submitted for approval of finalization reports (including 1 set to be submitted to the agency verifying and approving finalization reports) must comply with the Ministry of Finance’s circulars on finalization of state-funded completed projects, and project contracts, and project contract annexes (if any);

c/ Competence to approve finalization reports: the Minister of Transport;

d/ Agency verifying finalization reports: the Ministry of Transport;

dd/ Audit of finalization reports: The Ministry of Transport shall agree in project contracts with investors on the hiring of, and principles for selecting, capable and experienced independent audit firms to audit the value of investment capital for construction of project items.

e/ Contents of verification of finalization reports must comply with the Ministry of Finance’s circulars on finalization of state-funded completed projects;

g/ The time limit for finalization must comply with Clause 7, Article 24 of the Ministry of Finance’s Circular No. 88/2018/TT-BTC of September 28, 2018, prescribing the financial management of investment projects in the form of public-private partnership and expenses for investor selection;

h/ The Ministry of Transport shall, after making the finalization of completed project items, send finalization reports to the Ministry of Finance for summarization and monitoring.

Article 8.Implementation provisions

1. This Circular takes effect on January 23, 2019.

2. In the course of implementation of this Circular, if relevant legal documents referred to in this Circular are amended, supplemented or replaced, the amending, supplementing or replacing documents shall be complied with.

3. Any problems arising in the course of implementation of this Circular should be promptly reported in writing to the Ministry of Finance for study and appropriate amendment and supplementation.-

For the Minister of Finance
Deputy Minister
TRAN VAN HIEU

* The appendices to this Circular are not translated.