Circular 22/2022/TT-BGTVT feasibility study reports of investment projects in transport sector

CIRCULAR

Guiding a number of contents in prefeasibility study reports and feasibility study reports of investment projects in the form of public-private partnership, and build-operate-transfer contracts in the transport sector^[1]

Pursuant to the June 18, 2020 Law on Investment in the Form of Public-Private Partnership;

Pursuant to the January 11, 2022 Law Amending and Supplementing a Number of Articles of the Law on Public Investment, Law on Investment in the Form of Public-Private Partnership, Law on Investment, Housing Law, Bidding Law, Electricity Law, Law on Enterprises, Law on Excise Tax, and Law on Enforcement of Civil Judgments;

Pursuant to the Government’s Decree No. 28/2021/ND-CP of March 26, 2021, providing the financial management mechanism applicable to investment projects in the form of public-private partnership;

Pursuant to the Government’s Decree No. 35/2021/ND-CP of March 29, 2021, detailing and guiding the implementation of the Law on Investment in the Form of Public-Private Partnership;

Pursuant to the Government’s Decree No. 12/2017/ND-CP of February 10, 2017, defining the functions, tasks, powers and organizational structure of the Ministry of Transport;

At the proposal of the Director of the Public-Private Partnership Department;

The Minister of Transport promulgates the Circular guiding a number of contents in prefeasibility study reports and feasibility study reports of investment projects in the form of public-private partnership (below referred to as PPP projects), and build-operate-transfer contracts (below referred to as BOT contracts) in the transport sector.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

1. This Circular guides a number of contents in prefeasibility study reports and feasibility study reports of PPP projects, and BOT contracts in the transport sector, including socio-economic efficiency indicators; frame return on equity; indexes for quality evaluation of infrastructure facilities and systems provided by project enterprises; and duration of depreciation of infrastructure facilities and systems.

2. For build-transfer-operate (BTO) contracts, build-own-operate (BOO) contracts, operate-manage (O&M) contracts, build-transfer-lease (BTL) contracts, build-lease-transfer (BLT) contracts and mixed contracts: It is required to comply with this Circular and relevant regulations to apply suitable contents to different types of contract and specific characteristics of different fields or projects upon preparation of prefeasibility study reports and feasibility study reports.

Article 2. Subjects of application

This Circular applies to organizations and individuals involved in preparation of prefeasibility study reports and feasibility study reports of PPP projects in the transport sector and BOT contracts.

Chapter II

SOCIO-ECONOMIC EFFICIENCY INDICATORS; FRAME RETURN ON EQUITY; INDEXES FOR QUALITY EVALUATION OF INFRASTRUCTURE FACILITIES AND SYSTEMS PROVIDED BY PROJECT ENTERPRISES; AND DURATION OF DEPRECIATION OF INFRASTRUCTURE FACILITIES AND SYSTEMS

Article 3. Socio-economic efficiency indicators

1. Socio-economic performance indicators of a project include: economic net present value (ENPV); benefit-cost ratio (BCR); and economic internal rate of return (EIRR). The calculation of the above indicators must comply with Part IV, Form No. 01 provided in Appendix II, and Part IV, Form No. 01 provided in Appendix III, to the Government’s Decree No. 35/2021/ND-CP of March 29, 2021, detailing and guiding the implementation of the Law on Investment in the Form of Public-Private Partnership.

2. Socio-economic benefits of projects

 Socio-economic benefits of a project are divided into the following groups:

a/ Group of benefits that are quantitatively measurable and convertible into money, including: benefits gained from reduction of vehicle operation costs and benefits gained from saving of goods and passenger transportation time.

b/ Group of benefits that are quantitatively measurable but impossible to be  valuated, including: benefits gained from reduction of environmental impacts in terms of emissions, dust or noise; benefits gained from promotion of economic growth, increase of employment or building of the capacity of passenger and goods transportation; and benefits gained from reduction of traffic accidents.

c/ Group of benefits that are only qualitatively measurable, including: benefits gained from increase of connectivity among regions and benefits gained from employment generation and improvement of lives of people in the project-covered areas.

d/ Units preparing prefeasibility study reports and feasibility study reports may supplement other benefits in addition to the benefits mentioned at Points a, b and c, Clause 2 of this Article, ensuring conformity with different types of contract,  specific characteristics of different fields and projects, and relevant regulations.

e/ If not having sufficient conditions to identify benefits that are quantitatively measurable and convertible into money for calculation of socio-economic efficiency indicators of a project, the unit preparing the prefeasibility study report and feasibility study report may evaluate socio-economic efficiency of the project based on the remaining groups of benefits.

Article 4. Frame return on equity

1. Cost of equity of investors

Cost of equity of an investor, taking into account risk and inflation factors, shall be determined according to the following formula:

i = i_v + f

In which:

i: cost of equity of the investor;

i_v: lending interest for mobilization of investment capital, which shall be determined in reference to medium- and long-term lending interest rates of at least 3 commercial banks; and loan interest rates of similar projects as a basis for formulating the financial plan of the prefeasibility study report and feasibility study report (if any). The lending interest for mobilization of investment capital shall be determined at the last time within 3 months before preparation of the prefeasibility study report and feasibility study report;

f: inflation rate, which shall be determined on the basis of the average consumer price index (CPI) in the last 10 years as announced by the General Statistics Office of Vietnam, considering exclusion of years seeing large CPI fluctuations.

2. Frame return on equity

Based on relevant regulations, socio-economic conditions and characteristics of a project, the project preparation unit shall set the level of return on equity of an investor tin the financial plan of the prefeasibility study report and feasibility study report, ensuring that:

a/ The maximum return on equity does not exceed the cost of equity (i) specified in Clause 1 of this Article;

b/ The minimum return on equity is not lower than the lending interest for mobilization of investment capital (i_v) specified in Clause 1 of this Article.

Article 5. Indexes for quality evaluation of infrastructure facilities and systems provided by project enterprises

Indexes for quality evaluation of infrastructure facilities and systems provided by project enterprises include the level of satisfaction of infrastructure facilities and systems provided by project enterprises with regulations on survey, designing, construction, operation and maintenance according to standards and technical regulations applicable to different projects and regulations on quality of works. The evaluation of the level of satisfaction must comply with specialized laws.

Article 6. Duration of depreciation of infrastructure facilities and systems

The duration of depreciation of infrastructure facilities and systems of projects must comply with Clause 5, Article 1 of the Ministry of Finance’s Circular No. 147/2016/TT-BTC of October 13, 2016, amending and supplementing a number of articles of the Ministry of Finance’s Circular No. 45/2013/TT-BTC of April 25, 2013, guiding the management, use and depreciation of fixed assets.

Chapter III

ORGANIZATION OF IMPLEMENTATION

Article 7. Transitional provisions

1. For projects for which investment policy has been decided but which have not yet been approved by competent authorities before the effective date of this Circular, project preparation units shall update contents in feasibility study reports in accordance with this Circular without causing change of the investment policy.

2. For projects for which investment policy decisions and project approval decisions have been issued by competent authorities before the effective date of this Circular, they must continue to comply with such investment policy decisions and project approval decisions.

Article 8. Effect

1. This Circular takes effect on November 1, 2022.

2. In case the legal documents referred to in this Circular are amended, supplemented or replaced, the amending, supplementing or replacing legal documents shall prevail.

Article 9. Organization of implementation

The Chief of the Office, the Chief of the Inspectorate, Directors, the General Director of the Directorate for Roads of Vietnam, and directors of administrations under the Ministry of Transport, directors of project management units under the Ministry of Transport, directors of provincial-level Departments of Transport, heads of related agencies and units, and related individuals shall implement this Circular.-

For the Minister of Transport
Deputy Minister
NGUYEN DUY LAM