Circular No. 86/2019/TT-BTC dated December 03, 2019 of the Ministry of Finance guiding the determination of the reserve price in auction for lease or definite-term transfer of the right to operate road infrastructure assets invested and managed by the State

CIRCULAR

Guidingthe determination of the reserve price in auction for lease or definite-term transfer of the right to operate road infrastructure assets
invested and managed by the State.

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Pursuant to the Law No. 11/2012/QH13 on Prices dated June 20, 2012 and its guiding documents;

Pursuant to the Law No. 15/2017/QH14 on Management and use of public property dated June 21, 2017;

Pursuant to the Law No. 01/2016/QH14 on Property Auction dated November 17, 2016;

Pursuant to the Government s Decree No. 33/2019/ND-CP dated April 23, 2019 prescribing the management, use and operation of road transportation infrastructure assets;

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

At the request of Director of Price Management Department,

The Minister of Finance promulgates the Circularguiding the determination of the reserve price in auction for lease or definite-term transfer of the right to operate road infrastructure assets invested and managed by the State.

Article 1. Scope of regulation

This Circular guides the determination of the reserve price in auction for lease or definite-term transfer of the right to operate road infrastructure assets invested and managed by the State.

Article 2. Subjects of application

1. The lessee or transferee is an enterprise that rents and accepts the transfer of the right to operate road infrastructure assets invested and managed by the State for a definite term in accordance with the Government’s Decree No. 33/2019/ND-CP dated April 23, 2019 prescribing the management, use and operation of road transportation infrastructure assets.

2. The lessor or transferor is an agency assigned to manage road traffic infrastructure assets invested and managed by the State in accordance with the Government’s Decree No. 33/2019/ND-CP dated April 23, 2019 prescribing the management, use and operation of road transportation infrastructure assets.

3. Other relevant organizations and individuals.

Article 3. Principles of determining the reserve price in auction for lease or definite-term transfer of the right to operate road infrastructure assets

1. Ensuring reasonable and valid actual cost recovery to form and manage assets, in accordance with the State s socio-economic development policies and guidelines in each period.

2. Being compatible with the market price of assets of the same type or having the same technical standards and quality at the time of leasing or transferring with the equivalent leasing or transferring purpose.

3. Complying with the regulations, standards, expenditure norms and economic-technical norms promulgated by competent State agencies.

Article 4. Determination ofthe reserve price in auction for lease of the right to operate road infrastructure assets

1. The reserve price in auction for lease of the right to operate road infrastructure assets is the lowest initial price in auction for lease of the right to operate road infrastructure assets

2.The reserve price in auction for lease of the right to operate road infrastructure assetsshall be determined on the basis of the market rent price of assets of the same type or having the same technical standards and quality at the time of leasing with the equivalent leasing purpose; or estimated revenue and expenses derived from the operation of assets during the leasing term in case there is no asset of the same type or having the same technical standards and quality at the time of leasing with the equivalent leasing purpose for comparison.

3. Thereserve price in auction for lease of the right to operate road infrastructure assetsspecified in this Article shall be determined by the pricing methods and valuation methods from the system of Vietnam’s valuation standards specified by the Ministry of Finance, ensuring that each asset must be applied with at least two (02) different methods submitted to the Ministry of Transport or the People s Committees of the provinces or municipalities for consideration and decision.

4. Based on the specific characteristics and conditions on supply and market of assets to be determined of reserve price, the Ministry of Transport or the People s Committees of the provinces or municipalities shall propose and take responsibility for the selection of the pricing methods and valuation methods from the system of Vietnam’s valuation standards specified by the Ministry of Finance which are suitable for the assets to be determined of the reserve price, in accordance with the Government s Decree No. 33/2019/ND-CP dated April 23, 2019 dated April 23, 2019 prescribing the management, use and operation of road transportation infrastructure assets.

When applying multiple pricing methods and valuation methods, agencies and units in charge of determining the reserve price shall assess and clearly state the major methods and the methods used for testing and comparing results, thus analyzing, calculating and then proposing the reserve price in auction for lease of the right to operate road infrastructure assets

5. If the Ministry of Transport or the People s Committees of the provinces or municipalities use a pricing method or valuation method, they should clearly state the reasons and give practical proofs for their use of the method.

Article 5. Determination of thereserve price in auction for definite-term transfer of the right to operate road infrastructure assets

1. The reserve price in auction for definite-term transfer of the right to operate road infrastructure assets is the lowest initial price in auction for definite-term transfer of the right to operate road infrastructure assets (excluding maintenance costs of road infrastructure assets).

2. The reserve price in auction for definite-term transfer of the right to operate road infrastructure assets shall be determined on the basis of the residual value of the assets at the time of transferring after being revaluated, the volume of freight traffic (for roads), time for depreciation of the remaining assets, additional investment value, estimated revenue and expenses derived from asset operation during the transfer term.

Where:

a) The residual value of assets at the time of transferring, the time for depreciation of the remaining assets shall be determined in accordance with the law, including the Ministry of Finance s regulations on management and depreciation of property.

b) The additional investment value means the value transferred in line with the plan approved by competent agencies under the law on investment and relevant laws to the enterprise accepting the definite-term transfer of the right to operate road infrastructure assets which is in charge of investing in the project.

c) The volume of freight traffic (for roads), estimated revenue and expenses derived from the operation of assets during the transfer term shall be determined in line with the proposal, and ensured to be suitable to the specific characteristics and conditions on supply and market of each asset under the responsibility of the Ministry of Transport or the People s Committees of provinces or municipalities

d) Other reasonable and valid arising expenses (if any):

d1) Expenses for repayment of loan principals and interests shall be determined on the basis of a loan agreement or contract for investment and construction of road infrastructure assets. If the principals and interest are already included in the value of the assets, these expenses must be deducted from the remaining value of the assets.

d2) Expenses in service of management and operation of assets’ manager (the transferor) suitable to each type of asset during the transfer term of the right to operate road traffic infrastructure assets, including:

- Managerial expenses, including payables to managers such as wages, allowances, social insurance, health insurance, unemployment insurance and trade union fees of the asset operation managers. The determination of wages costs for managerial staff shall comply with the law on wages and other relevant legal documents in line with each type of road infrastructure asset.

- Expenses for materials used for management, such as stationery, reparation costs of fixed assets, machinery, equipment, tools and instruments...

- Expenses for office supplies used for management.

- Expenses for depreciation of shared fixed assets, such as working offices of departments, warehouses, architectural objects, means of transport and transmission, management machines and equipment used in offices (if any).

- Taxes, fees and charges as prescribed by law.

- Land rental (if any).

- Expenses for services purchased for managerial sections, including expenses for electricity, water, telephone services; expenses for consultancy on surveys and construction of renting and transferring plans (if any).

- Expenses in cash other than the above-mentioned expenses, including expenses for conferences, working-trip expenses, transportation expenses, expenses for female employees, payment of conference participation expenses and other reasonable and valid expenses related to the management of road infrastructure assets.

The expenses in service of management and operation, which already have a system of economic-technical norms and policies promulgated by competent agencies or prescribed by law (laws on taxation, accounting, statistics and relevant laws) and whose the prices must be set by the State, shall be calculated according to those regulations; If the expenses do not yet have a system of economic-technical norms and regulations on procurement and expenditures, the heads of management and operation agencies and units shall decide the approvals and take responsibility for their decisions.

In case the expenses are related to many different products, tasks and jobs that cannot be separated, such as depreciation of assets; wages, social insurance, health insurance, unemployment insurance and trade union fees; expenses for management and operations, etc., they should be gathered and allocated according to criteria prescribed by relevant laws for each product or task.

3. After determining the reserve price in auction for definite-term transfer of the right to operate road infrastructure assets according to the guidance in Clause 2, Article 5 of this Circular, for each asset to be determined of the reserve price in auction for definite-term transfer of the right to operate road infrastructure assets, the Ministry of Transport or the People s Committees of provinces or municipalities shall base on specific characteristics and conditions on supply and market of such asset to select and propose at least one (01) more pricing method or valuation method in the system of Vietnam’s valuation standards specified by the Ministry of Finance, which are suitable for the asset to be determined of the reserve price, under the Government s Decree No. 33/2019/ND-CP dated April 23, 2019 dated April 23, 2019 prescribing the management, use and operation of road transportation infrastructure assets and this Circular to determine the reserve price of such asset.

When applying multiple pricing methods and valuation methods, agencies and units in charge of determining the reserve price shall assess and clearly state the major methods and the methods used for testing and comparing results, thus analyzing, calculating and then proposing the reserve price in auction for definite-term transfer of the right to operate road infrastructure assets.

4. If the Ministry of Transport or the People s Committees of the provinces or municipalities use a pricing method or valuation method, they should clearly state the reasons and give practical proofs for their use of the method.

Article 6. Organization of implementation

1. This Circular takes effect from January 20, 2020.

2. In case legal documents serving as legal basis or being referenced in this Circular are amended, supplemented or replaced, the newly amended or supplemented legal documents shall prevail.

3. In the course of implementation, if any problems arise, agencies and units are requested to report them to the Ministry of Finance for consideration and settlement.