Circular No. 08/2008/TT-BTC amending and supplementing Circular No. 108/2003/TT-BTC dated November 7, 2003 guiding the financial mechanism applicable to projects for handling household waste and solid urban waste using Official Development Assistance (ODA) sources.

CIRCULAR

Amending and supplementing Circular No. 108/2003/TT-BTC dated November 7, 2003 guiding the financial mechanism applicable to projects for treating household waste and solid urban waste using official development assistance (ODA) funds

____________________________________________

Pursuant to Decree No. 60/2003/NĐ-CP dated June 6, 2003 of the Government promulgating detailed regulations and guidance on the implementation of the Law on State Budget;

Pursuant to Decree No. 134/2005/NĐ-CP dated November 1, 2005 of the Government promulgating the Regulation on management of foreign borrowing and repayment;

Pursuant to Decree No. 131/2006/NĐ-CP dated November 9, 2006 of the Government promulgating the Regulation on management and use of official development assistance (ODA) funds;

Pursuant to Decree No. 77/2003/NĐ-CP dated July 1, 2003 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Implementing Circular No. 253/TTg-QHQT dated February 22, 2007 of the Prime Minister approving the supplementation of the financial mechanism applicable to projects for treating household waste and solid urban waste using ODA loans;
The Ministry of Finance guides the amendment and supplementation of the financial mechanism applicable to projects for treating household waste and solid urban waste stipulated in Circular No. 108/2003/TT-BTC dated November 7, 2003 of the Ministry of Finance (Circular No. 108) as follows:

1. Amend and supplement Point 2 Section B Part I of Circular No. 108 as follows:

“2. Regarding the financial mechanism applicable to projects for treating household waste and solid urban waste using ODA loans:

2.1. Ratio of disbursement/re-loan:

a. The ratio of central budget support (the ratio of ODA loan disbursement over the total ODA loan amount for each project or component for treating household waste and solid urban waste) shall be determined corresponding to the level of the locality's city and the scale of investment (capacity of the treatment plant) according to the table below:

b. Principles for determining and applying the above ratios:

- The scale of investment in the table above is the maximum scale of investment suitable for each city level, serving as the basis for determining the ratio of disbursement/re-loan of ODA loan funds for each specific program/project.

For provincial People's Committees that have requirements for large-scale investment exceeding the maximum scale of investment suitable for the corresponding city level in the table above, to align with future urban planning and development plans, the ratio of central budget disbursement will also be applied according to the city type with a similar scale of investment.

For example, Town A in Province X belongs to City Level IV but has a requirement to invest in a household waste treatment plant with a capacity of 150 tons/day (equivalent to the maximum investment scale of a City Level III). In this case, the central budget will only disburse 70%, and the Project Owner must re-borrow 30% from the ODA loan fund to invest in the plant according to the conditions for re-borrowing specified in Point 1.2 below.

The ratio of disbursement/re-loan in the table above shall not be applied to projects for constructing waste treatment areas, inter-city, inter-region, or inter-provincial solid waste treatment facilities. The Ministry of Finance will coordinate with relevant agencies to examine the ratio of disbursement/re-loan for each specific project of the aforementioned types to submit to the Prime Minister for decision.

2.2. Conditions for re-borrowing the portion of ODA loan for re-borrowing:

a. The provisions regarding conditions for re-borrowing shall be implemented in accordance with the general principles of the Regulation on re-borrowing foreign loan and grant funds of the Government and are specified as follows:

- The currency for re-borrowing is the Vietnamese Dong. The value of the re-borrowed amount in Vietnamese Dong will be determined based on the value of the foreign currency withdrawn each time and converted to Vietnamese Dong at the exchange rate published monthly by the Ministry of Finance on its website (http://www.mof.gov.vn)

- Interest rate for re-borrowing: a unified interest rate of 3% per annum is applied. This interest rate for re-borrowing includes the service fee for re-borrowing charged by the re-lending agency. Payment of the service fee for re-borrowing is carried out in accordance with the Regulation on re-borrowing foreign loan and grant funds of the Government.

- Duration of re-borrowing (including grace period): shall be determined by the Ministry of Finance in accordance with the payback period stated in the approved project feasibility report or the reassessment result of the re-lending agency, but not exceeding 20 years.

Grace period: shall be determined based on the construction period until the project is completed and put into operation as stated in the approved project feasibility report or the reassessment result of the re-lending agency, but not exceeding 5 years.

The start date for calculating the grace period and repayment term is the first withdrawal date of the project/component (unless otherwise agreed with the foreign lender).

- Interest during the grace period may be paid annually or capitalized and repaid during the principal repayment period (as agreed and decided specifically by the re-lending agency and the Project Owner).

- Repayment period (principal and interest): every six months.

b. For projects serving mountainous, highland, remote, and island cities if they apply special classification standards for cities as stipulated in Point 1 Article 14 of Decree No. 72/2001/NĐ-CP dated October 5, 2001 of the Government, the following re-borrowing conditions shall apply:

- Duration of re-borrowing: a maximum framework of 20 years, including 5 years of grace period.

- Interest during the grace period: interest for the first two years can be deferred and will be paid together with the interest of the next three years.

- Other re-borrowing conditions shall be implemented in accordance with the general provisions stipulated in Point 1.2.a. above.”

2. For projects for treating household waste and solid urban waste:

The provision on the currency for re-borrowing stipulated in Point 5 Section B Part I of Circular No. 108 does not apply to these types of projects, but the provision on the currency for re-borrowing stipulated in Point 1 of this Circular shall apply.

3. Implementation:

The financial mechanism provisions set out in Sections 1 and 2 of this Circular shall apply to new projects, those currently applying for Official Development Assistance (ODA) funding lists, or those that have been officially approved for ODA funding but have not yet been approved by the Prime Minister for the applicable financial mechanism, from the date this Circular takes effect. For projects that have already been approved for a financial mechanism prior to the effective date of this Circular, they shall continue to be implemented according to the previously approved financial mechanism.

This Circular shall take effect fifteen days after its publication in the Official Gazette. Other provisions in Circular No. 108/2003/TT-BTC dated November 7, 2003, issued by the Ministry of Finance, guiding the financial mechanisms applicable to environmental sanitation projects funded by ODA, shall remain in force.

During the implementation of this Circular, if there are any difficulties, relevant agencies and units are requested to promptly report them to the Ministry of Finance for study, amendment, and supplementation to ensure appropriateness./.