Circular No. 19/2019/TT-BGTVT provides detailed guidance on investment areas and contents of feasibility study reports for public-private partnership (PPP) projects in the transportation sector.

Circular

Detailed guidance on the investment field and the content of feasibility study reports for projects invested in under the public-private partnership model in the transportation sector

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Pursuant to the Construction LawNo. 50/2014/QH13 dated June 18, 2014;

Pursuant to the Investment Law number 67/2014/QH13 dated November 26, 2014;

Pursuant to Decree No. 63/2018/NĐ-CP dated May 4, 2018 of the Government on public-private partnership investment;

Pursuant to Decree No. 12/2017/NĐ-CP dated February 10, 2017, issued by the Government on the functions, tasks, powers, and organizational structure of the Ministry of Transport;

At the proposal of the Director of the Department of Transport Infrastructure InvestmentNo.Public-Private Partnership

The Minister of Transport issues this Circular providing detailed guidance on the investment field and the content of feasibility study reports for projects invested in under the public-private partnership model in the transportation sectorNo.This Circular provides detailed guidance on the investment field and the content of feasibility study reports for projects invested in under the public-private partnership model in the transportation sector.

Chapter 1

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular applies to agencies, organizations, and individuals related to the implementation of projects invested in under the public-private partnership model (hereinafter referred to as the PPP model) in the transportation sector.

Article 2. Applicability

1. This Circular applies to agencies, organizations, and individuals related to the implementation of projects invested in under the public-private partnership model (hereinafter referred to as the PPP model) in the transportation sector.

2. This Circular does not apply to Build-Transfer contracts using land funds to pay investors.

Article 3. General provisions regarding feasibility study reportsi

1. The feasibility study report for projects invested in under the PPP model (hereinafter referred to as the feasibility study report) shall include the main contents as prescribed in Clause 1, Article 29 of Decree No. 63/2018/ND-CP dated May 4, 2018 of the Government on investment under the public-private partnership model (hereinafter referred to as Decree No. 63/2018/ND-CP) and this Circular. In addition, the feasibility study report must include the contents as guided in Circular No. 09/2018/TT-BKHĐT dated December 28, 2018 of the Minister of Planning and Investment (hereinafter referred to as Circular No. 09/2018/TT-BKHĐT).

2. For projects with construction components, the feasibility study report must include the basic design as prescribed by construction laws.

Article 4. Investment in the transportation sector

Projects for constructing, upgrading, operating, managing infrastructure works, and providing public services in the following fields:

1. Roadways;

2. Railways;

3. Inland waterways;

4. Maritime;

5. Aviation.

Chapter 2

CONTENTS OF THE FEASIBILITY STUDY REPORT

Article 5. Basis for preparing the feasibility study report

The basis for preparing the feasibility study report includes:

1. Laws, decrees, and circulars guiding the implementation of projects under the PPP model;

2. Laws, decrees, and circulars guiding the industry and investment field of the project;

3. Resolutions or decisions approving relevant plans according to the law on planning, national socio-economic development plans, industry and field development plans, regional and local development plans related to the project;

4. Decisions and documents of competent authorities at each stage of project preparation, review, and investment decision-making (except for PPP Group C projects);

5. Other relevant legal documents (if any).

Article 6. Necessity and investment objectives

1. Detailed explanation of the general context:

a) Explanation of the general context of the country's and locality's socio-economic situation during the period the project is implemented; the development of the related transportation system; natural conditions and environment affecting the project;

b) Overview of the industry and field proposed by the project, direct and indirect impacts of specialized laws on the project;

c) Compliance with relevant plans according to the law on planning and socio-economic development plans;

d) Assessment of the expected benefits that the project will contribute to the country and locality.

2. Analysis of the necessity of the project and social demand:

a) The degree of meeting the needs of the work before and after the project is implemented; the potential and benefits brought by the project to determine the need, timing, and scale of the project;

b) In forecasting the demand for the project's facilities, products, and services, it must scientifically analyze current and future demands, and the forecast results must be based on the allocation of demand across all transport modes (if applicable). Detailed input data, calculation bases, and results for different scenarios throughout the project's lifecycle must be presented according to specialized guidelines (if applicable). The detailed calculation files for demand forecasts must be attached to the feasibility study report;

c) Detailed current status of the work and issues to be addressed by the project; related works and projects (supporting and competing projects); analysis of the impact of other projects on the implementation of the project (which may affect revenue, profit, costs, etc.); explanation of both positive and negative impacts of these projects on the proposed project.

3. Objectives of the project

a) Overall objectives: the benefits the project brings to the country's and locality's socio-economic development; the contribution of the project to the overall objectives of the transportation industry and field;

b) Specific objectives: clearly stating specific quantifiable indicators (quantity, quality, and time); explaining the issues and current situations resolved, the number of beneficiaries from the project; the capacity scale the project needs to achieve to meet usage requirements and other specific objectives.

Article 7. Advantages of investing in projects under the PPP model and consulting opinions from agencies and organizations.

1. Analyze the advantages of investing in projects under the PPP model (including studying the conversion of investment forms for ongoing public investment projects), including the ability to attract capital, technology, and private sector management experience; practical survey results on the implementation capability of private sectors; risk-sharing schemes between relevant parties.

2. Fully present the limitations of investing in projects under the PPP model compared to other models, including: the project implementation management capacity of relevant parties; the complexity in drafting and implementing project contract terms.

3. For projects proposed by investors, the feasibility study report must clearly analyze the advantages regarding capital sources, the investor's capital balancing capability; the state's participation balancing capability; the investor's capacity, management experience; capital recovery capability, investment effectiveness, and risk acceptance and handling capability.

4. During the preparation of the feasibility study report, opinions on the implementation of the project from one or more of the following agencies and organizations must be compiled: People's Councils, People's Committees, provincial or city-level National Assembly Delegations where the project is implemented; professional associations related to the investment field.

Article 8. Compatibility of the Project with Planning and Development Plans

1. Explain the compatibility with relevant plans as stipulated by laws on national socio-economic development planning, industry and sector development plans, regional and local development plans; the extent of compliance with approved plans in cases of phased investment or technical standard limitations.

2. Explain the compatibility of the project with the investment fields specified in Article 4 of this Circular.

3. In cases where phased investment is aimed at reducing project complexity, enhancing feasibility and attractiveness, detailed explanations about the project scale, overall implementation plan should be provided to analyze difficulties during the implementation process.

Article 9. Scale, Location of the Project and Demand for Resource Utilization

1. Analyze the demand for infrastructure construction works based on planning, actual survey data, or forecast figures; explain the project scale, investment capacity, technical grade in accordance with standards issued by competent authorities; investment schemes suitable for forecasted demand growth and phased investment contents (if applicable).

2. Project location: describe the site, position, scope (start point, end point, control points) of the project; major place names the project passes through. If there are other projects or constructions around or within the project area that are currently being or will soon be implemented, analyze their impact on the proposed project.

3. Land usage requirements: determine the land use scope (boundaries) for the project layout; total land occupied by the project (temporary occupation, permanent occupation), advantages of the location for the project, protective zones (if any), classify according to current land use purposes as a basis for compensation costs and land clearance work orientation.

4. Requirements for resource utilization: collect and evaluate regional resource data; potential for use as construction materials (reserves, quality) and feasibility of extraction.

Article 10. Natural conditions of the construction area and current status of the project

1. Natural conditions: based on collected survey data, provide detailed information about the natural conditions of the construction area, evaluate the natural conditions for constructing the project, and assess the feasibility of the project.

2. Evaluate the current status of the project according to technical criteria when investing in the project; the specific condition of the project and its level of meeting operational requirements; the potential to utilize the entire or part of the existing project.

3. Assess the current status of the project and value remaining assets of transportation infrastructure structures according to current regulations for projects exploiting transportation infrastructure.

Article 11. Technical description, technology, and main solutions

1. Clearly describe the main technical standards and regulations applicable to the project and key technical parameters.

2. Present the content of the basic design prepared in accordance with construction laws regarding the location of construction, route direction of the project, list and scale, type, and grade of the project consistent with the investment scale, standards, and technical grades of the project; analyze the technical aspects of phased investment plans (if any).

3. Provide a detailed description of the investment content, main technical solutions, technological schemes, and selected equipment for each project component; the potential to utilize and connect existing structures; architectural solutions, site plans, cross-sections, elevations, and major structural dimensions of the construction project. When applying new technical solutions, technologies, or materials, clearly explain their ability to meet technical quality assessment indices and provide higher benefits for the project.

4. The NCKT report for projects constructing transportation infrastructure must include calculations for load-bearing structures or new structures; economic and technical comparisons in selecting technical options and design solutions to ensure optimal selection.

5. Describe related technical infrastructure works; connection plans for technical infrastructure within and outside the project; safety measures against fire and explosion; traffic safety; environmental hygiene, and labor safety.

Article 12. Implementation Plan, Progress, and Contract Duration

1. Present the overall implementation plan for the project (prepare a project schedule), specifying the start and end times for key project activities such as preparing the NCKT report, approving project investment, tendering to select investors, signing the project contract, construction phase, operation phase, transfer period, and other time points (if any). The plan must be developed in accordance with implementation conditions to ensure project progress.

2. For projects with construction components: prepare an overall construction schedule based on the construction volume and topographical, geological conditions, and weather characteristics of the project area, serving as the basis for determining the project implementation phase duration and calculating costs, allocating investment funds appropriately for the investment process.

3. Business and operation period of the project: determined from the date the project or facility is put into operation or from the date it is handed over by the management authority until the end of the business and operation period according to the financial plan; this period must be calculated in days.

Article 13. Land clearance and resettlement

1. The land clearance and resettlement plan must be consistent with the land usage needs determined according to Clause 3, Article 9 of this Circular, comply with state regulations on land recovery, compensation, support for resettlement, and other current regulations, including:

a) Scope of land clearance;

b) Implementation plan for land clearance work, compensation, and support for resettlement (clearly distinguishing between scattered and concentrated resettlement); in cases of concentrated resettlement, the location and scale of construction for the resettlement area must be identified; determine the subsidy amount for resettlement cost differences (if applicable);

c) Implementation costs; propose a payment plan that aligns with the overall project implementation plan to serve as the basis for capital planning and interest calculation;

d) Assess the impacts of land clearance and resettlement and propose measures to mitigate them; it may be necessary to organize surveys and community consultations to develop a reasonable implementation plan.

2. The comprehensive land clearance and resettlement plan must be approved in writing by the competent authority of the locality where the project passes through.

3. The content of the land clearance and resettlement plan shall be in accordance with Decree No. 47/2014/ND-CP dated May 15, 2014 of the Government on compensation, support, and resettlement, and other relevant regulations.

Article 14. Total investment ceiling, total project capital, and financial plan

1. The total investment ceiling must be fully determined and ensure accuracy in accordance with the legal provisions on construction investment cost management and Decree No. 63/2018/ND-CP, Circular No. 09/2018/TT-BKHĐT dated December 28, 2018, and this Circular, including the calculation and clarification of the following contents:

a) Compensation, support, and resettlement costs (if applicable); construction costs; equipment costs; project management costs; construction investment consulting costs; contingency costs for additional volume and price escalation, and other costs as prescribed by law;

b) Contingency costs, interest costs, and other costs permitted by law related to capital mobilization during the construction period (guarantee fees, commitment fees, credit insurance fees, brokerage fees) must be determined based on the disbursement schedule consistent with the project implementation schedule (a cash flow must be established for the project implementation).

2. The total project capital must be fully determined and ensure accuracy in accordance with Decree No. 63/2018/ND-CP and other relevant regulations, including the calculation and clarification of the following contents:

a) Determine the total investment ceiling as stipulated in Clause 1 of this Article;

b) Define the minimum equity ratio, loan capital, and state participation in the project (if applicable);

c) Basis and necessity for calculating costs related to initial working capital for project operation (if applicable).

3. The financial plan must include at least the contents specified in Section VI, Appendix III, Circular No. 09/2018/TT-BKHĐT dated December 28, 2018, including:

a) Fully justify the basis for determining the parameters of the project financial model; on this basis, calculate and evaluate the financial feasibility and capital mobilization feasibility of the project, determine the payback period and profit;

b) Detail the expenses in the financial model: total project capital accompanied by the project financial plan (project capital mobilization plan), expected interest rate, loan conditions, and other expenses;

c) Project revenue: detail the expected fee rates applicable in line with the type of project contract, general market conditions, and current legal regulations, while basing on the results of demand analysis and forecasting as stipulated in Point b, Clause 2, Article 6 of this Circular, explain and calculate in detail different revenue scenarios of the project (at basic level, minimum level, and maximum level);

d) Analyze the relationship between uncertain input factors and output factors (sensitivity) suitable for the input factors of the financial model (including analysis in both optimal and non-optimal financial plan scenarios);

e) Detail the output parameters of the financial model to ensure the project's borrowing capacity, including at least: debt-to-equity ratio; debt service coverage ratio (DSCR); minimum return on equity or internal rate of return on equity; project internal rate of return (IRR); net present value (NPV) and payback period (T);_hv).

4. In cases where the project requires state participation to ensure financial feasibility, based on the financial model and the results of financial analysis of the selected contract type for the project, detailed explanations of the contents related to state participation in the project as stipulated in Clause 1, Section IX, Appendix III, Circular No. 09/2018/TT-BKHĐT dated December 28, 2018, including:

a) The necessity for state participation in the project;

b) Determine the maximum value, capital balance capability; methods, plans, and disbursement schedules of the investor;

c) Requirements for state participation in the project such as: various options and the chosen option, value, proposed instruments, disbursement mechanism, payment mechanism.

Article 15. Selection of Project Contract Type

1. Based on technical scheme descriptions, demand forecasts, financial plans of the project, state participation capacity, payment schemes, and the NCKT report determining that the project falls under an investment model with business operations or payments to investors based on service quality provided, simultaneously analyze the suitability of the contract type for project conditions.

2. Analyze the advantages and disadvantages of the selected project contract type from the perspective of risk allocation and factors related to the feasibility of implementing the project.

3. Clarify the responsibilities of each party in executing the project contract (including design, construction, operation, financing arrangement) of the competent state agency, investor, and project enterprise and other relevant organizations (lenders, input suppliers, contractors...).

Article 16. Investment Capital, Plan, and Feasibility of Capital Mobilization

1. Detail the sources of project investment capital, specifically allocate the capital plan corresponding to each source of capital (including equity capital, borrowed capital, state participation in the project) according to the project implementation schedule.

2. Evaluate the feasibility of mobilizing various sources of capital to implement the project; market demand, payment capability, users' ability to pay, and investors' and lenders' interest in the project.

Article 17. Project Implementation Management, Operation, and Maintenance

1. Detail the management capacity and organizational structure of the competent state agency for each specific phase of project implementation from planning to NCKT report review.

2. Determine the indices evaluating infrastructure construction project quality from technical, operational, environmental, social, financial, and progress aspects during construction, operation, and exploitation (hereinafter referred to as KPI indices), serving as a basis for all parties to monitor the project. Based on the specific characteristics of the project, determine the contents to be monitored during project implementation and requirements for meeting those contents to define relevant KPI indices; for each index, clearly specify the measurement basis, information provider for assessing the index, and monitoring procedures.

3. Detail the management, operation, and maintenance work carried out in accordance with laws on project management, operation, and maintenance.

Article 18. Project Risk Analysis and Investment Incentive Proposals

1. Identify project risks throughout its lifecycle, assess impacts on the project if such risks occur, thereby proposing reasonable and appropriate risk allocation for the competent state agency and investor in compliance with legal provisions, while suggesting measures to mitigate risks and the responsibilities of each party in managing risks during project implementation. These contents must be presented in a table delineating the risk-bearing responsibilities of the project, including:

a) Systematically identify the main risks of the project such as legal risks; social risks; land use rights risks; environmental risks; design, construction, technical, technological, production risks; financial risks; macroeconomic situation risks; market demand risks; operational risks; contract termination risks, and other risks (if any);

b) Describe the main risks of the project, analyze their likelihood of occurrence and impact on the project (costs, schedule, design changes, capital allocation...), evaluate the financial impact on the project if risks occur, and when necessary, test different financial models to assess these impacts;

c) Based on specific technical, economic, and financial conditions of the project; financial analysis results to assess the impact of risks on the project and the costs and benefits of risk mitigation measures. The NCKT report should detail the proposed risk allocation and each party's responsibility in managing risks during project implementation; recommend the level of support from the competent state agency, the risk-sharing mechanism between the competent state agency and the investor.

2. Based on the assessment of project risks and current domestic and international financial market conditions, provide detailed explanations about investment incentive proposals, types of guarantees, and investment assurances stipulated in Chapter IX of Decree No. 63/2018/NĐ-CP, along with accompanying conditions and necessary precautionary obligations of the parties during the project contract period.

3. Provide detailed explanations on handling scenarios where actual project revenue significantly differs from estimated and forecasted revenue to reduce toll collection time for cost recovery.

Article 19. Economic and Social Effects and Impacts of the Project

1. Analysis of the Economic and Social Effects of the Project

The feasibility study report must present contents ensuring completeness as prescribed in Section V, Appendix III, Circular No. 09/2018/TT-BKHĐT dated December 28, 2018, including:

Determining all cost factors and socio-economic benefit factors of the project (including quantifiable benefit factors, potentially quantifiable but not priced factors, and only qualitative factors). Based on this, analyze the economic and social effects of the project, including: qualitatively assessing the main impacts of the project that cannot be quantified or can be quantified but not expressed in monetary terms, and clearly quantifying the impacts that can be expressed in monetary terms; calculating, quantifying, and analyzing benefits for users between the case with the project (including payment) and without the project, evaluating economic and social efficiency indicators of the project; calculation results must provide at least the following parameters: net present value (ENPV), internal rate of return (EIRR), and benefit-cost ratio (BCR).

Conclusion on the economic and social effects of the project: based on the above analysis, draw conclusions on the economic and social effects of the project. In cases where it is not possible to determine quantifiable cost and benefit factors that can be converted into money as a basis for calculating economic and social efficiency indicators, draw conclusions on the economic and social effects of the project based on remaining factor groups.

2. Environmental Impact of the Project: the feasibility study report includes an environmental impact assessment report established, reviewed, and approved according to environmental laws.

3. Social Impact of the Project: the feasibility study report needs to explain social impact factors such as resettlement support, gender equality, labor, job creation... and measures to minimize negative impacts during project implementation in accordance with current regulations.

4. Other Impacts: the feasibility study report needs to explain national defense, security, and other impacts (if any) of the project during implementation.

Article 20. Conclusions and Recommendations

1. In the conclusion section, summarize the main contents of the feasibility study report on the project, at minimum including:

a) Project name; competent state agency name; preparing unit or investor proposing the project name;

b) Project implementation location and land area used (if applicable);

c) Scale, capacity, main technical standards;

d) Estimated total investment capital, total investment level (clearly allocate the portion of State participation in the project, if applicable);

đ) Type of project contract and duration of the project contract (estimated project implementation schedule, business and exploitation period);

e) Financial indicators under the financial plan;

g) Investment incentives and guarantees;

h) Other contents.

2. In the recommendation section, propose recommendations and suggestions (if any).

Chapter 3

IMPLEMENTATION

Article 21. Effective Date

1. This circular takes effect from July 10, 2019, and replaces Circular No. 86/2015/TT-BGTVT dated December 31, 2015, issued by the Minister of Transport detailing regulations on investment areas and contents of feasibility studies for projects invested in public-private partnership models in the transport sector.

2. In cases where legal normative documents cited in this circular are amended, supplemented, or replaced, they shall be implemented according to the amended, supplemented, or newly replaced documents.

Article 22. Implementation organization

The Director of the Ministry's Office, the Inspector General of the Ministry, Heads of Departments, the Director of the Vietnam Highway Administration, Heads of Departments under the Ministry of Transport, Directors of Project Management Boards under the Ministry of Transport, Heads of agencies, units, and individuals related to this circular are responsible for its implementation./.