Circular No. 22/2022/TT-BGTVT guiding certain contents in the feasibility study report and the detailed feasibility study report for projects invested under the public-private partnership (PPP) model, including construction-operation-transfer (BOT) contracts in the field of transport.

CIRCULAR

Guidelines for certain contents in the feasibility study report, the detailed feasibility study report for public-private partnership investment projects, build-operate-transfer contracts in the transport sector
Law on Public-Private Partnership dated June 18, 2020;
Law Amending and Supplementing Certain Provisions of the Investment Law, Public-Private Partnership Law, Investment Law, Housing Law, Bidding Law, Electricity Law, Enterprise Law, Special Consumption Tax Law, and Civil Enforcement Law dated January 11, 2022;

On the basis of Decree No. 28/2021/NĐ-CP dated March 26, 2021 of the Government stipulating financial management mechanisms for public-private partnership investment projects;

On the basis of Decree No. 12/2017/NĐ-CP dated February 10, 2017 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Transport;

Decree No. At the proposal of the Director of the Department of Public-Private Partnerships;

Decree No. Pursuant to Decree No. 23/2024/NĐ-CP dated February 27, 2024, detailing certain provisions and measures for implementing the Law on Bidding regarding the selection of investors for projects that must be tendered according to laws governing sectors and fields;

Decree No. The Minister of Transport issues this Circular guiding certain contents in the feasibility study report, the detailed feasibility study report for public-private partnership investment projects, build-operate-transfer contracts (hereinafter referred to as BOT contracts) in the transport sector.

Article 1. This Circular guides certain contents in the feasibility study report, the detailed feasibility study report for public-private partnership investment projects, build-operate-transfer contracts (BOT contracts) in the transport sector, including: economic and social efficiency indicators; framework of return on equity of investors; quality assessment index of works and infrastructure systems provided by project enterprises; depreciation period of works and infrastructure systems.

Article 2. For Build-Transfer-Operate (BTO) contracts, Build-Own-Operate (BOO) contracts, Operate-and-Maintain (O&M) contracts, Build-Transfer-Lease (BTL) contracts, Lease-Operate-Transfer (LOT) contracts, and hybrid contracts: the implementation process shall be based on the provisions of this Circular and relevant laws to apply appropriate contents according to the type of contract, specific characteristics of each field and project when preparing the feasibility study report and the detailed feasibility study report.

PART I
GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular applies to organizations and individuals related to the preparation of feasibility study reports and detailed feasibility study reports for public-private partnership investment projects, build-operate-transfer contracts in the transport sector.

ECONOMIC AND SOCIAL EFFICIENCY INDICATORS; FRAMEWORK OF RETURN ON EQUITY OF INVESTORS; QUALITY ASSESSMENT INDEX OF WORKS AND INFRASTRUCTURE SYSTEMS PROVIDED BY PROJECT ENTERPRISES AND DEPRECIATION PERIOD OF WORKS AND INFRASTRUCTURE SYSTEMS

Article 2. Applicability

Article 1. Economic and social efficiency indicators of the project include: net present value of economic benefits (ENPV); benefit-cost ratio (BCR); economic internal rate of return (EIRR). Calculations of these indicators shall be carried out in accordance with Part IV of Model No. 01 of Appendix II and Part IV of Model No. 01 of Appendix III of Decree No. 35/2021/NĐ-CP dated March 29, 2021 of the Government detailing and guiding the implementation of the Public-Private Partnership Law.

Chapter II
Article 2. Economic and social benefits of the project

Article 3. Economic and social efficiency indicators

The economic and social benefits of the project include the following groups:

a) Quantifiable benefits that can be converted into monetary terms, including: benefits from reduced operating costs of vehicles, benefits from saving transportation time for goods and passengers.

b) Quantifiable but non-monetary benefits, including: benefits from improved environmental conditions due to reduced environmental impacts such as emissions, dust, noise, benefits from promoting economic growth, job creation, enhanced passenger and cargo throughput capacity, benefits from reducing traffic accidents.

c) Benefits that can only be qualitatively assessed, including: benefits from increased connectivity between regions, benefits from job creation and improved quality of life for people in the project area.

d) The entity preparing the feasibility study report and the detailed feasibility study report may supplement other benefits beyond those mentioned in points a, b, and c of this Article, ensuring consistency with the type of contract, specific characteristics of each field and project, and relevant legal provisions.

e) In cases where it is not possible to determine quantifiable factors that can be converted into monetary terms for calculating economic and social efficiency indicators of the project, the entity preparing the feasibility study report and the detailed feasibility study report may assess the economic and social efficiency of the project based on the remaining groups of factors.

d) The unit preparing the preliminary feasibility study report and the feasibility study report may supplement other benefits besides those mentioned in points a, b, and c of Clause 2 of this Article, ensuring consistency with the type of contract, the specific characteristics of each field and project, and relevant legal provisions.

e) In cases where it is not possible to determine quantifiable factors and benefits that can be converted into monetary values for calculating economic and social efficiency indicators of the project, the unit preparing the preliminary feasibility study report and the feasibility study report may assess the project's economic and social efficiency based on the remaining groups of factors.

Article 4. Framework for Return on Equity of Investors

1. Cost of Using Equity Capital of Investors

The cost of using equity capital, taking into account risk factors and inflation, is determined according to the formula:

i = i_v + f

Where:

i: cost of using equity capital of the investor;

i_v: interest rate for borrowing investment capital, determined based on reference to medium-term and long-term lending rates of at least three commercial banks; interest rate of project loans for similar projects to serve as a basis for financial planning in the pre-feasibility study report, feasibility study report (if applicable). The borrowing interest rate for investment capital is determined at the nearest point within three months prior to the preparation of the pre-feasibility study report, feasibility study report;

f: inflation rate, determined based on the average Consumer Price Index (CPI) of the last ten years published by the General Statistics Office of Vietnam, with consideration given to excluding years with significant CPI fluctuations.

2. Framework for Return on Equity of Investors

Based on legal regulations, economic and social conditions, and the specific characteristics of the project, the entity preparing the project establishes the return on equity of investors in the financial plan in the pre-feasibility study report, feasibility study report, ensuring it falls within the following framework:

a) The maximum profit margin on equity capital of investors shall not exceed the cost of using equity capital (i) as stipulated in Clause 1 of this Article;

b) The minimum profit margin on equity capital of investors shall not be lower than the interest rate on borrowed funds for investment (iv) as stipulated in Clause 1 of this Article.

Article 5. Quality Assessment Indexes for Construction Projects and Infrastructure Systems Provided by Project Enterprises

The quality assessment indexes for construction projects and infrastructure systems provided by project enterprises include the degree to which these projects and systems meet the requirements stipulated for surveying, design, construction, operation, and maintenance according to standards and norms applicable to each project and according to legal provisions on construction quality. The assessment of the degree of compliance is carried out in accordance with the specialized legal regulations.

Article 6. Depreciation Period for Construction Projects and Infrastructure Systems

The depreciation period for construction projects and infrastructure systems of the project shall be implemented in accordance with Clause 5, Article 1 of Circular 147/2016/TT-BTC dated October 13, 2016, issued by the Ministry of Finance to amend and supplement certain articles of Circular No. 45/2013/TT-BTC dated April 25, 2013, of the Ministry of Finance guiding the management, use, and depreciation of fixed assets.

Chapter III
IMPLEMENTATION

Article 7. Transitional Provisions

1. In cases where the project has been decided on by the competent authority regarding investment orientation but has not yet been approved before this Circular takes effect, the project preparation unit is responsible for updating the contents of the feasibility study report in accordance with this Circular without leading to changes in the investment orientation decision.

2. In cases where the project has been decided on by the competent authority regarding investment orientation and approved before this Circular takes effect, it shall continue to be implemented in accordance with the investment orientation decision and the project approval decision.

Article 8. Effective Date

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

2. In cases where the legal normative documents cited in this Circular are amended, supplemented, or replaced, the provisions of those amended, supplemented, or replaced documents shall be applied.

Article 9. Implementation Organization

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