Circular No. 26/2023/TT-BNNPTNT guiding certain contents in public-private partnership (PPP) investment activities in the water resources and rural clean water supply sectors.

CIRCULAR

GUIDANCE ON CERTAIN CONTENTS IN THE ACTIVITY OF INVESTMENT UNDER THE PUBLIC-PRIVATE PARTNERSHIP MODEL IN THE FIELD OF IRRIGATION AND RURAL CLEAN WATER SUPPLY

PARTNERING WITH PUBLIC SECTORS IN THE FIELD OF RURAL CLEAN WATER AND IRRIGATION

Pursuant to the Public-Private Partnership Investment Law dated June 18, 2020;

Pursuant to the Law on Irrigation dated June 19, 2017;

Pursuant to the Law Amending and Supplementing Certain Provisions of the Law on Public Investment, the Law on Public-Private Partnership Investment, the Law on Investment, the Law on Housing, the Law on Bidding, the Law on Electricity, the Law on Enterprises, the Special Consumption Tax Law, and the Civil Enforcement Law dated January 11, 2022;

Pursuant to Decree No. 35/2021/NĐ-CP dated March 29, 2021 of the Government detailing and guiding the implementation of the Law on Public-Private Partnership;

Pursuant to Decree No. 105/2022/NĐ-CP dated December 22, 2022 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Agriculture and Rural Development;

At the proposal of the Director of the Irrigation Department;

The Minister of Agriculture and Rural Development issues this Circular guiding certain contents in the activity of investment under the public-private partnership model (hereinafter referred to as PPP) in the field of irrigation and rural clean water supply.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular guides certain contents in the activity of investment under the public-private partnership model (hereinafter referred to as PPP) in the field of irrigation and rural clean water supply as prescribed in Clause 3, Article 93 of Decree No. 35/2021/NĐ-CP dated March 29, 2021 of the Government detailing and guiding the implementation of the Law on Public-Private Partnership Investment (hereinafter referred to as Decree No. 35/2021/NĐ-CP), including: the agency responsible for reviewing the design; guidance on certain contents of the pre-feasibility study report and feasibility study report; methods and standards for evaluating tender documents to select investors; model project contract.

Article 2. Applicability

This Circular applies to agencies, organizations, and individuals participating in or related to the activity of investment under the public-private partnership model in the field of irrigation and rural clean water supply.

Article 3. PPP Projects in the Field of Irrigation and Rural Clean Water Supply

1. PPP projects in the field of irrigation and rural clean water supply are investment projects aimed at providing public goods and services through the implementation of one or more activities in the field of irrigation and rural clean water supply as prescribed in Clause 9, Article 3 of the Law on Public-Private Partnership Investment (hereinafter referred to as the PPP Law).

2. The selection criteria for projects to be invested in under the public-private partnership model shall be implemented in accordance with Clause 1, Article 14 of the PPP Law.

3. Selecting PPP projects that have advantages over other forms of investment shall be based on analyzing and assessing the following contents:

a) The ability to attract private investor capital, technology, and management experience;

b) Multi-purpose irrigation projects that simultaneously provide various types of irrigation products and services such as aquaculture water supply, high-value crop irrigation, and other irrigation products and services (domestic and industrial water supply; drainage for industrial zones, export processing zones, economic zones, and high-tech parks; power generation; tourism development and other recreational activities; aquaculture in reservoirs; transportation integration);

c) Centralized rural clean water supply projects serving concentrated residential areas with favorable socio-economic conditions;

d) Centralized irrigation and rural clean water supply projects capable of sharing risks between the State, private investors, and related parties;

đ) Other irrigation and rural clean water supply projects of interest to investors.

Article 4. Authorities responsible for reviewing the design of PPP projects in the water resources sector and rural clean water supply

1. The construction-related authority in the water resources sector and rural clean water supply under the competent authority shall be responsible for reviewing the detailed design following the basic design according to Clause 2 and Clause 3, Article 83a of the Construction Law (supplemented at Clause 26, Article 1 of the Law Amending and Supplementing Certain Provisions of the Construction Law).

2. The project investor shall be responsible for organizing the review of the detailed design following the basic design according to Clause 2, Article 83 of the Construction Law (amended and supplemented at Clause 25, Article 1 of the Law Amending and Supplementing Certain Provisions of the Construction Law).

Chapter II

CONTENT IN THE FEASIBILITY STUDY REPORT AND THE DETAILED FEASIBILITY STUDY REPORT

Article 5. Economic and social efficiency indicators

1. The economic and social efficiency indicators of the project include: net present value (ENPV); benefit-cost ratio (BCR); internal rate of return (EIRR). Calculations of the economic and social efficiency indicators of the project shall be carried out according to Section IV Part D Form No. 01 Appendix II and Section IV Part D Form No. 01 Appendix III issued together with Decree No. 35/2021/NĐ-CP.

2. The economic and social benefits of water resources projects include the following groups:

a) Quantifiable benefits that can be converted into monetary terms, depending on the type of water resources works, including: benefits from the project for irrigation and drainage for agricultural production such as increased area, increased crop cycles, increased productivity, increased yield, reduced losses, reduced costs; benefits from power generation when combined with power plants; benefits from raw water supply for domestic and industrial use; benefits from drainage and flood control for agricultural production, rural areas, and urban areas (excluding inner city areas); benefits from drainage for industrial zones, export processing zones, economic zones, and high-tech zones; benefits from business, tourism, and recreational activities; benefits from aquaculture in reservoirs and inland waterway transportation.

b) Quantifiable but not monetizable benefits, depending on the type of water resources works, including: benefits from combined power generation that improve the environment by reducing greenhouse gas emissions if electricity is produced from coal or natural gas; benefits from improved water quality and ecological conditions in the project area; benefits from promoting economic growth, increasing employment, and contributing to poverty reduction.

c) Benefits that can only be qualitatively assessed, including: contributions to disaster prevention and mitigation, environmental protection, adaptation to climate change, ensuring water security, sustainable economic and social development, and improving the quality of life for people in the project area.

3. The economic and social benefits of rural clean water supply projects include the following groups:

a) Quantifiable and convertible benefits into monetary terms, including: economic benefits from the project due to improved health for people in the project area (reduced medical expenses, reduced cases of diarrhea, reduced hospitalization rates); benefits from saving labor and school absenteeism time for households using water; benefits from increased productivity of people in the project area, benefits related to time savings such as daily water collection time for each household compared to before the centralized rural clean water supply works were built; other health benefits such as increased average life expectancy compared to when using untreated water.

b) Quantifiable but not monetizable benefits, including: benefits from improved environmental conditions by reducing negative impacts caused by poor water supply and contaminated water sources that do not meet hygiene standards.

c) Benefits that can only be qualitatively assessed, including: benefits from improved education and awareness when people have access to rural clean water; intangible benefits such as entertainment and improved quality of life, improved income in the area, enhanced physical and mental health of water users; benefits from the impact of clean water on human transformation and development, especially for children.

4. Units preparing the feasibility study report and the detailed feasibility study report may supplement other benefits beyond those mentioned in Clause 2 and Clause 3 of this Article, ensuring consistency with the type of contract, the specific nature of each sector and project, and relevant legal provisions.

5. In cases where it is not possible to determine quantifiable factors that can be converted into monetary terms for calculating the economic and social efficiency indicators of the project, units 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.

Article 6. Profit Margin on Equity for Investors in Irrigation Projects and Rural Clean Water Supply Projects

1. Cost of Using Equity Capital of Investors in Projects

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

i = iv + f

Where:

i: cost of using equity capital of the investor;

iv: interest rate on borrowed funds for investment, determined based on reference to medium-term and long-term lending rates of at least three commercial banks; interest rate on borrowed funds of similar projects to serve as a basis for financial planning in the pre-feasibility study report, feasibility study report (if applicable). The interest rate on borrowed funds for investment 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 and considering the exclusion of years with significant CPI fluctuations (according to statistical methods).

2. Based on legal provisions, economic and social conditions, and the specific characteristics of the project, the project preparatory unit establishes the profit margin on equity capital of investors in the financial plan in the pre-feasibility study report, feasibility study report ensuring within the following profit margin 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 7. Quality Indicators for Construction Works and Infrastructure Systems for Irrigation Projects and Rural Clean Water Supply Projects Provided by Project Enterprises

1. Quality indicators for construction works and infrastructure systems provided by irrigation project enterprises and rural clean water supply project enterprises include the degree of compliance of construction works and infrastructure systems with current regulations on design, construction, operation, maintenance, and product and service quality.

a) Degree of compliance with design requirements for irrigation works implemented in accordance with National Technical Regulation QCVN 04-05: 2022 on Irrigation Works, Disaster Prevention - Part I. Irrigation Works - Main Provisions on Design issued together with Circular No. 29/2022/TT-BNNPTNT dated December 30, 2022 of the Minister of Agriculture and Rural Development. For rural clean water supply works, implementation follows the National Standard TCVN 13606:2023 on Water Supply - Pipeline Network and Construction Requirements.

b) Degree of compliance with quality, construction, and maintenance requirements carried out in accordance with Article 59 of the Public-Private Partnership Law and Decree No. 06/2021/NĐ-CP dated January 26, 2021 of the Government detailing certain contents regarding quality management, construction, and maintenance of construction works.

c) Degree of compliance with product and service quality requirements provided by irrigation and rural clean water supply projects carried out in accordance with the PPP project contract.

2. Depending on the specific nature of each PPP project in the field of irrigation and rural clean water supply, the contracting authority and the investor may agree to supplement quality indicators for construction works consistent with current legal regulations.

Article 8. Period for Depreciation of Water Infrastructure Projects and Rural Clean Water Supply Systems

1. For BOT contracts, the period for depreciation of water infrastructure projects and rural clean water supply systems shall be implemented in accordance with Clause 1, Article 12 of Circular No. 45/2013/TT-BTC dated April 25, 2013, issued by the Ministry of Finance to guide the management, use, and depreciation of fixed assets (amended and supplemented by Clause 5, Article 1 of Circular No. 147/2016/TT-BTC dated October 13, 2016, issued by the Ministry of Finance).

2. For other types of contracts, in cases where it is necessary to calculate the period for depreciation, the period for depreciation of water infrastructure projects and rural clean water supply systems shall be determined as the operating time for the investor to recover the investment cost of the project.

Chapter III

CONTENT ON STANDARDS AND METHODS FOR EVALUATING TENDER DOCUMENTS AND CONTRACT FORMATS FOR PROJECTS

Section 1. STANDARDS AND METHODS FOR EVALUATING TENDER DOCUMENTS

Article 9. Evaluation of Tender Documents

The method of evaluating tender documents (hereinafter referred to as "TD") through evaluation criteria in the tender invitation document (hereinafter referred to as "TID") includes:

1. Evaluation of TD for projects applying open tendering as stipulated in Clause 1, Article 37 of the Public-Private Partnership Law and competitive dialogue as stipulated in Clause 1, Article 38 of the Public-Private Partnership Law.

a) Checking and evaluating the validity of the technical proposal document (hereinafter referred to as "TPD"): Implemented according to Clause 1 and Clause 2, Article 56 of Decree No. 35/2021/NĐ-CP.

b) Evaluation of capacity and experience

For projects applying open tendering with prequalification: Implemented according to point a, Clause 3, Article 56 of Decree No. 35/2021/NĐ-CP;

For projects applying open tendering without prequalification, competitive dialogue as stipulated in Clause 1, Article 38 of the Public-Private Partnership Law, the evaluation of capacity and experience shall be carried out according to the provisions of this Article 10 of this Circular;

Investors with validly evaluated TPDs and meeting the requirements of capacity and experience shall be further detailed evaluated on technical aspects.

c) Detailed technical evaluation: Implemented according to the provisions of Article 11 of this Circular.

Investors meeting technical requirements shall be evaluated on financial-commercial proposals.

d) Evaluation of financial-commercial proposals:

Checking and evaluating the validity of financial-commercial proposals shall be carried out according to Clause 1 and Clause 2, Article 59 of Decree No. 35/2021/NĐ-CP.

Corrections and adjustments shall be made according to the provisions at point 1, sub-section 2, Part B, Chapter III, Appendix IV attached to Circular No. 09/2021/TT-BKHĐT dated November 16, 2021, issued by the Minister of Planning and Investment guiding the selection of investors for public-private partnership projects and land-using investment projects (hereinafter referred to as Circular No. 09/2021/TT-BKHĐT).

The method and standards for evaluation shall be carried out according to the provisions of Article 12 of this Circular.

2. Evaluation of TD for projects applying direct award

a) Checking and evaluating the validity of TD: Implemented according to point a, Clause 1 of this Article and Clause 5, Article 29 of Decree No. 35/2021/NĐ-CP;

b) Evaluation of capacity and experience: Implemented according to the provisions of Article 10 of this Circular.

c) Detailed technical evaluation: Implemented according to point c, Clause 1 of this Article, wherein the detailed technical evaluation criteria use the pass/fail assessment method as stipulated in Section II, Appendix II attached to this Circular.

d) Detailed financial-commercial evaluation: Implemented according to point a of this clause and Article 12 of this Circular.

3. Evaluation of TD for projects applying direct award of investors as stipulated in point b, Clause 1, Article 39 of the Public-Private Partnership Law.

a) Evaluation of the eligibility of investors: Implemented according to Article 29 of the Public-Private Partnership Law and Clause 5, Article 29 of Decree No. 35/2021/NĐ-CP;

b) Evaluation of capacity and experience: Implemented according to the provisions of Article 10 of this Circular.

Article 10. Methods and criteria for assessing capacity and experience

1. Assessment methods

a) For independent investors: Implement according to the provisions at Clause 3.1 Section 3 Part A Chapter III Appendix IV issued together with Circular No. 09/2021/TT-BKHĐT;

b) For joint venture investors: Implement according to the provisions at Clause 3.1 and Clause 3.2 Section 3 Part A Chapter III Appendix IV issued together with Circular No. 09/2021/TT-BKHĐT.

2. Evaluation criteria: Implement according to the provisions at Appendix I issued together with this Circular.

Article 11. Methods and criteria for assessing technical aspects

1. Assessment method: Implement according to the provisions at Clause 4.1 Section 4 Part A Chapter III Appendix IV issued together with Circular No. 09/2021/TT-BKHĐT.

2. Evaluation criteria: Implement according to the provisions at Appendix II issued together with this Circular.

Article 12. Methods and criteria for assessing financial and commercial aspects

1. Based on the scale and nature of the project, the tenderer must determine one of the following methods to compare and rank investors meeting the requirements for financial and commercial aspects:

a) Method of comparing and ranking based on the standard of state capital support for construction of works, infrastructure systems (not applicable to PPP projects with sub-projects using public investment funds as prescribed in Point a Clause 5 Article 70 of the PPP Law), other contents such as payback period, product price, service fee, and related factors clearly defined in the Tender Document.

The investor proposing the lowest amount of state capital support for construction will be ranked first and proposed as the successful bidder.

In case the investor belongs to the category eligible for preferential treatment, the value of state capital support for construction of that investor must be calculated before proceeding with the ranking of investors according to the formula prescribed at Section CDNĐT 26.3 Chapter II Part 1 Appendix IV issued together with Circular No. 09/2021/TT-BKHĐT.

In case multiple investors propose the same amount of state capital contribution, the ranking of investors will be based on the technical evaluation results. If the scoring method is used, the Tender Document of the investor with higher technical score will be ranked first. If the pass/fail method is used, the Tender Document will be considered passed when all detailed basic standards are evaluated as passed and detailed non-basic standards are evaluated as passed or acceptable. The Tender Document of the investor with more detailed non-basic standards evaluated as passed will be ranked first.

b) Method of comparing and ranking based on the standard of product/service price, clean water price, other contents such as standards for assets and services under the project, contract implementation time, and related factors clearly defined in the Tender Document.

The investor proposing the lowest product/service price, clean water price will be ranked first and proposed as the successful bidder.

In case the investor belongs to the category eligible for preferential treatment, the product/service price, clean water price of that investor must be calculated before proceeding with the ranking of investors according to the formula prescribed at Section CDNĐT 26.3 Chapter II Part 1 Appendix IV issued together with Circular No. 09/2021/TT-BKHĐT.

In case two or more investors propose the same lowest product/service price, clean water price, the ranking of investors will be based on the technical evaluation results. If the scoring method is used, the Tender Document of the investor with higher technical score will be ranked first. If the pass/fail method is used, the Tender Document will be considered passed when all detailed basic standards are evaluated as passed and detailed non-basic standards are evaluated as passed or acceptable. The Tender Document of the investor with more detailed non-basic standards evaluated as passed will be ranked first.

c) Method of comparing and ranking based on the standard of social benefit, state benefit, other relevant contents clearly defined in the Tender Document.

The investor proposing the highest budget revenue submission or shortest contract implementation period will be ranked first and proposed as the successful bidder.

In case the investor belongs to the category eligible for preferential treatment, the value of budget revenue submission or contract implementation period of that investor must be calculated before proceeding with the ranking of investors according to the formula prescribed at Section CDNĐT 26.3 Chapter II Part 1 Appendix IV issued together with Circular No. 09/2021/TT-BKHĐT.

In case two or more investors propose the same highest budget revenue submission or shortest contract implementation period, the ranking of investors will be based on the technical evaluation results. If the scoring method is used, the Tender Document of the investor with higher technical score will be ranked first. If the pass/fail method is used, the Tender Document will be considered passed when all detailed basic standards are evaluated as passed and detailed non-basic standards are evaluated as passed or acceptable. The Tender Document of the investor with more detailed non-basic standards evaluated as passed will be ranked first.

d) Method of comparing and ranking based on combined standards implemented according to the provisions at Appendix III issued together with this Circular.

2. Based on the scale, nature of the project, and evaluation criteria determined according to the provisions of Clause 1 of this Article, the tenderer shall clearly specify the contents of financial and commercial assessment according to the provisions at Point 2.2.2 Section 2 Part B Chapter III Appendix IV issued together with Circular No. 09/2021/TT-BKHĐT.

Section 2. SAMPLE CONTRACT FOR PROJECTS

Article 13. Sample contract for projects

1. The Build-Let-Transfer (BLT) contract applies to Public-Private Partnership (PPP) projects in the water resources sector implemented under a mechanism where the State pays based on the quality of products and public services, signed between the contracting authority and the project investor. The sample BLT contract shall be carried out in accordance with Appendix IV attached to this Circular.

2. The Build-Operate-Transfer (BOT) contract applies to PPP projects in the rural clean water supply sector implemented under a mechanism where fees are directly collected from users or organizations that purchase the products and public services, signed between the contracting authority and the project investor. The sample BOT contract shall be carried out in accordance with Appendix V attached to this Circular.

3. For other types of contracts, the tenderer may refer to the appropriate contents in Appendix IV and Appendix V of this Circular to develop the sample contract in the bidding documents to ensure compliance with the type of contract, the specific nature of each project, and relevant laws.

4. During the negotiation and completion of the contract, the parties may propose amendments and supplements to the contract's content to ensure that it does not change the basic content of the bidding documents and does not contravene the provisions of the law on investment through the Public-Private Partnership model and relevant laws.

Article 14. Product and Service Prices in PPP Project Contracts

1. The prices of water resources products and services and clean water prices are implemented in accordance with Article 65 of the PPP Law. The principles for adjusting the prices of water resources products and services and clean water prices are carried out in accordance with point c, Clause 1, Article 22 of the Price Law.

2. The price of water resources products and services is determined in accordance with Clause 3, Article 35 of the Water Resources Law (amended and supplemented at Clause 5, Article 73 of the Price Law).

3. The price of clean water is determined and adjusted in accordance with Circular No. 44/2021/TT-BTC dated June 18, 2021, issued by the Minister of Finance regarding the framework price, principles, and methods for determining the price of clean water for daily use, and relevant laws.

Chapter IV

IMPLEMENTING PROVISIONS

Article 15. Implementation Organization

1. The Ministry of Agriculture and Rural Development assigns specific tasks to its subordinate units to implement PPP projects in the water resources sector and rural clean water supply for projects invested in and managed by the Ministry of Agriculture and Rural Development.

2. The People's Committee of the province assigns specific tasks to its subordinate agencies and units to implement PPP projects in the water resources sector and rural clean water supply within their management scope.

Article 16. Effective Date

1. This Circular takes effect from July 1, 2024.

2. In case the legal normative documents cited in this Circular are amended, supplemented, or replaced, they shall be applied according to the provisions of the amended, supplemented, or replacing legal normative documents.

3. During implementation, if there are any difficulties, organizations and individuals should report in writing to the Ministry of Agriculture and Rural Development for timely consideration and resolution./.