Circular No. 86/2015/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 contents of feasibility study reports for projects invested in under the public-private partnership model in the transportation sector.

Detailed guidance on the investment field and contents 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 Law No. 50/2014/QH13 dated June 18, 2014;

On the basis of the Law Amending and Supplementing Certain Provisions of the Laws on Taxation No. 71/2014/QH13 dated November 26, 2014;

Pursuant to Decree No. 15/2015/NĐ-CP dated February 14, 2015 of the Government on investment under the public-private partnership model;

Pursuant to Decree No. 107/2012/NĐ-CP dated December 20, 2012 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Transport;

At the proposal of the Director of the Public-Private Partnership Investment Project Management Board,

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

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular provides detailed guidance on the investment field and contents of feasibility study reports for projects invested in under the public-private partnership model in the transportation sector (hereinafter referred to as "transportation" or "GTVT").

Article 2. Applicability

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 "PPP") in the transportation sector.

Article 3. General provisions on feasibility study reports

1.   The feasibility study report (hereinafter referred to as "NCKT") for projects invested in under the PPP model shall include main contents as prescribed in Clause 1, Article 25 of Decree No. 15/2015/NĐ-CP dated February 14, 2015 of the Government on investment under the public-private partnership model (hereinafter referred to as "Decree No. 15/2015/NĐ-CP") and the contents stipulated in this Circular.

2.   For projects with construction components, the feasibility study report must include the basic design with contents as prescribed in Clause 1, Article 54 of the Construction Law No. 50/2014/QH13.

3.   Based on the objectives, nature, and specific conditions of each project, the parties may agree on other contents provided that they do not contravene the provisions of Decree No. 15/2015/NĐ-CP, this Circular, and relevant laws.

4.   Contents of other projects and financial plans in the feasibility study report for projects invested in under the PPP model using the Build-Transfer contract shall be implemented in accordance with the provisions of Decree No. 15/2015/NĐ-CP and other relevant laws.

Chapter II

INVESTMENT FIELD

Article 4. Investment in construction of transportation infrastructure works

Projects for constructing and upgrading transportation infrastructure works, including:

1.   Road sector

a)   Road works: roads, bridges, tunnels, ferry terminals;

b)   Bus stations, parking lots, rest stops.

2.   Rail sector

a)   Railways, railway bridges, railway tunnels, railway stations;

b)   Railway signaling systems.

3.   Inland waterway sector: channels; berths; inland waterway ports and wharfs.

4.   Maritime sector: port facilities, warehouses, port channels.

5.   Aviation sector

a)   Airports, air cargo terminals;

b)   Terminals; cargo warehouses; car parks, parking lots.

6.   Other projects for constructing and upgrading transportation infrastructure works as prescribed in Clause 1, Article 4 of Decree No. 15/2015/NĐ-CP shall be carried out according to specific decisions of the Minister of Transport.

Article 5. Operation and exploitation of transport infrastructure structures

1.   Projects for operation, business, and management of exploitation of transport infrastructure works.

2.   Projects providing equipment and public services in the field of transport.

Chapter III

CONTENTS OF THE FEASIBILITY STUDY REPORT

Article 6. Basis for preparing feasibility study reports

1.   Legal documents serving as the basis for preparing feasibility study reports.

2.   Decisions approving planning schemes, development plans for sectors, regions, and local socio-economic development plans related to the project; decisions and documents of competent authorities at each stage of proposal preparation, review, approval, and other relevant legal documents.

3.   Reference materials during the research and preparation of feasibility study reports.

Article 7. Necessity and investment objectives

1.   General situation regarding the country's and locality's socio-economic conditions where the work or project is located; overall assessment of transport development related to the project; impacts on the implementation of the project.

2.   Analysis of the necessity for investment in the project, social demand, and the responsiveness of the work to travel, passenger, and cargo transportation needs, specifically:

a)   The level of meeting social needs before and after the project investment; potential and benefits of the project serving as the basis for determining investment needs, timing, and scale;

b)   In forecasting the usage demand for the project's facilities, products, and services, scientific analysis and forecasting must be conducted; forecast results must be based on the allocation of demand across all modes of transport within the entire network (if applicable); detailed input data, calculation bases, and results with different scenarios must be presented (detailed calculation files for demand forecasting must be attached to the feasibility study report);

c)   Detailed current status of the work and issues to be resolved in the project; related works and projects; analysis of the impact of other projects on the implementation of this project and the impact of implementing this project on other projects and works in the affected area.

3.   Investment objectives of the project, including:

a)   Overall objectives: benefits that the project brings to the national economy and society, as well as the locality; the project's contribution to the overall objectives of the transport sector and the national goals;

b)   Specific objectives: clearly stating specific quantifiable indicators (quantity, quality, and time); explaining the issues and current situations being addressed, the number of beneficiaries using the services provided by the project, and other specific objectives.

Article 8. Advantages of investing in the project under the PPP model

1.   Explanation of the advantages of investing in the project under the PPP model (including the study of converting the investment form for ongoing public investment projects), analyzing the advantages in terms of funding sources, repayment capacity, economic efficiency, and risk transfer between parties.

2.   Fully presenting the limitations of investing in the project under the PPP model compared to other models, including: the management capability of the parties involved in implementing the project; complexity in drafting and implementing project contract terms.

3.   For projects proposed by investors, the feasibility study report must clearly analyze the advantages in terms of funding sources and the investor's ability to balance funds; the investor's capability and experience in management; repayment capacity, investment effectiveness, and risk acceptance.

Article 9. Compliance of the project with planning and development plans

1.   Explain the compliance of the project with the transportation development plans of localities, regions, and the country, and the socio-economic development plans of the locality; the extent to which the approved planning requirements are met in cases of phased investment or technical standard limitations.

2.   Explain the compliance of the project with the investment fields specified in Articles 4 and 5 of this Circular; in cases where the project does not fall within the prescribed investment fields, attach the decision approving the project from the competent state agency.

3.   Explain the compliance of the project with the conditions stipulated in points c, d, đ of Clause 1, Article 15 of Decree No. 15/2015/NĐ-CP.

4.   In cases where it is necessary to limit technical standards or phase investment to reduce the complexity of the project, enhance its feasibility and attractiveness, provide detailed explanations based on the scale of the project and the overall implementation plan to analyze difficulties during the implementation process.

Article 10. Scale, location of the project and demand for natural resources

1.   Provide scientific evidence to determine the investment scale and technical grade of the project's works in accordance with usage needs and standards issued by authorized bodies; phased investment of the project and contents limiting technical standards (if applicable).

2.   Project location: specify the project site, scope (start point, end point, control points); main place names through which the project passes.

3.   Land use demand: define the land use area for the project layout; total land area occupied by the project (temporary occupation, permanent occupation), classified according to current land use purposes to serve as the basis for compensation costs and land clearance work orientation.

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

Article 11. Natural Conditions of the Construction Area and Current Status of Works

1.   Natural conditions: based on collected survey data, detail the natural conditions of the construction area, assess the impact of these conditions on building the project and works.

2.   Evaluate the current status of works according to technical criteria when investing in the project; specific condition of the works and their operational requirements; potential for utilizing existing works (in whole or in part).

3.   Assess the current status of infrastructure works and remaining assets of transport infrastructure projects according to current regulations for projects implemented under Business-Management Contracts (hereinafter referred to as O&M).

Article 12. Technical Description, Technology and Main Solutions

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

2.   Present the construction location, alignment of works, list and scale, type, grade of works suitable for the investment scale, technical standards, and grade of the project's works; necessity to limit technical factors (if applicable); technical analysis of phased investment options (if applicable).

3.   Detail the investment content, main technical solutions, technology and equipment options selected for each work component (considering the utilization and connection of existing works); architectural, layout, cross-section, elevation solutions, and major structural dimensions of the construction works; particularly for components or projects applying new science and technology, modern production lines. When applying new technical solutions, technologies, and materials, clearly explain their ability to meet national technical standard requirements and relevant laws.

4.   The NCKT report must include structural calculation tables for major load-bearing structures or new structures; economic and technical calculations in selecting technical options and design solutions to ensure optimal selection.

5.   Describe related infrastructure works; connection schemes for internal and external infrastructure; safety measures against fire and explosion; traffic safety; environmental hygiene and occupational safety.

Article 13. Project schedule and contract implementation period

1.   Present the overall plan for implementing the project (prepare a project progress chart), specifying clearly the start and end times for the main works of the project such as: preparing the NCKT report, approving the project investment, bidding to select investors, signing the project contract, construction phase, operation phase, transfer deadline, other time points (if any). The plan must be consistent with reality to ensure the project's implementation schedule.

2.   For projects with construction components: prepare the overall construction progress based on the volume of construction and topographical, geological conditions, and weather characteristics of the project area as the basis for determining the project implementation phase time and calculating costs, allocating investment capital.

3.   Business and exploitation period of the project: determined from the time the project or facility is put into operation or from when it is handed over by the management agency (for projects implemented under O&M contracts) until the end of the business and exploitation period according to the financial plan; this period must be calculated in days.

Article 14. Land clearance and resettlement

1.   Land clearance and resettlement plans must be consistent with land usage needs as stipulated in Clause 3, Article 10 of this Circular, comply with state regulations on land recovery, compensation, resettlement support, and other current regulations, including:

a)   Scope of land clearance in different cases;

b)   Implementation plan for land clearance, compensation, and resettlement support (clearly distinguishing between scattered and concentrated resettlement); in cases of concentrated resettlement, the location and scale of the resettlement area must be determined; determine the resettlement support cost difference (if any);

c)   Implementation costs; anticipated payment plan consistent with the implementation plan as the basis for arranging capital and determining loan interest;

d)   Assess the impacts of land clearance and resettlement and propose measures to mitigate them; if necessary, organize surveys and community consultations to develop reasonable implementation plans.

2.   Overall land clearance and resettlement plans must be approved in writing by the competent authority of the locality (Provincial People's Committee, centrally-administered city People's Committee, or authorized agency) where the project passes through.

3.   Content of the land clearance and resettlement plan as prescribed in Decree No. 47/2014/NĐ-CP dated May 15, 2014 of the Government on compensation, support, and resettlement, and other related regulations.

Article 15. Total Investment Amount, Total Capital Investment, and Financial Plan

1.   The total investment amount must be fully determined, ensuring accuracy in accordance with legal provisions on construction cost management and Decree No. 15/2015/NĐ-CP, including the calculation and clarification of the following contents:

a)   Determining the minimum equity capital, loan capital, and state investment capital participating in the project (if applicable);

b)   Contingency costs and interest during the construction period must be determined based on the disbursement schedule consistent with the project implementation schedule (must establish cash flow during project implementation);

2.   The total capital investment must be fully determined, ensuring accuracy in accordance with Decree No. 15/2015/NĐ-CP and other relevant regulations, including the calculation and clarification of the following contents:

a)   Determining the minimum equity capital and loan capital;

b)   Basis and necessity for calculating initial working capital costs for project operation and maintenance.

3.   The financial plan must include at least the following contents:

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

b)   Detailed explanation of expenses in the financial model: total project investment capital along with the project financial plan (project funding mobilization plan), expected interest rate, loan conditions, and other expenses;

c)   Project revenue: detailed expected fee rates applicable to the type of project contract, general level, and current legal regulations, while basing on the analysis and forecast results of demand as stipulated in Point b, Clause 2, Article 7 of this Circular, explain and calculate in detail various revenue scenarios of the project (at basic, minimum, and maximum levels);

d)   Conduct sensitivity analysis appropriate to the input factors of the financial model (including analysis in both optimal and lowest financial plan scenarios);

đ) Provide detailed analysis of the output parameters of the financial model to ensure the project's borrowing capacity, at a minimum including: debt-to-equity ratio; debt service coverage ratio (DSCR); minimum return on equity or equity internal rate of return; project financial internal rate of return (FIRR); financial net present value (FNPV) and payback period (T_hv).

4.   In cases where state investment participation is required to enhance the feasibility of the project, based on the financial model and the analysis results of the project's financial model, provide detailed explanations of the contents related to state investment participation in the project, including:

a)   The necessity for state investment participation in the project;

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

c)   Requirements for state investment participation in the project, such as: different options and selected option, value, proposed instruments, disbursement mechanism, payment mechanism;

d)   For investment projects under the PPP model applying the Build-Transfer-Lease Service Contract or Build-Lease Service-Transfer Contract: the portion of state investment capital paid to the investor providing services and the ability to balance annual capital.

Article 16. Selection of Project Contract Type

1.   The bases for examining the suitability of the project contract type already determined in the approved project proposal or for selecting another project contract type.

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

3.   Clarify the responsibilities related to the implementation of the project (including: design, construction, operation, financing arrangement) of the competent state agency, the investor, and the project enterprise.

Article 17. Investment Capital, Plan, and Feasibility of Mobilizing Capital

1.   Details on the sources of project investment capital, specific allocation of the capital plan corresponding to each source of capital (including equity capital, borrowed capital, state support capital) in accordance with the progress of the project implementation.

2.   Evaluate the feasibility of mobilizing various sources of capital to implement the project; market demand, payment capacity, and the interest of investors and lenders in the project.

Article 18. Project Implementation Management, Operation Management, and Maintenance of Works

1.   Details on the capability and organizational structure for managing the project implementation of the competent state agency at each specific stage of the project from its initiation to the review of the Technical Feasibility Report.

2.   Depending on the nature and specific conditions of each project, establish a set of Key Performance Indicators (KPIs) to assess the quality of transportation infrastructure works during operation and exploitation. Based on the specific characteristics of the project, determine the contents that need to be monitored during the project implementation and the requirements for meeting these contents to define relevant KPIs; for each indicator, clearly specify the basis for measurement, the information provider for evaluating the indicator, and the monitoring procedure.

3.   Details on the management, operation, and maintenance of works carried out in accordance with Decree No. 46/2015/NĐ-CP dated May 12, 2015 of the Government on Quality Management and Maintenance of Works; Decree No. 11/2010/NĐ-CP dated February 24, 2010 of the Government on Management and Protection of Road Transport Infrastructure; and Decree No. 100/2013/NĐ-CP dated September 3, 2013 of the Government amending and supplementing certain articles of Decree No. 11/2010/NĐ-CP dated February 24, 2010, and other relevant legal provisions.

Article 19. Risk Analysis of the Project and Investment Incentive and Guarantee Proposals

1.   Identify the main risks of the project, evaluate the impact on the project if such risks occur, thereby proposing an optimal risk allocation between the competent state agency and the investor, while also proposing measures to mitigate risks and the responsibilities of the parties in managing risks during the project implementation. These contents must be presented in a summary table of project risks, including:

a)   Systematically identify the main risks of the project such as: legal risks; social risks; environmental risks; design, construction, production risks; construction cost and completion 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 and analyze the likelihood of occurrence of these risks as well as their impact on the project (in terms of costs, schedule, design changes, capital allocation...); evaluate the financial impact on the project if the risks occur, and if necessary, test different scenarios in the financial model to assess these impacts.

c)   Based on the specific technical, economic, and financial conditions of the project; the results of financial analysis to assess the impact of risks on the project as well as the costs and benefits of risk mitigation measures. The Technical Feasibility Report should detail the proposed risk allocation and the responsibilities of the parties in managing risks during the 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 evaluation of project risks and the current domestic and international financial market situation, provide detailed explanations about the investment incentive proposals, types of guarantees provided by the government as stipulated in Chapter 9 of Decree No. 15/2015/NĐ-CP, accompanying conditions, and necessary precautionary obligations during the project contract period.

3.   Provide detailed explanations on the handling plan in case the actual revenue of the project significantly differs from the estimated and forecasted revenue to reduce the toll collection period for recovery of investment.

Article 20. Economic and social effects and impacts of the project

1.   Determine overall cost factors and benefit factors of the project (including quantifiable and non-quantifiable benefit factors). Based on this, analyze the economic and social effectiveness of the project, including: qualitative assessment of the main impacts of the project that cannot be quantified or can be quantified but cannot be expressed in monetary terms, and clearly quantify the impacts that can be expressed in monetary terms; calculate, quantify, and analyze the benefits for users between the case with the project (including payment) and without the project, evaluate the economic and social effectiveness indicators of the project; the calculation results must provide at least the following parameters:

a)   Net Present Value (NPV);

b)   Economic Internal Rate of Return (EIRR);

c)   Economic Benefit-Cost Ratio (EBCR).

2.   Environmental impact of the project: the NCKT report includes an environmental impact assessment report prepared, reviewed, and approved according to the provisions of environmental laws.

3.   Social impact of the project: the NCKT report needs to explain the factors affecting society such as resettlement support, gender equality, labor... during the implementation of the project in accordance with current regulations.

4.   Other impacts: the NCKT report needs to explain the factors affecting national defense, security, and other impacts (if any) of the project during its implementation.

Article 21. Conclusions and Recommendations

1.   In the conclusion section, present a summary of the main contents of the NCKT report on the project, at least including:

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

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

c)   Scale, main technical standards;

d)   Total investment capital, total investment level (clearly allocate state support funds, if any);

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

e)   Financial indicators of the project (input and output parameters);

g) Other contents.

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

Article 22. Other Contents

In addition to the above contents, the NCKT report must include contents according to the provisions of the law and relevant technical standards and technical specifications.

Chapter IV

IMPLEMENTATION

Article 23. Effectiveness of Implementation

This Circular takes effect from February 15, 2016.

Article 24. Implementation Organization

1.   The Director of the Ministry's Office, the Inspector General of the Ministry, the Heads of Departments, the General Directors of the Vietnam Highway Administration, the Heads of the Bureaus under the Ministry of Transport, the General Directors of the Project Management Boards under the Ministry of Transport, the Heads of agencies, units, and individuals related to this Circular shall be responsible for implementing this Circular.

2.   The Heads of agencies and units shall organize the implementation of this Circular and propose appropriate Public-Private Partnership investment projects in line with the operational situation of their agencies and units.

3.   During the implementation of this Circular, if there are any difficulties, agencies, organizations, and individuals shall send their opinions to the Ministry of Transport for timely guidance./.