BOT projects: Harmonizing the benefit of the State, people and enterprises

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Could you please advise your opinion on the issues of public concern relating to the traffic infrastructure projects invested in the form of BOT, such as the distance between toll stations, the toll rates, transparency in the investment process?

In recent years, the Ministry of Transport has invested heavily in transport infrastructure in this form. Recently, the Ministry of Transport has summarized 5 years of investment in BOT traffic infrastructure, the benefit is clear, I want to talk more about some of the existing issues. Firstly, we believe that the investment project in the form of BOT when it is assigned to investors to propose projects, setting up projects, technical designs, organizations need to get into more closely, deeper of state management agencies. Specifically, from the steps of project planning, design, construction, cost estimation, acceptance, payment and settlement are assessed by the State agencies to control the whole project. This is a new point, necessary and in the 15/2015 Decree on public-private partnerships mentioned this issue. Recently, there are opinions that we have over-authorized the investor, so investors can make the move leading to increase total investment, and project efficiency will be lower.

Secondly, in the formulation of an investment project, we develop an investment-based plan to obtain a financial plan and on that basis, the year of charge is calculated. However, there is a fact that between the total initial investment and the settlement of works are two very different data, so recently social opinion that the total expected investment level deviated quite a lot when compared with the reality under the inspection of examination agencies. But the initial investment rate is only the basis for investors to implement the project. In order to implement the project after completion, it must be based on the balance, based on the new balance sheet calculating from the efficiency of the project and year of charge.The Ministry of Transport also confirmed that the year of settlement fee is relatively reasonable, but the contract also stated clearly that, after 3 years, based on the forecast growth rate in the contract of vehicle traffic, we will have to control and recalculate for adjustment. If the vehicle traffic increases faster, the year of the charge must be shortened, as the traffic volume decreases, we have to compensate the investor by the yearly charge. This problem has been continuously adjusted and changed, so we confirmed that the BOT projects are strictly controlled on the charging time, right from the signing of the contract to the end of the project, there is no loss, or drainage of State budget.

As reported by the State Audit, there is a difference in total investment capital of 27 traffic BOT projects after being audited. Could you elaborate on this issue?

In principle, there are two distinct parts in the basic construction cost estimate. The first part is the construction cost and the second is the reserve fund. The reserve has three parts: provision for the amount incurred, provision for depreciation of the material and provision for depreciation of foreign currency. The reserve level fluctuates from 6-10% / year, even 20%. Recently, there are BOT projects we have to make up to 30%. However, many projects are constructed very quickly, for example, from 2 years to 1 year, there is no depreciation of materials, foreign currency, only a small number arises in volume, so the amount of backup will not be used and surplus and that is why there is a difference between the estimated total investment capital and the total investment capital after the audit which leads to the adjustment of the total investment capital after the audit. That excess does not say anything because it is a bank loan, only used when there are competent State agencies. We also draw on the experience of new projects that will calculate the investment time, project completion time more reasonably, so that there are reasonable fees, the difference is also reduced. From 2017 we began to change the calculation method so that the difference between actual and total initial levels did not differ too much.

As reported by the State Audit, most BOT projects are mainly contractor appointment, not public bidding. Does the Ministry of Transport have any recommendations on this matter to ensure investment efficiency?

During the implementation, the report of the State Audit stated that BOT projects are mainly carried out by contractor appointment. In this regard, the Ministry of Transport also wants to clarify. In fact, when there are investment projects, the Ministry of Transport has posted all of these projects to the mass media, the Ministry of Planning and Investment's website, the Ministry of Transport so investors can consider to join. But in fact, from 2013 to 2014, the Ministry of Transport simultaneously held from 20 to 40 BOT projects, but the number of participating investors is lower than the number of call projects so there is almost no competition or choice. In the coming time, we are looking forward to having more participating investors so that the Ministry of Transport can organize tenders to ensure better competitiveness.

Currently, the Ministry of Transport has complied with Decree 15. That means that even if only one investor registered, there still has to have an open bid. If the investor satisfies the requirements, then the approval, if they can not meet, they will be eliminated and must continue to call on other investors to open bids until they find the right investor. So that, time may be long but must be accepted for the sake of transparency. In order to meet the requirements, investors must have enough required capital, experience in basic construction and a credit institution to accept financing.

Recently, the National Assembly has specialized subject in supervising BOT projects in the field of transport infrastructure with the participation of many relevant agencies such as the State Audit and relevant ministries. How do you review the impact of this monitoring on the management of current BOT projects?

We applaud this program, which will help the management of BOT projects more effectively. It should be added that, when implementing BOT projects, the Ministry of Transport also asked investors to invite auditors to work from the beginning. For example, Deo Ca BOT project is a project with a total investment of over 30,000 billionvnd, we have invited the State Audit since its inception. Actually, this is necessary to help the investor to comply with regulations to avoid mistakes.

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Auditing for basic construction projects is a regular and necessary task, on the one hand, to direct the operation of the projects to ensure openness, transparency and prevention of losses, on the other hand, timely prevent shortcomings. I think the audit element is not due to a specific program of Congress that we do, it must be active, regular and give a specific schedule to relevant ministries. In particular, the Ministry of Transport is involved in BOT projects as well as projects related to the State budget.

Thank you Sir!