The State shall share 50 % of decreased revenue with investors of PPP projects

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PPP project investors share with the State 50% of the increased revenue between actual revenue and contracted revenue. Photo: Internet.

Accordingly, parties will agree on the level of revenue committed in the contract, but not higher than 125 percent of the revenue in the financial plan. The share of increased revenue is applied after the term of the PPP contract is adjusted as per Point dd, Clause 3, Article 53 of this Law (When the revenue increases by 125 percent or more compared to the revenue level in the financial plan specified in the contract).

If the actual revenue decreases compared to the contracted revenue, the draft law states that the State shall share with investors and enterprisesof PPP projects 50% of decreased revenue between the actual revenue and the contracted revenue for the PPP project fully satisfying the following conditions:

Firstly, the project is made by a competent authority; applies to BOT, BTO and BOO contracts and does not use state capital to support the construction of works and infrastructure systems.

Secondly, the changes in related planning, policies and laws make the actual revenue lower than the contracted revenue. The parties shall agree on the level of contracted revenue but not higher than 75 percent of the revenue in the financial plan.

Thirdly, the project has implemented all measures to adjust prices and fees of products and service or adjust the PPP contract term as prescribed in Articles 52 and 53 of this Law but has not yet ensured the revenue level prescribed as specified inPoint b of this Clause.

Fourth, for the PPP project under the investment policy decision competency of the provincial People's Councils, the share of reduced revenue is guaranteed by the local budget.

The draft law also stipulates that the revenue increase and decrease mechanism prescribed in Clauses 1 and 2 of this Article must be determined in the decision on investment policies.

The parities shall confirm the actual revenue of the PPP projects annually, and every three years the parties shall determine the difference between the actual revenue and the contracted revenue of the PPP project based on the annual data, which serves as a basis for the competent authorities to consider and apply the mechanism of sharing of increased and decreased revenue.

The draft law states that the Government will specify this content.