DECREE Providing the financial management mechanism applicable to investment projects in the form of public-private partnership Pursuant to the June 19, 2015 Law on Organization of the Government; and the November 22, 2019 Law Amending and Supplementing a Number of Articles of the Law on Organization of the Government and Law on Organization of Local Administration; Pursuant to the June 25, 2015 Law on the State Budget; Pursuant to the June 22, 2015 Law on Promulgation of Legal Documents; and the June 18, 2020, Law Amending and Supplementing a Number of Articles of the Law on Promulgation of Legal Documents; Pursuant to the June 20, 2012 Law on Price; Pursuant to the June 18, 2014 Law on Construction; and the June 17, 2020 Law Amending and Supplementing a Number of Articles of the Law on Construction; Pursuant to the June 21, 2017 Law on Management and Use of Public Assets; Pursuant to the November 23, 2017 Law on Public Debt Management; Pursuant to the June 13, 2019 Law on Public Investment; Pursuant to the November 26, 2019 Law on Securities; Pursuant to the June 17, 2020 Law on Enterprises; Pursuant to the June 17, 2020 Law on Investment; Pursuant to the June 18, 2020 Law on Investment in the Form of Public-Private Partnership; At the proposal of the Minister of Finance; The Government promulgates the Decree providing the financial management mechanism applicable to investment projects in the form of public-private partnership. Chapter I GENERAL PROVISIONS Article 1. Scope of regulations 1. This Decree provides the financial management mechanism applicable to investment projects in the form of public-private partnership (below referred to as PPP projects), including: a/ Financial plans of PPP projects; b/ Issuance of bonds by PPP project enterprises; c/ Management and use of state capital invested in PPP projects; d/ Account finalization of investment capital for completed infrastructure facilities and systems; dd/ Order and procedures for handling of assets upon transfer of infrastructure facilities and systems to competent state agencies; e/ Sharing of increased or decreased amounts in turnover. 2. Public investment funds paid for project preparation by competent agencies, PPP project preparation units, bid solicitors, PPP project appraisal councils, and units assigned to appraise PPP projects specified in Article 73 of the Law on Investment in the Form of Public-Private Partnership (below referred to as the PPP Law), provided as support for construction of infrastructure facilities and systems specified at Point a, Clause 5, Article 70 of the PPP Law; and used for compensation for ground clearance, support and resettlement or support for construction of makeshift works specified in Article 72 of the PPP Law shall be managed, used and paid under regulations on management, use, payment, and account finalization for projects using public investment funds. 3. The order and procedures for handling of assets upon transfer of infrastructure facilities and systems to competent state agencies under Point dd, Clause 1 of this Article must comply with PPP project contracts, the law on management and use of public assets, and relevant laws. Article 2. Subjects of application This Decree applies to parties to PPP project contracts; state management agencies, and agencies, organizations and individuals involved in PPP investment activities. Chapter II FINANCIAL PLANS OF PPP PROJECTS, FUNDS FOR IMPLEMENTATION OF PPP PROJECTS OF INVESTORS AND PPP PROJECT ENTERPRISES Section 1 FINANCIAL PLANS OF PPP PROJECTS Article 3. Principles of making financial plans of PPP projects 1. A PPP project’s financial plan must state all lawful expenses and revenues in stages of investment preparation, implementation and operation of the PPP project under regulations. 2. Financial indicators of a financial plan shall be calculated based on after-tax cash flows discounted at the weighted average discount rate of interests on mobilized funding sources and the investor’s return on equity. 3. Actual turnover means the whole turnover earned from the provision of public products and services, exclusive of value-added tax. 4. The currency used in financial plans is Vietnam dong. Article 4. Contents of financial plans A financial plan in the prefeasibility study report or feasibility study report of a PPP project must have the following contents: 1. Total investment amount of the project. 2. Funding sources for implementation of the project: a/ State capital amounts (if any) used for purposes specified in Articles 70 and 72 of the PPP Law: - Total public investment fund amount as support for the construction of infrastructure facilities and systems; compensation for ground clearance, support and resettlement; and support for construction of makeshift works; - Value of public assets in accordance with the law on management and use of public assets; - Disbursement schedule of public investment funds; time of allocation of capital being public assets. b/ The investor’s equity: - Total equity amount contributed to the project; - Disbursement schedule of the equity amount. c/ Funds mobilized by the investor: - Total mobilized fund amounts (by type of funding sources); - Time of loan borrowing and term of issued corporate bonds (if any), disbursement schedule of fund sources mobilized by the investor; - Expenses for fund raising: interest rates for loans and issued corporate bonds (if any) and necessary expenses for fund raising (if any); d/ A competent agency shall refer to medium-term and long-term loans’ interest rates applied by commercial banks; and loans’ interest rates applicable to similar projects for making a financial plan in the prefeasibility study report or feasibility study report (if any). 3. Proposals on incentives and security (if any). 4. The investor’s return on equity. 5. Estimated expenses in the course of operation of the project. 6. Plan on investment capital recovery and the investor’s profit: a/ Estimated public service prices and charges, specifying the reserve price and charge rate, principles of price and charge adjustment in accordance with regulations on prices and charges and relevant regulations; b/ Estimated turnover from every lawful revenue source of the PPP project enterprise; c/ Implementation duration, operation, capital recovery and profit of the investor; d/ For PPP projects applying BTL or BLT contracts, a plan on investment capital recovery and the investor’s profit must additionally have contents on funds used for making payment to the PPP project enterprise, including: - Payment schedule of public investment funds used for implementation of the PPP project; - Payment schedule of funds used for regular expenditures for the PPP project enterprise in the operation stage; - Revenues from provision of public services of the PPP project enterprise (if any). 7. Amounts to be remitted into the state budget (if any), for PPP projects applying O&M contracts. 8. Indicators for analyzing and evaluating feasibility of a financial plan include: a/ Net present value (NPV); b/ Internal rate of return (IRR); c/ Benefit-cost (B/C) ratio; d/ Levels of impacts of the (above-mentioned) financial indicators upon a change in the total investment amount, operation expenses, turnover or project contract term; dd/ Based on specific characteristics of the PPP project, a competent agency may set additional financial indicators such as debt to equity ratio, debt-service coverage ratio, quick ratio, solvency ratio, and measures to ensure capital adequacy under current regulations in order to select an efficient investment project. 9. This Article serves as a basis for related agencies to make, appraise and approve dossiers of invitation to prequalification or bidding dossiers, and signing of PPP project contracts. Section 2 FUNDING SOURCES FOR IMPLEMENTATION OF PPP PROJECTS OF INVESTORS AND PPP PROJECT ENTERPRISES Article 5. Equity of investors 1. Equity of an investor participating in a PPP project is equity actually contributed by an independent legal person or a joint-name entity of independent legal persons according to the charter of the PPP project enterprise and terms of the PPP project contract. 2. Bases for determination of equity of an investor: a/ The investor’s latest annual financial statement audited by an independent audit firm and audited interim financial statement (if any) in accordance with law; b/ For an institutional investor established in the year, its equity shall be determined based on its financial statement audited by an independent audit firm for the period from the time of its establishment to the time of its participation in the PPP project or its audited latest interim financial statement prior to the time of its participation in the PPP project in accordance with law; at the same time, the owner’s representative, owner or parent company shall make a written commitment and financial statement proving adequacy of equity for capital contribution according to the PPP project’s financial plan; c/ If the investor concurrently makes investment in different projects and other long-term financial investments (if any), it/he/she shall make a list of such projects and other long-term financial investments and ensure that its/his/her total equity can fully cover equity amounts it/he/she has committed for all of these projects and other long-term financial investments under regulations; d/ Dossiers of invitation to prequalification or bidding dossiers must specify bases for determination of equity of investors and requirement on time for determination of equity of investors to serve as a basis for evaluation of financial capacity of investors; dd/ At the time of signing the PPP project contract, the investor or PPP contract enterprise shall send to a competent agency or PPP project contract-signing agency a plan to ensure adequacy of equity and documents proving its/his/her satisfaction of the requirement on equity adequacy as stated in the PPP project contract to serve as a basis for the supervision of capital mobilization by the investor or PPP project enterprise. 3. Investors shall take responsibility before law for accuracy and lawfulness of provided figures and documents related to equity and allocation of equity to ongoing projects and other long-term financial investments, and the plan on mobilization of equity according to the implementation schedule of the PPP project. Article 6. Mobilization of loans, corporate bonds and other lawful funding sources for project implementation 1. Loans and funds mobilized from issuance of corporate bonds and other lawful funding sources by the time of project contract negotiation shall be determined based on a written commitment or agreement between the lender, bond purchaser or bond issuance-underwriting institution and the investor or PPP project enterprise. The total fund amount committed by the lender, bond purchaser or bond issuance-underwriting institution must be at least equal to the fund amount which the investor or PPP project enterprise has to mobilize. 2. The total loan amount, including funds mobilized through issuance of corporate bonds and other forms of loan borrowing (if any), must not exceed the total loan amount stated in the PPP project contract. 3. A PPP project enterprise may only carry out private placement of non-convertible bonds or bonds not linked with warrants after signing the PPP project contract. 4. The issuance of bonds by a project enterprise must comply with the PPP Law and the Government’s decree on private placement of corporate bonds and trading of privately placed corporate bonds in the domestic market and offering of corporate bonds to the international market by corporations other than public companies. 5. A PPP project enterprise that wishes to privately place corporate bonds in the domestic market must comply with Clause 4 of this Article, and satisfy the following conditions: a/ Having fully paid both principal and interest of issued corporate bonds or due liabilities during 3 consecutive years (if any) prior to the bond issuance; b/ Having a plan on issuance of corporate bonds approved by a competent authority in accordance with regulations on private placement of corporate bonds and trading of privately placed corporate bonds in the domestic market, and conformable with the financial plan in the signed PPP project contract; c/ Having its financial statement of the year preceding the year of bond issuance audited by an audit firm qualified for auditing financial statements of units having public interests. A PPP project enterprise having operated for less than 1 year is not required to have its financial statement of the year preceding the year of bond issuance audited under Clause 3, Article 78 of the PPP Law. 6. Eligible for participating in private placement/offering of corporate bonds are professional securities investors under regulations on private placement of corporate bonds and trading of privately placed corporate bonds in the domestic market. Participants in the offering of corporate bonds to the international market must comply with regulations of the bond-issuing market. 7. The bond issuance plan of a PPP project enterprise must comply with the Government’s decree on private placement of corporate bonds and trading of privately placed corporate bonds in the domestic market and offering of corporate bonds to the international market and the following provisions: a/ The volume and term of corporate bonds to be issued must comply with the financial plan stated in the signed PPP project contract; b/ The project enterprise has a plan on payment of bond principals and interests in case its contract is terminated under Clause 2, Article 52 of the PPP Law. 8. The regime of disclosure of information on issuance of corporate bonds by a PPP project enterprise must comply with regulations on information disclosure upon private placement of corporate bonds and trading of privately placed corporate bonds in the domestic market and offering of corporate bonds to the international market and the following provisions: a/ Disclosure of information prior to bond offering about the project’s financial plan according to the signed contract; procedures for management and disbursement of capital raised through the offering of bonds; and the plan on payment of bond principals and interests specified in Clause 7 of this Article; b/ Periodical disclosure of information about the management and use of capital raised through bond issuance and implementation progress of the PPP project. 9. In case a PPP project enterprise has its contract terminated under Clause 2, Article 52 of the PPP Law, the payment of bond principals and interests to bond purchasers is specified as follows: a/ The replacement investor that takes over the project under Clause 2, Article 53 of the PPP Law shall pay bond principals and interests according to terms and conditions of corporate bonds issued by the PPP project enterprise; b/ In case a competent agency takes over the project upon premature termination of the PPP contract, the PPP project enterprise shall fully pay premature bond principals and interests to bond purchasers, using funds for acquisition of the PPP project enterprise or compensation amounts for PPP project contract termination under Clause 6, Article 52 of the PPP Law, and other lawful funding sources of the PPP project enterprise. 10. A PPP project enterprise shall report to the PPP project contract-signing agency on mobilization and use of funding sources according to terms of the PPP project contract. Chapter III MANAGEMENT, USE, AND PAYMENT OF STATE CAPITAL AMOUNTS USED IN IMPLEMENTATION OF PPP PROJECTS Article 7. Principles of management of state capital amounts used in implementation of PPP projects 1. Public investment funds and value of public assets provided as support for the construction of infrastructure facilities and systems specified in Article 70 of the PPP Law: a/ The use of public investment funds as support for the construction of infrastructure facilities and systems mentioned at Point b, Clause 5, Article 70 of the PPP Law shall be specified in PPP project contracts regarding the fund ratio, value, schedule, and conditions. b/ The ratio of state capital amount in a PPP project mentioned at Point a or c, Clause 1, Article 69 of the PPP Law must not exceed 50% of the total investment fund of such project as stated in the PPP project contract. For a project with multiple component projects including a PPP component project, the ratio of state capital amount mentioned at Point a or c, Clause 1, Article 69 of the PPP Law must not exceed 50% of the total investment fund of the component project using state capital. c/ State capital amounts used in PPP projects mentioned at Point a or c, Clause 1, Article 69 of the PPP Law shall not be included in the plan on capital recovery and profit of the investor. 2. Use of public assets as support for the construction of infrastructure facilities and systems: a/ The competence, order and procedures for issuing decisions on use of public assets as support for the construction of infrastructure facilities and systems must comply with the law on management and use of public assets; b/ Public assets used as support for the construction of infrastructure facilities and systems shall be subject to price appraisal in accordance with the law on price and law on management and use of public assets. The time limit for issuance of price appraisal certificates for valuation of public assets is 6 months prior to the date of submission of investment policy for PPP projects to competent authorities for approval. 3. State capital amounts used for payment to PPP project enterprises providing public products and services under BTL or BLT contracts: a/ For projects for which state agencies or public non-business units that cannot self-finance their regular expenditures or can finance only part of their regular expenditures act as contract-signing agencies, capital amounts used for payment to PPP project enterprises include: - Public investment funds included in medium-term and annual public investment plans for payment of investment expenses of PPP projects; - State budget funds reserved for regular expenditures included in annual estimates and revenues (if any) of the PPP projects for payment of operational costs of PPP project enterprises. b/ For projects for which public non-business units that can self-finance their regular expenditures and investment expenditures act as contract-signing agencies, capital amounts used for payment to PPP project enterprises include: - Non-business operation development funds of non-business units, state budget funds for development investment expenditures allocated for payment of investment expenses of PPP component projects using state capital in the PPP project; - Funds from other lawful revenue sources in accordance with law (if any). c/ Funding sources for payment, payment conditions, to-be-paid capital amounts, time of payment, and payment time limit must be specified in PPP project contracts. 4. State capital amounts allocated from funds for regular expenditures to pay project implementation expenses after contract signing by competent agencies or contract-signing agencies under Clause 3, Article 73 of the PPP Law must comply with the law on the state budget. 5. The State shall pay to a PPP project enterprise the decreased amount in turnover under the mechanism for sharing of increased or decreased amounts in turnover from state budget contingency funds as specified in Article 82 of the PPP Law in accordance with Chapter V of this Decree. Article 8. Principles of control of payment of public investment funds, funds for regular expenditures, and funds from lawful revenue sources of PPP project enterprises for investment in PPP projects, and payment using state budget contingency fund

Decree 28/2021/ND-CP