BOT Transport Project - Issues to be addressed

Photo: internet

Photo: internet

Implementing policy of the Party and State, from 2011 to now, Transport sector has been mobilized near 200 trillion VND of capital from the private area to invest, develop transport infrastructure system in the form of public-private partnership (PPP). In addition to positive results contributing to promote socio-economic development, reduce public debt pressure, stimulate domestic production, etc. Ministry of Transport has clearly identified some limitations of BOT projects and considered general policies to overcome and ensure the harmony of interests of the State, people and businesses.

Talking with at the conference "BOT Transport - Current situation, economic and technical solutions" Mr. Pham The Minh - Vice President cum Secretary General of Vietnam General Association for Construction said that BOT is a one of the investment form of public-private partnerships (PPPs), the State acts as the representative of the society to sign with the investor to invest in a particular infrastructure. In which, the State contributes land, use right to use, the duration of exploitation, the level of charge and preferential tax policy for investors. Investors contribute capital and have the right to exploit, manage and collect fees to return their investment capital and make appropriate profits.

Mr. Minh added that the BOT mobilized private capital from various sectors to build infrastructure. It reduces burden for the State when the Official Development Assistance loans (ODA) has been limited; the public debt has reached the ceiling; the revenues from the population are deficient. While the need for investment to develop, to modernize the infrastructure is still required.

Moreover, BOT investment is more efficient as investors tend to manage better investments and minimize the corruption that often appears in the public investment management apparatus. BOT investors also manage the exploitation process better and more closely; maintain in time, so the work will be better maintained, bring more efficiency.

However, according to Mr. Minh, the last time, the BOT investment has still many deviations to correct, the call for investment is not public and transparent. More than 70% of the projects are not invited for bidding because of time-delay reasons or lack of contractor to appoint? Who are appointed contractors? Many investors who do not have the expertise in transportation and are not financially capable have been appointed to invest. There is fact that appointed contractors handed over to other investors for the "commission", this helped them to overcome the debt and bankruptcy.

This is the biggest and most complex mistake, because the people on behalf of the State who appoint the investment have put their interests right in the decision to choose the investor and they are the owner, no longer the representative of society and people anymore.

It is reported that after being accepted as an main contractor, the fact that the sub-contractor such as design consultants, supervision consultants, site contractors and supplying materials and equipment contractors want to get work must "return" to main contractor from 10 to 20% of the contract value. Many contractors call it "fresh, raw food." Agreements on the fee collection period, the level of fee in the contract between the State and main contractor are called "dry provisions. " or "to save" gradually. If the collection fee is low, the time is long, it takes the bank debt
to extend! and low or high fee, fast or slow period, that’s the whole society, the people bear,  not the State.

Next is the issue of investment funds. With the same scale and standard, but for Cau Gie - Ninh Binh path, investment rate for 1 km road is higher much than Phap Van - Cau Gie path, although the variable price between the two investment moments has been considered. Through inspections, some investors have been forced to reduce the fee and collection time up to dozens of years. At the end of 2014, a series of BOT projects are proposed to increase fee, after the Prime Minister revise the BOT projects, they proposed to reduce fee and collection time So the responsibility is of which agency, the Ministry of Transport or the Ministry of Finance?

Taking the reason of lack of capital, damaged roads, the fact that the State has taken the National Highways for BOT that were invested before is wrong. Highway 1 from Hanoi to Quang Binh is cut into many sections. Section Phap - Cau Gie has not been renovated, only covered a road class and then let the investor charge fee people; Permission to collect fees at projects not invested by investors such as the Ben Thuy Bridge, Thanh Hoa City bypass from the Tao Xuyen Bridge, the fee collection at North Thang Long - Noi Bai instead of bypass road in Vinh Yen, the fee collection through Cai Lay town, Tien Giang and the bypass of the town is not in line with the principle of BOT investment.

Particularly, the fact that investors of the Hanoi-Hai Phong Expressway can collect fee on the old road 2.5 times higher than the present level to compensate 4 trillion VND of freeway clearance, is a violation of the law. This should have been approved by the National Assembly.

That’s the reason why the BOT is distorted and opposed by people and road users in the past. If it is done properly, publicly and transparently, it’s no matter.


BOT Cai Lay (internet photos)

When reporter asked, "So is there a legitimate incentive policy for investors to make a capital return, be profitable and be protected from risks caused by natural calamities or sabotage. Mr. Minh replied: "First of all, it is necessary to consult the public of the residential areas where the project passes by referendum on the mass media. Secondly, the appointment of contractor should be selected by the owner, but the design evaluation should be assigned to the independent consultants of the professional associations to evaluate the correctness and accuracy of the design, avoid raising prices and total investment amount. However, in order not to be "distorted", it should be publicly transparent from the project formulation to calling the investment process. Indicators such as land use, standard size of works, time of exploitation, maximum collection fee should be publicized for investors to choose and for social supervision.

In addition, according to Mr. Minh, in any situation, BOT investment is not the only work to ensure the freedom of choice for users. Consultancy bodies should not selected only by state agency but also an advisory council.

There should have regulations on responsibility of agency for design, design evaluation, construction and construction supervisors if any breakdown or damage occurs during the warranty period.

The most important is the promulgation of a decree on investment management in the form of BOT and PPP to implement, overcome the arbitrary state of BOT investment today.

Author: HT