Addressing Difficulties for PPP Projects

8:29:24 AM | 10/12/2021

Facing the complicated development of the COVID-19 pandemic, the Government of Vietnam has issued many policies and solutions to help remove difficulties and promote production and business for enterprises. However, the actual implementation of construction enterprises, especially PPP project contractors, faces many difficulties. Many projects are at risk of not ensuring progress, and many financing options are hardly feasible.

Double difficulties during the pandemic

Due to the COVID-19 pandemic situation and social distancing, projects under construction could not rotate personnel, machinery, equipment or materials to construction sites to meet the schedule. Some construction projects must be stopped.

When the pandemic broke out, in Trung Luong-My Thuan expressway project, Cam Lam-Vinh Hao expressway PPP project, and Nghi Son-Dien Chau highway project, many officials and workers had to be quarantined, badly affecting the construction progress. In addition, units and businesses also face added costs to maintain the apparatus, from human resources to machinery and equipment.

Toll collection stations in localities that are implementing social distancing under Directive 16 must stop, resulting in zero revenue. However, investors still have to maintain and arrange personnel and funding to operate, ensure traffic safety and pay bank interest according to the financial plan, increasing the risk of bad debt and bankruptcy to many enterprises.

Proposing support options

Facing the above situation, the Vietnam Association of Road Traffic Construction Investors (VARSI) and the Vietnam Chamber of Commerce and Industry (VCCI) have collected recommendations of many traffic construction enterprises, and proposed the Government issue solutions to support construction businesses affected by the COVID-19 pandemic.

Most of the proposed businesses are supported in terms of corporate finance with solutions to reduce interest rates on loans, extend the time to pay debt and adjust plans to repay bank principal/interest. Construction loans are deferred or offer 0% interest to ensure businesses can survive through this difficult time.

The enterprises also proposed the Government direct the authorities to implement the commitments agreed in the project contract, such as allocating state capital to support the Hanoi-Hai Phong project, the Ca tunnel project.

To ensure the construction of ongoing projects, many businesses propose to add green channels for the transportation of goods and materials for projects under construction to meet the demand, ensuring project implementation as planned for the North-South expressway projects.

In addition, options such as stabilizing the price of raw materials and reducing electricity bills for construction projects are also mentioned. Many traffic construction enterprises request the local Departments of Construction to promptly and accurately update the unit prices of construction materials: steel, cement, stone and sand, avoiding disadvantages for contractors/project enterprises that have signed BOT contracts or construction contracts.

For the prevention of the COVID-19 pandemic, businesses have requested to allocate vaccines for workers, and at the same time, allow project sites to work on site. Vehicles transporting staff, equipment and construction materials are allowed to move on the condition that they comply with the instructions and directions of the Ministry of Health on pandemic prevention plans to ensure dual goals.

The VARSI also proposed a number of solutions to overcome difficulties, proposing the Government assign relevant ministries and sectors to guide the application of regulations on force majeure conditions for BOT contracts; and credit loan contracts signed by investors with competent authorities and with banking credit institutions previously signed with enterprises due to the impact of the COVID-19 pandemic.

In addition, VARSI proposed relevant ministries and agencies to guide the application of regulations on the basis of Resolution 68/NQ-CP on a number of policies to support employees and employers who face difficulties in the pandemic.

VARSI also proposed that the government have a plan to allow businesses to be late in collecting and paying social insurance premiums for the last 6 months of the year, and at the same time, have a policy to support employees for toll stations that have to temporarily stop collecting fees.

The above solutions can become a "lifebuoy" in time, ensuring the dual goals of pandemic prevention and maintaining production, contributing to realizing the task of completing 5000km of the highway by 2030.

With the goal of promoting the business community to actively cooperate and participate in public-private partnerships (PPPs) to increase the competitiveness of businesses, the Business Office for Sustainable Development (SD4B), the Vietnam Chamber of Commerce and Industry (VCCI) and the Public-Private Partnership Committee - National Council for Sustainable Development and Competitiveness Improvement  are implementing the project: “Strengthening participation of the private sector in public-private partnership in Vietnam (2020-2024)”.

Accordingly, the project supports the development of a policy framework to attract private sector investment in public-private partnership programs, especially projects related to sustainable development goals, and at the same time increase the efficiency of social investment capital.

By Huong Ly, Vietnam Business Forum