PPP proposed for major projects only
PPP proposed for major projects only
Many individuals and organizations have urged the Ministry of Planning and Investment to only employ the public-private partnership (PPP) model for large-scale projects.
The ministry has been gathering feedback on the draft Law on PPP from experts, businesses and State agencies. Many have stressed the need for the minimum investment scale of projects to be subject to the PPP format.
PPP contracts take a long time to carry out and they require various guarantees from the Government, according to the ministry.
The ministry explained that the requirement for the minimum scale is meant to select projects that are worth investing in under PPP and to prevent investments from being scattered, which could lower the efficiency of such investments.
Preparatory costs for developing PPP projects are also quite high, so the execution of small-scale projects would be less effective, the ministry said, adding that large-scale projects would be highly attractive to investors, especially those from abroad.
According to the draft law, projects in the fields of transport and electricity where costs range from VND240 billion (US$10.3 million) to VND4.6 trillion (US$198 million) each are subject to the PPP format.
Statistics also showed that the majority of the completed PPP projects required more than VND200 billion each, accounting for 69.3% of the total. If those under build-operate contracts are excluded, the figure would rise to 76.3%.
Therefore, the ministry said in Article 6 of the draft law that the PPP format only applies to projects that require at least VND200 billion.
The country is now home to 336 PPP projects with contracts that have already been signed. These projects have a total investment of VND1.6 quadrillion.
The draft PPP law will be submitted to the legislative National Assembly for feedback at a plenary sitting in October this year, and it is scheduled for a vote next year.
