NA official ascribes major risks to BOT investors

A senior official at the National Assembly’s (NA’s) Financial and Budget Committee pointed out majors risks, such as possible master plan adjustment and less realistic planning, in the execution of infrastructure projects under public-private partnerships (PPP), especially in build-operate-transfer (BOT) mode.

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Vehicles wait to pay fees at a build-operate-transfer road tollgate


A roundtable talk on the development of transport infrastructure was held by Nha Dau Tu magazine recently. The event was attended by senior officials from the NA’s committees, the Transport Ministry, and the Ministry of Planning and Investment, as well as economists, reported Kinh Te Do Thi news website.

Minister of Transport Nguyen Nhat said at the roundtable talk that the financial resource demand for the development of transport infrastructure is significant. Given the State budget constraints, the Government has stressed that calling for the private sector to invest in transport infrastructure projects under public-private partnerships is a vital solution.

The need for investment capital in infrastructure has exceeded the capacity of the State budget for the 2016-2020 medium-term investment plan. The situation will persist in the course of the country’s industrialization process, according to Nguyen Duc Kien, vice chairman of the NA Economic Committee.

He commented that the mobilization of all resources beyond the State budget is a growing trend, which is an effective solution for meeting the requirements for investment capital in developing transport infrastructure and enhancing the quality of services in the sector.

Dinh Van Nha, vice chairman of the NA’s Financial and Budget Committee, named the major risks to private investors involved in PPP infrastructure projects, especially those under the BOT mode.

The first risk involves the possible adjustment of master plans. Nha explained that the strategies in the master plans for road networks and infrastructure are inadequate.

Besides this, the price of infrastructure services can be seen as a second risk, which residents refer to as the road maintenance fee.

The third risk is that development strategies in Vietnam are less realistic and are likely to fail for many reasons. Previous projects involving road and airport infrastructure could be at risk and suffer negative effects, thereby reducing their revenue.

The Government and the legislative NA are expected to create a legal environment for PPP projects so that investors, especially those involved in BOT projects, will not need to bear these high risks any longer. In the past 10 years, they have invested, despite all possible risks, according to the vice chairman Nha.

He noted that the Government should clarify various issues. For example, the pricing of infrastructure services can be seen as the foundation for addressing many persistent problems.

According to him, the Government should amend the economic and technical norms for construction, including infrastructure investment and construction. Currently, the country’s economic and technical norms still apply the calculation from the late 1990s.

“We are in a market economy, but the basis for determining the level of reasonable costs still follows the centralized planning mechanism rather than being aligned with the market,” he said.

SGT

NA official ascribes major risks to BOT investors, vietnam economy, business news, vn news, vietnamnet bridge, english news, Vietnam news, news Vietnam, vietnamnet news, vn news, Vietnam net news, Vietnam latest news, Vietnam breaking news
 
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