Nghe An: Encouraging investment in the form of PPP

(Baonghean) - While the state budget is being spread across many areas, mobilizing businesses to participate in investing in construction and management of civil works is a positive direction. This method is applied under the Public-Private Partnership (PPP) contract. In Nghe An, according to registration up to 2020, there are 98 projects invested in this form.

Vinh City Wholesale Market – a PPP investment project under the BOT form has been in operation for more than 2 years. Photo: Nguyen Son

“Start-up” projects

A public-private partnership contract is signed between an investor, project enterprise and a competent state agency to implement a new investment project to build or renovate, upgrade, expand, manage and operate infrastructure works or provide public services.

In the province, from 2007 to present, there are 29 projects applying the PPP investment form that have been, are being implemented and are preparing investment policy documents, with a total cost of 10,007 billion VND. Of which, there are 26 projects in the form of Build-Transfer (BT) contracts, 2 projects in the form of Build-Operate-Transfer (BOT) contracts and 1 project in the form of Build-Own-Operate (BOO) contracts.

To date, only 7 projects have been implemented (2 completed projects, 5 projects in progress), with a budget of 349 billion VND, mainly in the form of BT (6 projects, total budget of 329 billion VND). The above statistics show that, in the past 10 years, the mobilization of enterprises to participate in investment, business, exploitation, management and handover of public works in the province has been too modest.

The two completed projects are: Cua Tien II Bridge (Vinh city) under the BT form (land for construction) 32m long, 15.25m wide, total investment 14 billion VND; and the wholesale market (one side of Vinh market) Vinh city under the BOT form, 9,200m2 wide, investment 25 billion VND, completed and put into use for more than 2 years.

If the Cua Tien bridge project is a typical example of a BT project, where the enterprise invests in building a bridge for the people and the locality allocates a land area for the enterprise to use and do business; then the wholesale market model is a form that is worth paying attention to and needs to be promoted.

According to the contract, the enterprise investing in the wholesale market will operate it for 25 years (including 2 years of basic construction), with a monthly tax payment of 600 million VND to the budget. In addition, the enterprise will also provide about 30 workers for market management. More importantly, with the management assignment, the enterprise will organize all activities in the market well, such as arranging for over 400 regular business households and thousands of seasonal business households.

Business activities at the Wholesale Market - Vinh City. Photo: Nguyen Son

Currently, in the province, there are 5 other projects operating under the BT form, including: Construction of a traffic route connecting Nghia Dan - Dong Hoi road to Dong Hoi port, 480m long, 15m wide, with a total investment of 34 billion VND; construction of Hung Phuc Primary School (Vinh city) with 20 classrooms and auxiliary works, with a total investment of 51 billion VND; construction of Cua Lo town wastewater treatment plant, with a capacity of 3,700m3/day and night, with a total investment of over 59 billion VND; construction of Le Mao road phase 2 (Vinh city), 1.2km long, 48m wide, with a total investment of 81 billion VND; upgrading the Cau Dau level III dyke (Do Luong district), 1,745m long, with a total investment of 90 billion VND.

Along with that, 7 projects have been approved: Construction of planned roads in Nghi Phu and Hung Loc communes (Vinh city) with a length of 1,610m, total investment of 143 billion VND; Construction of Hieu 2 Bridge and roads at both ends of the bridge (Thai Hoa town) with a total investment of 211 billion VND; upgrading and expanding Nguyen Viet Xuan street (Vinh city) with a length of 1,700m, total investment of 365 billion VND; construction of Ly Thuong Kiet street through Hung Binh ward (Vinh city) with a length of 1,056m, total investment of 118 billion VND; construction of planned roads in Nghi Kim commune (Vinh city) with a length of 3,723m, total investment of 160 billion VND; construction of Hoang Mai town Cultural Center, 23 billion VND; construction of Nghia Dan district water plant (BOT), capacity of 15,000 m3/day and night, total investment of 229 billion VND.

Hung Phuc Primary School project is under construction in BT form - Photo by Nguyen Son

Many proposed projects, slow implementation

According to the assessment of all levels and sectors, PPP projects are considered an important solution to effectively promote the strength of economic sectors, but the current general situation of this type of investment is "doing while waiting", because there are still many problems in the implementation process.

According to the above statistics, over the past 10 years, Nghe An has only had 7/29 projects registered under the PPP form to start implementation. In many localities, leaders are not really enthusiastic about the projects, not bold enough to discuss solutions from land planning, site clearance support, business support... According to statistics, projects implemented under the public-private partnership (PPP) form in the province in the past were mainly proposed by investors, only 1 project was proposed by a state agency.

Therefore, the number of PPP investment projects that have been and are being implemented in the whole province is still small, not commensurate with the potential, and the implemented projects are only concentrated in Vinh city and towns. Some districts have project dossiers but the scale is still small, there are no large projects that create advantages and breakthroughs for socio-economic development.

It is worth noting that most of the projects implemented under the form of public-private partnership (PPP) in the province are mainly implemented under the BT form, while other forms are very few. This type of investment is attractive to businesses to be able to control the allocated land fund based on the calculation of construction costs and make profits during the investment process. Therefore, out of more than 100 projects registered under the PPP form in the province, 68 projects proposed to invest under the BT form.

According to Mr. Nguyen Van Do - Director of the Department of Planning and Investment, many projects proposed under the PPP form in localities are still limited in feasibility, due to a lack of understanding of the process, regulations as well as balanced resources...

At the same time, the capacity of some enterprises is not really strong enough to implement projects under the PPP form; the coordination between the government and investors in the project implementation process is not really effective, especially in compensation and site clearance.

In the coming time, the Provincial People's Committee assigned the Department of Planning and Investment to coordinate with departments and branches to develop a specific guidance system on implementing PPP projects at the district level. In the future, the Government will also supplement practical regulations and propose to study and promulgate the PPP Investment Law to have unified policies and specific regulations that are both strict and open for businesses to implement proposed projects.

Nguyen Son