Chương IV Luật Đầu tư theo phương thức đối tác công tư 2020: Thành lập, hoạt động của doanh nghiệp dự án ppp; hợp đồng dự án ppp

Chapter IV

INCORPORATION AND OPERATION OF PPP PROJECT ENTERPRISES; PPP CONTRACTS

Article 44. Incorporation and operation of PPP project enterprises

1. After the decision to approve the selection results is issued, the investor shall establish a PPP project enterprise in a form of a limited liability company or a joint stock company that is not a public company with the sole purpose of signing and implementing PPP contracts. The application for enterprise registration shall contain the details prescribed by law on enterprises and the decision on approval of investor selection results.

2. PPP project enterprises may issue corporate bonds in accordance with Article 78 of this Law.

3. Apart from compliance with the provisions of Clauses 1 and 2 of this Article, the establishment, management, operation, dissolution, and bankruptcy of PPP project enterprises must comply with laws pertaining to businesses or enterprises, and regulations of other relevant laws and PPP contracts.

Article 45. Classification of PPP contracts

1. The group of project contracts applying the mechanism for direct collection of fees from users or underwriting for public products and services, including:

a) BOT contract means the contract under which a PPP project investor or enterprise is assigned the right to build and operate infrastructure works and systems within a predetermined term; upon expiry of such term, the PPP project investor or enterprise transfers these works or systems to the State;

b) BTO contract means the contract under which a PPP project investor or enterprise is assigned the right to build infrastructure works and systems; after the construction is complete, the PPP project investor or enterprise transfers these works or systems to the State, and is accorded the right to operate these works or systems within a specified period of time;

c) BOO contract means the contract under which a PPP project investor or enterprise is assigned the right to build, own and operate infrastructure works and systems within a predetermined term; upon expiry of such term, the PPP project investor or enterprise terminates the contract;

d) O&M contract means the contract under which a PPP project investor or enterprise is assigned the right to operate and manage part or the whole of existing infrastructure works and systems within a predetermined term; upon expiry of such term, the PPP project investor or enterprise terminates the contract.

2. The group of project contracts providing the State mechanism whereby payment is made on the basis of the quality of public products and services, including:

a) BTL contract means the contract under which a PPP project investor or enterprise is assigned the right to build infrastructure works or systems, and transfer them after completion; is accorded the right to supply public products and services on the basis of operating and exploiting these works or systems within a predetermined term; the transferee signs a service lease and pays the PPP project investor or enterprise;

b) BLT contract means the contract under which a PPP project investor or enterprise is assigned the right to build infrastructure works or systems, and supply public products and services on the basis of operating and exploiting these works or systems within a specified period of time; the transferee-to-be signs a service lease and pays the PPP project investor or enterprise; upon expiry of such term, the PPP project investor or enterprise transfers these works or systems to the State.

3. Mixed contract is the contract which is the result of combination of those contracts prescribed in Clause 1 and 2 of this Article.

4. With respect to the projects referred to in Point b of Clause 9 of Article 3 herein, the contract providing the mechanism for direct collection of fees from users shall not be applied to them.

Article 46. PPP contract documentation

1. PPP contract documentation shall comprise the following main documents:

a) PPP contract, including general and specific terms and conditions;

b) Appendices (if any);

c) Contract negotiation minutes;

d) Decision on approval of investor selection results;

dd) Bidding documents and other documents clarifying the selected investor’s bidding documents;

e) Invitation for bid and other documents stating amendments and supplements to the invitation for bid.

2. If there is any change in any contractual terms and conditions, parties shall need to sign appendices to the contract.

Article 47. Basics of project execution contracts

1. A PPP contract shall contain the following information:

a) Objectives, scale, location and schedule of implementation of a project; time and duration of a infrastructure work or system; the effective date of the contract; contract term;

b) Scope of and requirements concerning engineering, technology and quality of the infrastructure work or system, supplied public products or services;

c) Total investment; capital structure; financial plan, including the financial arrangement plan; public product and service prices and charges, including methods and formulas for setting or adjusting them; state capital invested in a PPP project and the corresponding form of management and use (if any);

d) Conditions for use of land and other natural resources; plans to organize the construction of auxiliary works; requirements for compensation, support and resettlement; assurance of safety and environmental protection; force majeure cases and plans for response to force majeure events;

dd) Responsibilities for carrying out licensing procedures according to regulations of relevant laws; design; organization of construction; quality inspection, supervision and management at the construction phase; acceptance testing, settlement of investment capital and confirmation of the completion of infrastructure works and systems; provision of main input materials used for production and business activities of the project;

e) Responsibilities for the operation and commercial use of infrastructure works and systems so that public products and services are provided in a continuous and stable manner; conditions, order and procedures for transfer of infrastructure works and systems;

g) Performance security; rights of ownership, management, and exploitation of assets related to the project; rights and obligations of the PPP project investor or enterprise; the agreement on use of a third-party guarantee service with respect to the obligations of the contract signatory;

h) Plans for response to the circumstances substantially changing in accordance with civil law to continue to perform the contract; response, compensation and punitive measures in case one of the contracting parties breaches the contract;

i) Responsibilities of parties related to information security; reporting regime; provision of information, related documents and explanation about the contract performance at the request of competent authorities, inspection, examination, auditing, and supervising authorities;

k) Principles and conditions for amendment, supplementation and termination of the contract before its expiry; assignment of rights and obligations of the parties; the lender's rights; procedures, rights and obligations of the parties upon contract discharge;

l) Investment incentives, guarantees, plans to share the revenue increase and decrease, assurance of balancing of foreign currencies, types of insurance (if any);

m) Laws governing the contract and dispute resolution mechanism.

2. PPP contract must specify rights and obligations of the contracting authority, the investor and the PPP project enterprise.

3. The Government shall regulate sample contracts applicable to types of contracts specified in Article 45 of this Law.

Article 48. PPP contract performance security

1. The PPP project enterprise must provide a contract performance security before the effective date of the contract.

2. Based on the scale and nature of each project, the value of a contract performance security shall be specified in the invitation for bid at a determined rate of between 01% and 03% of total investment in the project.

3. The validity period of the contract performance security shall start on the effective date of the contract and end on the date on which the PPP project enterprise completes its contractual obligations during the stage of construction of infrastructure work or system under the contract; In cases where it is necessary to prolong the construction period, the investor must extend the validity period of the contract performance security accordingly.

4. The PPP project enterprise shall be entitled to return or release the contract performance security after discharge of their contractual obligation to build the construction work or infrastructure system, unless otherwise prescribed in Clause 5 of this Article; As for O&M contracts, the contract performance security shall be returned or released after the investor completes their contractual obligations.

5. The PPP project enterprise shall not be entitled to the return or release of the contract performance security in the following cases:

a) Refuse to execute the contract after contract conclusion;

b) Violate agreement made in the contract to the extent of the early termination of the contract as prescribed at Point d of Clause 2 of Article 52 in this Law;

c) Fail to extend the validity period of the contract performance security under the regulations laid down in clause 3 of this Article.

6. The Government shall elaborate on the ratio of value of the contract performance security under clause 2 of this Article.

Article 49. Conclusion of PPP project execution contracts

1. A contract shall be signed on the basis of a decision on approval of investor selection result, contract negotiation result or bidding document that remains valid, or investor's capability information which is updated at the time of contract conclusion and the invitation for bid.

2. The investor and the PPP project enterprise may form a party and jointly sign a contract with the contracting authority.

3. As for investors in partnerships, all member partners must directly bear their signatures and stamps (if any) into the contract.

Article 50. Modification or revision of PPP contracts

1. Modification of a PPP project contract must be specified in the contract and considered by the contracting parties in one of the following cases:

a) The project is affected by force majeure events or when circumstances change substantially or when there is any change in relevant planning, policies or laws that seriously affects the technical and financial plans of the project, prices and charges of public products and services supplied by the PPP project enterprise;

b) One of the contracting parties is subject to certain adjustment;

c) The term of the PPP contract provided in clause 2 and 3 of Article 51 herein is subject to any adjustment;

d) A PPP contract falls into other cases where modification or revision thereof is required under the authority of the contracting authority provided that such modification does not result in any change in the investment policy, and brings about better financial and socio-economic efficiency for the project.

2. The steps in modifying a PPP contract shall be specified as follows:

a) One of the contracting parties submits a written request for modification or revision of the contract, clarifying cases in which modification or revision of the contract is accepted;

b) The contracting parties negotiate the proposed updates to the contract, including prices and charges of public products and services; contract term; other matters of the contract whenever there is any change thereof;

c) The contracting parties need to sign appendices to the contract that describe amendments or modifications.

3. With respect to the modification of a contract leads to a change in the objectives, location, size and type of PPP contract, if an increase in total investment by 10% or more or the value of state capital invested in the PPP project is made after contingency funds are used up, investment policy adjustment procedures must be carried out as prescribed in Article 18 of this Law before signing the contract annexure for amendments or modifications.

Article 51. PPP contract term

1. The contract term shall be agreed upon between parties based on the decision on approval of investor selection results.

2. The contracting parties may adjust the contract term on condition that the aggregate contract term, including the adjustment period, does not exceed the land allocation or lease term in accordance with the land law, and such adjustment does not change other contents of the project investment policy decision.

3. Cases in which adjustment in the contract term is required, including:

a) There is any delay in completing the construction phase or any interruption in the operation of the construction work or infrastructure system due to any substantial change in circumstances as provided in the civil law to the extent that it goes beyond the reasonable control of a contracting party;

b) The project is suspended by the competent authority or other competent authority of the State, except as it is suspended through the PPP project enterprise’s fault;

c) As additional costs incurred due to the competent authority’s request have not yet been determined by the contracting authority after the contract conclusion, in case of failure to obtain permission for such extension, the PPP project enterprise cannot recover these costs;

d) There is any change in planning, policies and related laws to the extent of a reduction in revenue by less than 75% compared with the revenue in the financial plan specified in the contract;

dd) The revenue increases by at least 125% compared to the revenue inscribed in the financial plan specified in the contract.

Article 52. PPP contract termination

1. The contract termination shall comply with the provisions of the contract, and may serve as a basis for the contract discharge.

2. Termination of a PPP project contract before its expiry (briefly called early termination) only occurs in the following cases:

a) If the project is affected by a force majeure event, despite all remedial actions taken by parties, the continued execution of the PPP contract will not be ensured;

b) Early termination occurs to gain the state interests; meet the requirements concerning national defence, security and state secrets;

c) The PPP project enterprise loses its solvency in accordance with the law on bankruptcy

d) Either party seriously defaults on contractual obligations;

dd) Other cases appear due to substantial changes in circumstances in accordance with civil law to the extent that the contracting parties agree to terminate the contract.

3. The contracting authority must report to the competent authority before the contract termination.

4. In case of termination of a PPP contract before its expiry, the contracting authority shall perform the following tasks:

a) Cooperating with the lender in selecting an alternative investor to sign a new PPP contract;

b) Pending the implementation of the response plan, if an alternative investor has not been selected yet, the contracting authority shall be responsible for the safety and anti-deterioration of the work or infrastructure system with respect to the project under construction; the operation and commercial use of the work or infrastructure system to ensure the continuity of the provision of public products and services with respect to the project in operation.

5. The authority entering into a contract to perform the tasks specified in Clause 4 of this Article may use the funding sources specified in Clause 3 of Article 73 in this Law and other lawful income.

6. In case where the PPP contract is terminated before expiration of the term specified at Point b of Clause 2 of this Article or due to the contracting authority’s serious default on the performance of the contractual obligations specified at Point d of Clause 2 of this Article, funds for acquisition of the PPP project enterprise or compensation for contract termination shall be allocated from the state capital according to the provisions of law; In case the termination occurs at the investor's fault specified at Points c and d of Clause 2 of this Article, the investor shall be responsible for transferring shares or contributed capital portions to the alternative investor.

7. The Government shall elaborate on this Article.

Article 53. Lender’s rights

1. During the process of execution of a PPP contract, the lender's rights shall be exercised according to the parties' agreements made in the credit facility contract, the PPP contract and regulations of relevant laws.

2. In case where a PPP contract is terminated before expiration and an alternative investor is selected, the lender shall cooperate with the contracting authority to select a substitute investor under the provisions of Point b of Clause 1 of Article 39 herein.

3. Regulations laid down in Clause 2 of this Article must be agreed in writing between the contracting authority and/or the lender and the investor and/or the PPP project enterprise.

Article 54. Transfer of shares, contributed capital portions, rights and obligations of PPP contracts

1. In case where the PPP project enterprise is established by an investor in the partnership, member partners shall have the rights to transfer shares or contributed capital portions to each other, but must ensure the minimum equity ratio of each member as prescribed in Point a of Clause 2 of Article 41 herein.

2. Investors shall have the right to transfer shares or contributed capital portions to other investors after completion of the construction of works with respect to those projects with construction components, or after switching to the operation stage with respect to those projects without construction components.

3. The transfer stipulated in Clause 1 and 2 of this Article must satisfy the following requirements:

a) Such transfer does not lead to any change in execution of a PPP contract already in effect;

b) Such transfer must comply with regulations of relevant laws;

c) Such transfer is accepted by the contracting authority;

d) Such transfer is subject to agreement between the lender and members of a partnership with regard to partnership investors.

4. The transferee must satisfy the following requirements:

a) They must not be constrained from the right to receive transferred items as provided for by law;

b) They must have financial and administrative capacity to execute PPP contracts and other related contracts;

c) They are committed to continuing to carry out the rights and obligations of the transferor in accordance with the PPP contract and other related contracts.

5. In case where the transfer specified in Clause 1 and 2 of this Article changes the contents of enterprise registration, the PPP project enterprise must comply with relevant provisions of the enterprise law.

Article 55. Legislation governing PPP contracts

PPP project contract, its annexure and other relevant documents signed between a Vietnamese state authority and a PPP project investor or enterprise shall be governed under Vietnamese legislation. With respect to the matters that are not regulated under Vietnamese law, the parties may reach specific agreements in a PPP contract on condition that such agreements are not in breach of basic rules of Vietnamese law.