Government to partly underwrite revenue risks for private investors in infrastructure

By Dat Nguyen June 19, 2020 | 05:09 am PT

A vehicle passes through a toll booth in Cai Lay District, southern Tien Giang Province. Photo by VnExpress/Quynh Tran.

The National Assembly has passed the Public-Private Partnership Law which allows the government to share financial risks with companies in public infrastructure projects.

The law will allow for a 25 percent band on either side of targeted revenues in a public-private partnership (PPP) project, and its provisions will only kick in if that is breached.

Thus, if a private company’s revenues fall by more than 25 percent from the agreed amount, it will receive 50 percent of the difference from the government as indemnification.

Whereas, if the revenue exceeds the projected amount by more than 25 percent, the company will have to hand over half the excess amount to the government.

Minister of Planning and Investment Nguyen Chi Dung said with the law the government seeks to attract greater private sector participation in infrastructure development to reduce the pressure on public funds.

The law will take effect on January 1, 2021.

Foreign businesses have said that PPP projects in Vietnam are too risky and the government should protect investors by ensuring a reasonable return on their investment.