Experts dissect BOT project shortcomings
  • | vietnamnet, | September 16, 2016 04:24 PM

Many experts have blamed lax management and lack of regulations for violations related to build, operate and transfer (BOT) projects.


There are many shortcomings with BOT projects

Le Quoc Dat, vice inspector of the Ministry of Planning and Investment pointed out several shortcomings with the current BOT projects in Vietnam.

Many toll booths have been erected not on their new roads but on important old roads such as the Highway 1 and Ho Chi Minh Highway. People have no choice but to use the routes and investors can apply high toll fees for profit. Vietnam also doesn’t really have clear criteria on how to select BOT projects.

Ngo Van Quy from the State Audit Office of Vietnam said there was no regulation states that a toll booth must be located within the location of the project. This creates a loophole that is easily taken advantage of and investors just place toll booth everywhere they want even on roads not built by them. In addition, each BOT project has a different toll road charge regulations. Some projects are allowed to increase the fees by 18% every three years.

He pointed out four shortcomings of Vietnam’s BOT projects including how to estimate number of vehicles before approving projects as each investor has different calculating method.

Secondly, it is regulated that the toll booths must be at least 70km away from each other yet local authorities still allow investors to shorten the distance. The distance between 32 out of 88 toll booths on Highway 1 is shorter than the minimum requirement.

Promised profits for investors are also varied and not regulated meanwhile there is no mechanism to examine or audit a project.

Quy suggested creating a favourable situation for healthy competition to choose the most suitable investors instead of appointing investors to each project like now. If this is carried out, investment costs, profits for investors and toll road charges will go down greatly.

Nguyen Van Hoan from the National Assembly Office warned about lax management over government bonds and BOT projects alike. Most investors only have 11-15% of the required capital and they have to borrow the rest from the banks. That’s why the government must consider bad debts and financial security carefully.

Statistics from the State Bank of Vietnam show that 22 out of 150 projects sponsored by the banks are stagnant with loans worth over USD500m.

Le Dinh Thang, head of the State Audit Office in Area 6, said both government and investors must respect the market rules. Investors must accept that they might face loss from wrong estimations by them or by the government.

“The government signs on BOT contract on behalf of the public, it can’t side with the corporations,” he said.

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