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Viewing: What is Ppp
What you need to know about PPP will help you better understand the construction, renovation, operation, business and management of infrastructure projects, providing public services in Vietnam today. If you do not fully understand what PPP is and have many big questions about this form, please refer to the article below with Shun Deng!
What is PPP?
What is PPP?
PPP stands for Public and Private Partner. PPP is the work in which the State (Government) and Investors jointly implement projects by discussing and signing contracts. PPP infrastructure development and public service provision projects are projects that are built, renovated, operated, operated, operated, managed, and provided public services on a contract basis. has been signed.
Currently, the PPP model is being widely applied by the State. The contract will be the State (representative agency is the Government) to set standards for service provision.
Private investment in PPP model will be encouraged to provide by payment mechanism according to service quality. This helps to optimize the efficiency of cooperation to invest and provide high-quality public services, which will benefit both the State, investors and people using the service.
PPP is the work in which the State (Government) and Investors jointly implement projects by discussing and signing contracts.
What is a PPP project
?PPP project is an investment project to build, renovate, operate, trade, manage infrastructure works, and provide public services on a contract basis. has been signed.
PPP project is a cooperation between the State and private enterprises in close economic relationship, in order to implement an investment project, public-private cooperation.
Investors, after winning the bid, will be transferred rights and responsibilities by the State to different degrees. Depending on the size of the PPP project, investment in technical infrastructure for the private sector also varies.
With this project, most of the investment capital will be financed by private enterprises, the State only participates with capital not exceeding 30% of the total investment of the PPP project. However, there are other exceptions decided by the Prime Minister.
What is a PPP contract
?PPP contract is a phrase that is mentioned by many people, widely used in news, newspapers or documents today. However, many people have not yet written what a PPP contract is.
PPP contract is an investment contract in the form of public-private partnership between the State and private enterprise units bidding for investment. This is a type of contract that is discussed, set terms and signed between two parties, the competent State agency and private investors to implement the project. These projects are mainly investment in building new or renovating, upgrading, expanding, managing and operating infrastructure works or providing public services.
PPP contracts have several salient features:
The two parties to the contract are state agencies and private enterprises; Contracts related to infrastructure works and public services.
PPP contract is an investment contract in the form of public-private partnership between the State and private enterprise units bidding for investment.
What is a form of PPP investment
?PPP is a form of investment made on the basis of project contracts signed between competent state agencies. rights and investors. Private enterprises rely on projects to build, renovate, operate, trade, manage infrastructure works, and provide public services.
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Vietnam is a country that is on the way of industrialization and modernization, so the state budget is limited and investment capital is also narrow. However, because it is developing, the need for investment capital in infrastructure works and public services of our country in general and each locality in particular is too great.
It is because of this need that the PPP form of public-private partnership is being widely used. This is to act as a lever to mobilize resources from thriving private enterprises from our country and abroad to invest in infrastructure.
Steps to do to form a PPP project
Determine criteria for selecting PPP projects.Determine expenses for investment. Competent state agencies draw up PPP project contracts. Set up an interdisciplinary working group to organize Bidding to select Investor. Selected investor will negotiate, supplement and finalize the contract. Signing.
Forms of PPP in the world today
Currently, in the world, there are 5 popular forms of PPP widely used as follows:
Franchise (Mining Franchise Model): This is the picture the way in which public infrastructures and services will be built and owned by the state. However, it will be handed over to the private sector to operate and exploit to recover capital and profit by auction.
Franchise Build – Operate – Transfer (BOT model) : This is the form in which the winning bidder for the project will pay capital to build and finance the project. support and operate the project. After that, the Government will create conditions for businesses to implement other projects such as bot toll stations to recover capital and profits. At the end of this time, these enterprises will transfer this project to the state for management and operation.
Build – Operate – Transfer (Model for BOT construction, operation and transfer) Design – Build – Finance – Operate (DBFO model for design, construction, financing and operation): This is the form in which businesses The private sector will build, finance and operate the project. Although this project is still under the ownership of the State.
Design – Build – Finance – Operate (DBFO model) Build – Transfer – Operate: This is the model after enterprises After winning the construction contract, it shall be immediately transferred to the State for ownership and operation. However, the company is still prioritized by the Government for the implementation of other projects to recover capital and profit. At the same time, the company still retains the right to exploit the work for the enterprise Build – Own – Operate: This is the form in which the project implementation companies will stand out to build the works, the ownership own and operate the project.
Forms of PPP in Vietnam
According to Decision 71/2010/QD-TTG by the Prime Minister, the pilot implementation will be conducted in the form of public-private partnership.
First, the capital of private enterprises participating in the project is mobilized by the State on the principle that it does not lead to debt. Enterprises participating in PPP projects and contracts must be allowed to enjoy unsecured commercial loans from the Government up to a maximum of 70% of the capital of the private sector.
At the same time, the State’s equity invested in PPP projects must ensure 30% (minimum) of the capital of the participating private enterprises.
Second, these projects must attract investment capital from domestic and foreign private enterprises. These enterprises must compete fairly and transparently to bring high working efficiency and economy. In addition, the method of conducting a PPP project must also be consistent with Vietnamese law, Vietnamese customs and relevant international practices.
About the field of pilot investment in the form of PPP
Currently, the form of PPP is applied to the field of investment pilot in:
Urban traffic.Roads, tunnels, road bridges, road ferry terminals.Airports, river ports, seaports.Railways, railway tunnels, railway bridges.Power plants, medical hospitals. .Clean water supply system.Environmental protection waste treatment plantProjects to develop infrastructure and provide public services.
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Forms of PPP in our country
Currently, in our country, two forms of PPP are commonly applied: BOT and BOO.
Build – Operate – Transfer: This is the form in which the winning bidding company will stand out and invest capital to build, finance and operate the project. After that, the Government will create conditions for businesses to implement other projects such as bot toll stations to recover capital and profits. At the end of this time, these enterprises will transfer this project to the state for management and operation. Build – Own – Operate: This is the form in which companies The project implementation will build the work, own and operate the work.
The two main sectors that attract large investments are telecommunications and electricity. In the period from 1994 to now, hundreds of projects implemented under the PPP model have been successful, attracting hundreds of thousands of billions of investment from private enterprises. Some famous big projects such as bot Phu My bridge, Phu My electricity, Co May bridge, …