3 reasons for unilateral termination of BOT contract

The Ho Chi Minh City People's Committee has just sent a notice to Yen Khanh Group Joint Stock Company (investor) and Ho Chi Minh City - Trung Luong BOT Investment Company Limited (project enterprise) about the early termination of the BOT contract for the investment project to build the section connecting Vo Van Kiet Street to Ho Chi Minh City - Trung Luong Expressway (phase 1).

The reason is that the investor and project enterprise have committed serious violations, with 3 specific reasons.

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The intersection of Vo Van Kiet Street with National Highway 1, the starting point of the BOT project worth over VND1,500 billion, has just been unilaterally terminated by the Ho Chi Minh City People's Committee. Photo: Tuan Kiet

Firstly, the investor and project enterprise did not provide the agreement, commitment and legal documents related to proving the source of equity, loan capital, and guarantee for the implementation of the signed BOT contract. Meanwhile, the deadline for correcting the contract violations expired on July 6, 2020.

Second, the project lending bank has expressed its intention to no longer provide loans to the enterprise. The reason is that the investor and the project enterprise have violated the credit contract, and the construction work has been delayed and prolonged. This has affected the financial plan and revenue to repay the bank...

Third, investors and project enterprises do not provide legal volume and value records as requested.

There is no basis for payment of BOT contracts to investors.

According to the Ho Chi Minh City People's Committee, over the past years, the Management Board of Traffic Construction Investment Projects (contract supervision unit) has repeatedly requested investors and project enterprises to review and update relevant information and legal documents; determine the legal volume and value that investors have implemented to meet the conditions for payment and settlement according to regulations.

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After 9 years of implementation, the BOT project connecting Vo Van Kiet Street to Ho Chi Minh City - Trung Luong Expressway has only completed a few pillars and pillars. Photo: Tuan Kiet

However, up to now, the investor and project enterprise have not yet provided the required legal volume and value documents, although the City People's Committee has extended the deadline until January 31 and the time for auditing the volume and value has been completed before February 28 this year.

Ho Chi Minh City determined that the investor and project enterprise did not coordinate with the contract supervision unit to provide information and related documents as a basis for determining the volume and legal value of the implementation, and handling contract violations due to the investor's fault; the investor and project enterprise refused the right to receive payment from the Ho Chi Minh City People's Committee for the volume implemented according to the signed BOT contract and had no basis to complain or file a lawsuit about this matter to competent authorities as prescribed.

Therefore, the Ho Chi Minh City People's Committee has no basis to pay for the volume performed according to the signed BOT contract.

The project connecting Vo Van Kiet Street with Ho Chi Minh City - Trung Luong Expressway is 2.7km long with a total investment of 1,557 billion VND.

Starting point from the Vo Van Kiet overpass intersection - National Highway 1 to the intersection with the access road to Ho Chi Minh City - Trung Luong Expressway (now Vo Tran Chi Street).

The project started construction in October 2015, but by mid-2018, the investor had stopped construction, with total construction output reaching only 140 billion VND, equivalent to 12% of the value.

To date, this project has been "covered" for 6 years. The project only has concrete piers lying around, yellowed, rusted, causing waste.

Ho Chi Minh City will unilaterally terminate the BOT contract for the 1,500 billion VND project to build 2.7km of road.

Ho Chi Minh City will unilaterally terminate the BOT contract for the 1,500 billion VND project to build 2.7km of road.

The project to build a road connecting Vo Van Kiet Avenue to Ho Chi Minh City - Trung Luong Expressway, about 2.7km long, under a BOT contract, with a budget of more than 1,500 billion VND, has been stalled for 6 years now.
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