Proposal to increase state capital ratio in railway PPP projects

Proposal to increase the state capital ratio in railway PPP projects to no more than 80% of total investment

In the proposal to draft the Railway Law (amended) submitted to the Government, the Ministry of Transport proposed to increase the participation rate of the state budget in railway projects invested in the form of public-private partnership (PPP), instead of applying the current regulations of the law on PPP investment of a maximum of no more than 50%; Decentralize the authority to the provincial People's Committee to decide on investment in urban railway projects.

The Ministry of Transport proposed an investment policy for railway development, including increasing the proportion of state capital to no more than 80% of the total investment in PPP projects (Photo: illustration).

Specifically, the Ministry of Transport proposed to amend the regulation to allow the proportion of state capital participating in railway investment projects (new investment in everything from infrastructure to railway vehicles) under the PPP form to not exceed 80% of the total investment.

Supplementing regulations that local authorities at the provincial level take the lead and coordinate with the Ministry of Transport to reserve appropriate land funds in areas surrounding railway stations for urban development, commercial service areas, offices, and hotels.

Localities are allowed to use their local budgets to establish independent public investment projects (for railway infrastructure development investment projects) to carry out compensation, support, resettlement, land recovery and auction of land use rights, underground space use rights, and overhead space in the land area around the station as a basis for implementing urban development projects according to the planning approved by competent authorities. Allowing the use of revenue from the exploitation and development of land funds around the station to be partially prioritized for reinvestment in railway infrastructure development.

For high-speed railway and urban railway projects under the authority of the National Assembly to decide on investment policies, the Ministry of Transport proposes to add regulations allowing the implementation of front-end engineering design (FEED) instead of basic design in the Feasibility Study Report preparation step to shorten project implementation time.

Supplementing regulations on the rights and responsibilities of provincial-level local authorities to invest in the construction of national railway infrastructure, regional railways, and urban railways passing through two or more provinces/cities after being approved by the Government.

The Ministry of Transport proposed regulations on decentralization of local authority to invest in railways and exploit land funds around stations (Photo: illustration).

For urban railway investment projects, it is proposed to amend and supplement the regulations: After the investment policy is approved by the competent authority, the provincial-level local government shall decide on project investment and organize the implementation of investment in the construction of urban railway projects to increase the initiative and responsibility of localities in accelerating project progress. Provincial-level localities are granted a Certificate of appraisal of urban railway system safety records and a periodic Certificate of urban railway operation safety management system.

Big investment, big risk

The Ministry of Transport said that the reason for these proposals is that investment projects in the railway sector bring great socio-economic efficiency, however, the intrinsic financial efficiency of the project is not high due to the large total investment and many risks, so calling for investors to participate in the form of public-private partnership is not feasible. In fact, no project in the railway sector has been implemented in this form. Therefore, adding regulations to increase the participation rate of the state budget in railway infrastructure investment projects in the form of public-private partnership will contribute to attracting non-budgetary resources.

According to the Ministry of Transport, international experience shows that the optimal exploitation of areas around stations has brought great economic efficiency and is a trend that many countries in the world are applying; opening up new space for economic development, optimizing travel needs. Adding regulations on the exploitation of land funds around stations will create more important resources for railway development.

Source: https://www.baogiaothong.vn/de-xuat-tang-ty-le-von-nha-nuoc-tai-du-an-ppp-duong-sat-19224012214485914.htm