Higher state capital ratio proposed for PPP road projects in Vietnam

A higher ratio of state capital in public private partnership (PPP) road projects and allowing localities to use their budgets for roads passing through other localities were among two special funding mechanisms proposed to the National Assembly on Friday.

Presenting the proposal under the Prime Minister’s authorization, Minister of Planning and Investment Nguyen Chi Dung said that the government proposed to lift the ratio of state capital in road projects under the PPP format to a maximum of 70% of the total investment, from the 50% under existing regulations.

He explained that road projects that have a large investment outlay but low current transport demand need more state capital to make them feasible when calling for private investment capital.

In addition, site clearance accounts for a high proportion of the total investment in some projects. Such projects will not be attractive to private investors if state capital contribution is low, Dung said.

Therefore, increasing the proportion of state capital in PPP road projects aims to facilitate mobilization of private investment, he added.

The government also proposed that the provincial people's committees are given the authority to implement expressway and national highway projects using local budgets.

This policy aims to promote the potential, advantages and responsibilities of local leaders and encouraging planning and infrastructure links, Dung said.

Prime Minister Pham Minh Chinh is considering assigning provincial people's committees as the main investor with authority to use local budgets to support other provinces in building roads that run through many localities, Dung said.

The government also proposed a special mechanism in mining for common construction materials saying many ongoing projects are suffering a shortage of materials, which pushes prices up.

The specific mechanisms will be applied until the end of 2025.

The lawmakers agreed on the need for special mechanisms to invest in expressway and national highway projects, but they also expressed concern about their efficient application. As such, they asked the government for more careful evaluations on the mechanisms’ impact.