BOT project risks under control

14:39 | 04/10/2016 Finance - Banking

(VEN) - The State Bank of Vietnam (SBV) has warned of further controlling risks on build-operate-transfer (BOT) and build-transfer (BT) projects.

BOT project risks under control

Available risks

According to the Ministry of Transport, commercial banks implemented loans for BOT and BT projects with a total of VND171.52 trillion during the 2011-2015 period.

Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), Saigon Hanoi Commercial Joint Stock Bank (SHB) and Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) were leading banks in pouring capital into BOT projects such as VND40.863 trillion from the Vietnam Development Bank and Vietcombank for Hanoi-Hai Phong Highway, VND10.894 trillion from BIDV, Vietinbank, TPBank for Bac Giang-Lang Son Highway, VND6.467 trillion from Vietinbank to upgrade Phap Van-Cau Gie Highway and VND2.158 trillion from Vietcombank, Vietinbank and LienVietPostBank for Hanoi-Bac Giang Highway.

Repayments have created huge pressure on businesses and indirectly affected people. Due to recommendations of people and businesses in terms of high fees in BOT stations, the Ministry of Finance submitted to the prime minister a plan to decrease fees by 10-20 percent in many BOT stations. However project investors and commercial banks have been worried.

Strengthening control

Loans for BOT projects may face many risks. According to economists, inefficient projects and weak financial capability will limit capital recovery. In particular, the period in loans for BOT projects has lasted long, posing liquidity difficulties to commercial banks.

Credit to BOT projects have been considered carefully and not recommended in recent times. The SBV has twice directed on strengthening risk control in granting credit for BOT and BT projects and continued to warn credit institutions in late August 2016.

According to Resolution No. 71/NQ-CP dated August 5, 2016 on the government’s regular meeting, the government assigned the Ministry of Transport to propose solutions in order to reduce the burden on domestic transportation costs for citizens and businesses. “Credit institutions should closely monitor to capture policy changes in collecting fees in BOT stations and re-assess the effectiveness of BOT projects after changes,” the SBV said.

Credit institutions must strictly evaluate BOT and BT projects, select projects with high return, implement the provisions of the law on procurement, investment and construction, and not consider projects if legal procedures are incomplete.

 

Minh Duy

Theo ven.vn