As infrastructure has traditionally been developed by the State, private sector participation in major infrastructure projects in Vietnam by way of public-private partnerships (PPP) can be challenging.
Legislation promulgated in November 2010 has not succeeded in providing a comprehensive legal framework for PPP projects. The BOT model has had some minor success, (especially in power generation), although all parties continue to be frustrated by the time taken for BOT projects to be implemented. Institutional capacity and coordination between different Government ministries remain major concerns for all types of privately developed infrastructure projects in Vietnam, especially if they are being financed on a limited recourse basis.
There have been practical difficulties in the development of a ‘bankable’ pipeline of economic and/or social infrastructure projects which attract the necessary funding from private investors.
The Government has not provided any detailed guidance on standard commercial principles applicable to projects or its preferred position on allocation of certain major project risks.
The foreign investment community is concerned with the lack of availability of full Government guarantees to cover matters such as full contractual performance by State owned enterprises and the availability of foreign currency.
Major issues affecting the development of energy generation projects in Vietnam include low tariff levels and an unclear energy pricing policy. Furthermore, the State approval process in respect of power generation projects is often protracted and cumbersome, causing significant delays or the inability of project sponsors to commence construction.
Land acquisition procedures are also complex and time consuming. In practice, project sponsors usually bear the costs and risks encountered during the land acquisition process, and are often faced with major delays in the completion of the site clearance and compensation processes. The potential lack of robustness of loan security and government guarantees (in particular) connected with power generation projects in Vietnam also remains a significant challenge.
Acting for an international lender in respect of its proposed role as a cornerstone foreign lender to project bidders for the Nghi Son 2 1200MW coal fired power generation project to be undertaken on a Build-Operate-Transfer (BOT) basis in Vietnam.
Advising on the proposed development of a 750MW power generation project to be undertaken by a large foreign owned company on an industrial zone, in Dong Nai Province, Vietnam.
Advising on a 475MW power station in southern Vietnam including structuring issues, licensing requirements, choice of law and governing law issues, land use and allocation issues, gas supply and power purchase arrangements.
Advising on the first independent and privately owned power generation project (375MW) in Vietnam to sell electricity to the state-owned power company, Electricity Vietnam (EVN), including drafting and negotiating the power purchase agreement with EVN.
Acting on a proposed joint venture in Ho Chi Minh City for water supply, purification and distribution, and associated contracts.
Preparing turnkey construction services and management contract documentation for use in respect of all Vietnam-based development projects to be invested in by a significant property investment fund.
Advising on a project for the construction of a road in exchange for land use rights for property development.
Advising an international investor in relation to the structuring, implementation and operation of the Ho Chi Minh City Urban Railway project.
Advising a Canadian company with mining interests in Vietnam on the Vietnamese security package to be provided in relation to offshore loan facilities.
Advising an Australian telecommunications and media company on its international network business cooperation contract (BCC) in Vietnam.
Advising a multinational financial institution on the restructuring of the loans relating to a port project in Vietnam involving detailed advice on the security structure and enforceability issues.
Advising on a ship repair yard joint venture in Ho Chi Minh City and a towage joint venture in Vung Tau.