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Phạm Văn ĐồngBsc of Civil Engineering 2006(CTU)Msc of CME 2009 (TUDelft)Working at DoT 2009-now
Breaking the Iceberg of Public-Private Partnership in Vietnam
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A story: lack of funding for infrastructure projects of a city in Vietnam
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Outline 1. Research questions and goal 2. Public-Private Partnership (PPP) concept 3. PPP in Vietnam 4. Fishbone Framework for Critical Success
Factors (CSFs) of PPP projects 5. Case Studied: BOT Phu My 2 Phase 2
Energy Project6. Lessons learned 7. Conclusion & Future Research8. The process of theory application
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Research questions and Goal
• Research questions: • What is PPP in Vietnam? • Is there a framework to assess the
success/failure of PPP? • What are the problems with Vietnamese PPP?
• Goal: • Clarify the problems with current BOT projects
in Vietnam, find out what actors and factors (the iceberg) hinder the good PPP practices in Vietnam and come up with definite solutions
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Outline
1. Research questions and goal 2. Public-Private Partnership (PPP) concept 3. PPP in Vietnam 4. Fishbone Framework for Critical Success
Factors (CSFs) of PPP projects 5. Case Studied: BOT Phu My 2 Phase 2 Energy
Project6. Lessons learned 7. Conclusion & Future Research 8. The process of theory application
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PPP concept: Definition
What is Public-Private Partnership?
• Is it so simple? I don’t have money to realize the projects, can you come in?
• No, it is much more complex (Koppenjan 2005): • Long-term contractual agreement between Public-Private
party;• Planning, construction, and/or exploitation and “co-
financing”; • Sharing or reallocating : risks, costs, benefits, resources &
responsibilities.
• How about: Design-Construction (Maintenance) contract?
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PPP concept: forms of PPP
• Forms of private sector participation
Source: Koppenjan (Adapted from Bennet et al.,
2000)
• Public-Private Partnership (PPP): 1. Service
contracts2. DBFM(O) and
BOT3. Joint ventures
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PPP concept: motives
Public party Private party
Efficiency New markets
Inclusion private skills and knowledge
Reduction of long term uncertainties
Creation of added values and innovative solutions
Public contributions to unprofitable project parts
* Added value- Efficiency (cheaper,faster, better)
- Enrichment and synergy
Motives
Source: Koppenjan
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Outline
1. Research questions and goal 2. Public-Private Partnership (PPP) concept 3. PPP in Vietnam 4. Fishbone Framework for Critical Success
Factors (CSFs) of PPP projects 5. Case Studied: BOT Phu My 2 Phase 2 Energy
Project6. Lessons learned 7. Conclusion & Future Research 8. The process of theory application
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PPP in Vietnam: legislation
• Current key legislation: • Decree No. 78/2007/CP enacted on the
11th of May 2007• Generic law• Build-Operate-Transfer (BOT), Build-
Transfer-Operate (BTO) or Build-Transfer (BT) contracts for all infrastructure services
• Decree No. 108/2009/CP enacted on the 27th of November 2009: BT focus
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PPP in Vietnam: expectations
• Filling in financial gaps
• Preventing the involvement of State-Own Enterprises (SOEs) with ineffectiveness, corruptions
• Stimulating private sector participation
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PPP in Vietnam: State of the Art
• Overall context of PPP in Vietnam: • Projects: 17 vs. 83
Philippines, 80 Indonesia and 672 China
• Amount: US$ 4 billion vs. US$ 38 billion Philippines, US$ 37 billion Indonesia, and US$ 90 billion China Private Participation by sector (World Bank
2008)
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PPP in Vietnam: Hindering Factors
• Unfavorable investment environment: • Weak financial market • Weak PPP frame law
• Leading to high financial risks political risks
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PPP in Vietnam : sectors’ investigation
• Similarities: • SOEs have kept dominant powers across sectors• The competitive bidding is lacking across sectors
• Sector performance: • Energy sector: most PPP projects (10 /17)• Telecom: only BT contract (restrictions)• Transportation: poor performance sector• Water sector: tariff and affordability (turning into
Design-Build-Lease)
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PPP in Vietnam: Solutions
• Macro improvements: • Improve financial market and PPP policy
• Sectors’ strategy • Energy sector: redefine master plans • Telecom: true joint ventures, private ownership,
management control right, and equity contribution
• Transport sector: determine the boundary of SOEs and private investors
• Water sector: income measures, differentiation of tariff and differentiated management
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Outline
1. Research questions and goal 2. Public-Private Partnership (PPP) concept 3. PPP in Vietnam 4. Fishbone Framework for Critical Success
Factors (CSFs) of PPP projects 5. Case Studied: BOT Phu My 2 Phase 2 Energy
Project6. Lessons learned 7. Conclusion & Future Research8. The process of theory application
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Fishbone Framework for CSFs of PPP projects
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Fishbone: success of feasibility phase
Feasibility study
Successful
Favorable investmentenvironment
Viable project
Financial trade-off
Being PPP character Parties’ good willfor collaboration
Community supportPolitical support
Project scope adaptation
Innovative idea
Stable political system
Precise law frame
Favorable legislation & regulations
Consistent with public interest
Available financial market
Stable macro-economicsituation
Predictable exchange risk
Uncorrupted government
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Outline
1. Research questions and goal 2. Public-Private Partnership (PPP) concept 3. PPP in Vietnam 4. Fishbone Framework for Critical Success
Factors (CSFs) of PPP projects 5. Case Studied: BOT Phu My 2 Phase 2
Energy Project6. Lessons learned 7. Conclusion & Future Research 8. The process of theory application
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Case Studied: BOT Phu My 2 Phase 2 Energy Project (PM2.2)
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PM2.2: Contractual arrangement (World Bank
2003)
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PM2.2: Financial arrangement
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PM2.2: Successful factors (fishbone verification)• Exploration phase: • The intensive interests and strong
commitments of government • Feasibility study phase• Planned Government guarantees (GG)
• Contract phase• “Coguarantee”: GG and IDA PRG of World
Bank • Construction phase• Trade-off
• Operation en maintenance phase • Empowerment
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Outline
1. Research questions and goal 2. Public-Private Partnership (PPP) concept 3. PPP in Vietnam 4. Fishbone Framework for Critical Success
Factors (CSFs) of PPP projects 5. Case Studied: BOT Phu My 2 Phase 2 Energy
Project6. Lessons learned 7. Conclusion & Future Research 8. The process of theory application
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Lessons learned from PM2.2
• Update fishbone framework: 4 new factors
• Facilitating PPP in Vietnam • Short term: PRG of World Bank
or ADB• Long term: release this layer of
cost
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Outline
1. Research questions and goal 2. Public-Private Partnership (PPP) concept 3. PPP in Vietnam 4. Fishbone Framework for Critical Success
Factors (CSFs) of PPP projects 5. Case Studied: BOT Phu My 2 Phase 2 Energy
Project6. Lessons learned 7. Conclusion & Future Research 8. The process of theory application
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Conclusions & Future Research
• Conclusions: • It is difficult for PPP investments in
Vietnam due to weak financial market, weak PPP policy;
• But, PPP can be lived up by good arrangements at operational level;
• Side effect: it is costlier to invest PPP projects in Vietnam by Government guarantees & risk premiums.
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Conclusion & Future Research
• Future Research: • PPP in Vietnam: • Transplant good PPP laws in other countries • How to optimize the GG and establish the
“Guarantee Fund”
• PPP in general: • Valuate the effectiveness of risk transfer
process • How public reacts with PPP scheme as
introduced
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Outline
1. Research questions and goal 2. Public-Private Partnership (PPP) concept 3. PPP in Vietnam 4. Fishbone Framework for Critical Success
Factors (CSFs) of PPP projects 5. Case Studied: BOT Phu My 2 Phase 2 Energy
Project6. Lessons learned 7. Conclusion & Future Research 8. The process of theory application
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The process of theory application
• 3 BT projects in Cantho city with the amount of approximately 1600billion VND• Provincial road 918: 675billion VND• Provincial road 923: 549billion VND• Political school: 377billion VND
• Progress: in detailed design – Cost estimate phase
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Questions and discussion