State Audit plays crucial role in PPP projects: experts

Hanoi (VNA) - Experts and managers discussed solutions to improve the quality and efficiency of auditing public-private partnership (PPP) projects during a conference themed “PPP projects and the role of the State Audit” held by the State Audit of Vietnam (SAV) in Hanoi on March 3.

In recent years, the PPP investment form has significantly contributed to attracting investment in infrastructure development projects and public services, thus promoting the national economic development.

Speaking at the conference, Prof. Dr. Doan Xuan Tien, deputy general auditor of the SAV, highly valued the benefits brought about by PPP projects, saying that they contribute to improving transport infrastructure and urban areas.

However, he pointed out shortcomings related to managing and operating such projects, saying that these issues have raised pubic concerns.

PPP projects not implemented strictly

Overlapping charges are recorded in many PPP transport projects, causing increased freight costs as well as lack of transparency in fee collection and management, Tien said.

These problems arise from weak management, he said, noting that the investor selection process was conducted in the form of appointment, which led to less competition and transparency.

Besides, the capital ratio contributed by investors is still quite low compared to projects’ total investment.

The capital contribution by investors has not been implemented on schedule as they committed, and investors have not strictly abided by regulations during the implementation of projects.

Investors also have concerns over the stability of this cooperation model as PPP projects often last many years, Tien said.

Therefore, investors as well as lenders often require the sustainability of legal regulations following their concern over risk of changing policies. They often propose applying guarantee mechanism or require a high profit level and long payback period to compensate for potential risks, he noted.

The State Audit needs to promote its role in preventing and eliminating “group interests” in appraising, approving and implementing PPP projects. (Photo: VietnamPlus)

Handling financial violations valued at nearly 14 trillion VND in four years

Le Tung Lam, Vice Chief of the SAV Office, that from 2016-2019, the State Audit of Vietnam conducted audits of 84 investment projects in the form of build-operate-transfer (BOT) contract, and proposed handling financial violations valued at over 4.68 trillion VND (over 197.7 million USD), equivalent to 3.4 percent of the total audited value, of which many projects recorded large financial handling ratios from 11 to 13 percent of the audited value.

In addition, the agency also proposed reducing the payback time compared to the original plans for 81 projects, with the total time cut up to 300 years.

The agency also audited 50 investment projects in the form of build-transfer (BT) contract and proposed settling financial violations valued at over 9 trillion VND, equal to 13.78 percent of the total audited value, including those with large financial handling proposals of 27 – 29 percent of the audited value.

If BOT and BT projects have not been audited, a large amount of money will be lost. As a result, people and enterprises have to pay greater fees, and the State budget will suffer big losses, Lam stressed.

Participants agreed that the State Audit of Vietnam needs to promote its crucial role in managing and implementing PPP projects, thus contributing to strengthening discipline, making the national financial system transparent, improving the efficiency of PPP projects, and maximizing the value and benefits of PPP projects in line with the principles of the UN’s 2030 Agenda for sustainable development and for people.

Participants agree on the necessity to issue a law on PPP to provide a legal corridor for State activity in PPP investment (Photo: VietnamPlus)

A law on PPP needed

Deputy head of the delegation of National Assembly deputies of Quang Binh province Nguyen Ngoc Phuong said it is necessary to issue a law on PPP to create a legal corridor on State activity in PPP investment, in order to prevent losses and waste of investment capital.

Phuong also emphasized the necessity to promote the role of the State Audit to make PPP projects effective.

It is necessary to organise workshops and conferences among related agencies and departments to build a master plan for PPP projects, and propose the Government amend and supplement regulations to audit the capital that is not funded by the State budget, he added./.