Quang Ninh: Grasping New PPP Trends

5:31:59 PM | 22/1/2015

Rapid population growth and increasing economic development requirements amidst gradual depletion of mainland resources are pushing up people to the sea to exploit marine resources and affecting sustainable development, especially the environment. Capital needs for environmental protection are placing tremendous pressures on limited State budget. Thus, it is urgent to have mechanisms and policies to draw external resources, including private funds sourced through the public-private partnership (PPP) method.
Pioneering sustainable development
In that context, Quang Ninh is a pioneer in applying new development methods, adopting PPP mode and transforming from industrial and tourism development to environmental protection and sustainable development (from brown to green).
Quang Ninh has over 250 kilometres of coast, 6,100 square kilometres of sea surface, 40,000 ha of tidal area, and 20,000 ha of bays and straits. Island area accounts for 11.5 percent of natural land. Ha Long Bay of Quang Ninh province has been twice recognised by the UNESCO as World Natural Heritage in terms of landscape values and geological and geomorphologic values. The bay was recently named the new Natural Wonder of the World. Together with Ha Long Bay and Bai Tu Long Bay, the province also has maritime nature reserves like Bai Tu Long National Park, Cat Ba National Park, Co To - Thanh Lan Archipelago, and Tran Island.
According to the Quang Ninh environmental improvement scheme to 2030, the province will need VND27,433 billion (US$1.3 billion) for environmental management. All 91 proposed projects are related to coastal areas or the sea.
However, the State budget is always limited. The State funded VND810 billion (US$40 million) on environmental protection in 2013 and VND680 billion (US$ 34 million) in 2014. The provincial environmental protection fund now has VND600 billion (US$30 million). Incomes from taxes and other costs of environmental protection are unlikely to be enough for the objectives.
Active in PPP cooperation
To draw more resources aside from the State budget, Quang Ninh province boldly piloted and adopted the PPP form. It issued a list of 64 PPP projects, including Ha Long Bay Operation Project and Industrial and Household Waste Treatment Complex Project in Ha Long, Cam Pha and Hoanh Bo areas.
With environmental protection socialisation policy, private companies, joint stock companies, cooperatives, research institutes, universities and research centres supply new environmental services, and collect and treat solid wastes. Typical companies include INDEVCO, URENCO, Ha Long Urban Solid Waste Joint Stock Company, Green Environment Company, and Hong Manh Sanitation Company. Moreover, companies are also encouraged to plant forests to protect the environment.
Apart from environmental projects, Quang Ninh province is speeding up the implementation of the project on improving the quality and efficiency of business administration, exploiting and promoting the values of Ha Long Bay and Bai Tu Long Bay World Heritages in the PPP mode. The province has guided relevant agencies to build administration and business indicators to exploit and promote world natural heritages to draw the interest of investors to administer and provide services in line with the laws, UNESCO Convention on management, conservation and promotion of heritage values of Ha Long Bay. The province also approved the "Ha Long Bay coalition initiative" project, aiming to set up a PPP alliance, which comprises of local level and national organisations, Vietnamese and US businesses, in support of Quang Ninh province to sustainably preserve outstanding universal values of Ha Long Bay and effectively manage natural resources. Improving the efficiency of natural resource management in association with the coastal ecosystem protection is considered a key task of Quang Ninh province in the coming time.
The involvement of non-State sector in environmental services is an increasingly positive trend, consistent with environmental protection socialisation requirements, capable of generating a lot of benefits like better performance, wider coverage, and greater sustainability thanks to their administration, creativity and adaptability. The application of different models has helped increase investment resources while the province’s budget source is limited.
However, Quang Ninh province has confronted certain difficulties in implementation: Incomplete legal framework for PPP model and inexperienced PPP officials. Insufficient State budget gives rise to difficulties in capital allocation for PPP projects. This hardship also hinders the formation of investment projects.
PPP projects must be profitable enough to attract private investors. Incapable officials and insufficient regulations lead to difficulties in PPP project proposals and contract negotiations. Besides, the construction of the list of PPP projects also does not take into account project attractiveness, thus projects are unattractive to investors.
Huong Ly