Thông tư 194/2011/TT-BTC

CIRCULAR

GUIDING DISBURSEMENT AND FINANCIAL MECHANISM FOR THE 4TH CREDIT LIMIT OF THE NORDIC INVESTMENT BANK

Pursuant to June 17, 2009 Law No. 29/2009/QH12 on Public Debt Management;

Pursuant to the Government's Decree No. 78/20I0/ND-CP of July 14, 2010, on on-lending of the Government's foreign loans;

Pursuant to Loan Facility Agreement PIL 5229 signed on July 21, 2010, between the Ministry of Finance on behalf of the Government of the Socialist Republic of Vietnam and the Nordic Investment Bank (NIB) on the grant of a credit limit of USD 40 million (below referred to as the credit limit);

The Ministry of Finance guides capital disbursement and financial mechanism for the 4th credit limit of the NIB as follows:

Article 1. General provisions

1. The NIB's credit limit is the Government's foreign loan; the whole loan and paid debt shall be accounted into the state budget.

2. Projects funded with loans from the credit limit (below referred to as projects) must be on the Prime Minister-approved list and satisfy the criteria specified in the Loan Facility Agreement, and are approved by the NIB.

3. The domestic financial mechanism applicable to projects is the on-lending mechanism approved by the Prime Minister under Official Letter No. 1029/TTg-QHQT of June 17, 2010, and under the conditions specified in part II of this Circular.

4. The Vietnam Development Bank is the on-lending agency authorized by the Ministry of Finance to on-lend loans from the credit limit under authorization contract No. 04/2011/UQ/ BTC-QLN of March 29, 2011, between the Ministry of Finance and the Vietnam Development Bank (below referred to as the authorization contract).

5. Project owners shall use properly and effectively loans under the conditions specified in the Agreement and pay debts under the credit contract signed with the Vietnam Development Bank (below referred to as the credit contract).

Article 2. Specific provisions

1. Principal borrowing conditions under the Agreement

- Lending currency is the US dollar (USD) or Euro (EUR) as proposed under each project and approved by the NIB.

- The total value of the credit limit is equivalent to USD 40 million, of which the value of each loan within the credit limit (below referred to as sub-loan) is equivalent to at least USD 1 million and at most USD 20 million but must not exceed 50% of a project's total investment.

- Loan interest rate: The on-lending interest rate is the LIBOR (if the loan is disbursed in - USDVEURIBOR (if the loan is disbursed in EUR) + margin interest rate. The specific margin interest rate for each sub-loan shall be determined by the NIB and notified to the Ministry of Finance in the offer of lending conditions when approving such sub-loan.

- For a sub-loan valued at USD 2 million or equivalent or more, after it is wholly disbursed, the Ministry of Finance and NIB may agree to apply a fixed interest rate for the whole sub- loan if the project owner sends a written request to the Ministry of Finance no later than 30 calendar days before any dale of payment.

- The schedule for payment of a debt (principal and interest) and the lime for payment of the principal for each sub-loan shall be specified in the offer of relevant lending conditions for each sub-loan on the principle that the sub-loan's maximum lending period is 17 years, including a maximum grace period of 5 years from the date specified in the offer.

- The capital withdrawal deadline for the whole credit limit is July 21,2013, and may be extended as agreed between the Ministry of Finance and the NIB.

- Front-end fee: USD 5,000 in a lump-sum for the whole credit limit, which shall be advanced by the Ministry of Finance for the NIB before the first tranche disbursement under the Agreement. The front-end fee for each sub-loan shall be calculated based on the proportion of the project's used capital to the total actually used amount of the credit limit in the total front-end fee for the whole credit limit advanced by the Ministry of Finance to the NIB. Any change in the total actually used amount of the credit limit shall be notified by the Ministry of Finance to the project owner for adding the front-end fee for sub-loans.

- Commitment fee: 0.25%/year on the amount not yet disbursed daily for each sub-loan, counting from the date the Ministry of Finance accepts the offer of relevant interest rate for such sub-loan, but excluding the actual number of days for which the amount is wholly disbursed or cancelled. The commitment fee shall be paid biannually depending on the date of debt payment applicable to such sub-loan.

- The interest rate for deferred payment is the higher one of the following two interest rates:

* 150% of the on-lending interest rate specified in the on-lending agreement, calculated on the overdue debt, or

* The interest rate for deferred payment specified in the Agreement, calculated on the overdue debt (equal to the LIBOR (if the loan is disbursed in USD)/EURIBOR (if the loan is disbursed in FUR) + margin interest rate + 2%).

The interest for deferred payment is calculated from the date on which a debt becomes due but cannot be paid to the dale such debt is actually paid. The Ministry of Finance shall notify the on-lending agency of the interest for deferred payment when receiving a notice from the NIB.

2. On-lending conditions

- The Ministry of Finance shall, on behalf of the Government, on-lend loans within the credit limit to the project owner strictly under the NIB's lending conditions specified at Point I above. In addition, the project owner must pay an on-lending charge equal to 0.25%/year of the outstanding original debt.

- The Vietnam Development Bank is the on-lending agency authorized by the Ministry of Finance to on-lend the credit limit to the project owner and enjoys an on-lending charge under the authorization contract.

- Within 15 days after receiving the Ministry of Finance's notice of the sub-loan's specific conditions, the Vietnam Development Bank shall sign a credit contract with the project owner, specifying the on-lending conditions for the project's sub-loan.

- The project owner shall fully and timely pay debt principals and interests and charges to the NIB and the Vietnam Development Bank under the Agreement and the credit contract.

- Based on the credit contract, the NIB's capital withdrawal notice and the Ministry of Finance's mutual ceasing documents of foreign loans withdrawn via the state budget, the Vietnam Development Bank shall notify and sign a loan debt acknowledgement contract upon each time of withdrawal with the project owner.

3. The NIB's financing procedures

3.1. General principles: The NIB's loan is a binding credit which is used only for financing goods and services originating from Nordic countries (Finland. Denmark. Sweden. Norway and Iceland) and Baltic countries (Estonia, Lithuania and Latvia) or for co-financing projects participated (with capital, technologies, etc.) by the above countries. Normally, the NIB's fund for a project depends on the proportion of participation of the above Nordic and Baltic countries in such project but must not exceed 50% of the project's total investment. The NIB's financing criteria are specified in Annex I to this Circular.

3.2. Procedures to request financing for projects

a/ The project owner shall send to the Ministry of Finance a project registration official letter and the following documents:

- Detailed description of the project, signed by the project owner, and its English translation.

- (Original) decision approving the project's feasibility study report and its English translation.

- Environmental impact assessment report. made according to the form provided in Annex 3 to this Circular (not printed herein).

b/ The Ministry of Finance shall send the above project documents to the NIB for in-principle approval. If the NIB gives in-principle approval of financing, the project owner shall carry out bidding procedures for procuring supplies and equipment for the project under current state regulations on bidding and investment and construction management. (Payment currency under commercial contracts on supply of supplies and equipment (below referred to as commercial contracts) for projects is USD or EUR according to the lending currency under the Agreement and avoid exchange risks (if any)).

c/ After the project owner has completed project investment procedures under regulations and bidding results show that a Nordic bidder has won a contract to supply types of goods satisfying the NIB's financing criteria, the Ministry of Finance shall ask for evaluation opinions of the Vietnam Development Bank and the Ministry of Planning and Investment before submitting the project to the Prime Minister for approval. To serve the project evaluation, the project owner shall send to the Ministry of Finance and the Vietnam Development Bank 2 (two) sets of documents specified at Point a, Clause 4, Article 19 of the Government's Decree No. 78/2010/ND-CP of July 14, 2010, on on-lending of the Government's overseas loans.

d/ The project owner shall send to the Ministry of Finance the following documents for completing the dossier to be sent to the NIB and carrying out approval submission procedures:

- A sub-project request, made according to the form provided in Annex 2 to this Circular (not primed herein), appended with the project owner's seal.

- The project's capital withdrawal plan (5 tranches at most), signed by the project owner, and its English translation.

- (Original) decision approving the commercial contract and its English translation.

- 2 commercial contracts (originals or certified true copies).

- Notice of names, positions, specimen seals and signatures of persons competent to represent the project owner to sign the project's capital withdrawal dossier.

e/ Within 15 days after the NIB officially approves the project, the Ministry of Finance shall notify in writing the project owner and the Vietnam Development Bank of the NIB's project financing decision and the sub-loan's specific conditions as a basis for signing a credit contract specifying the conditions for on-lending the loan for the project.

4. Guidance on the credit limit disbursement

4.1. General principles

Under the Agreement, the NIB shall only disburse capital on the basis of the Ministry of Finance's capital withdrawal application, enclosed with relevant payment documents.

Capital withdrawal dossiers must be forwarded to the NIB at least 15 days before the date of request for capital withdrawal. At the proposal of the Ministry of Finance, the NIB shall transfer payment money directly to the seller/ supplier designated under the commercial contract, or may consider applying other forms of capital withdrawal (advance or refund) to meet the project's payment requirements subject to the NIB's prior approval.

Each loan within the credit limit may be disbursed in 5 tranches at most under the project's capital withdrawal plan.

4.2. Specific capital withdrawal procedures

a/ Direct payment

Based on the project's capital withdrawal plan and commercial contract performance progress, when needing payment, the project owner shall send to the Ministry of Finance a capital withdrawal request dossier comprising the following documents:

- Written request for capital withdrawal, stating the legal grounds for capital withdrawal, enclosed with necessary payment instructions (name, account number and bank of the seller/ supplier).

- The seller's/supplier's invoice or payment request already examined and certified (with the signature and seal) by the project owner to approve payment under the conditions of the signed commercial contract.

- Other documents in the commercial contract (deposit guarantee, contract performance guarantee, records of take-over test and transfer of machines and equipment for operation, etc) or additional explanatory documents when so requested by the Ministry of Finance and the NIB.

Within 5 working days after receiving a complete and valid dossier and payment documents, the Ministry of Finance shall consider and sign a capital withdrawal application and send it to the NIB.

Within 15 working days after receiving the Ministry of Finance's capital withdrawal application, the NIB shall consider and transfer money directly into the seller's/supplier's account if approving payment (or send to the Ministry of Finance a letter notifying the reason for disapproval of such payment).

b/ Advance payment

In special cases, the NIB may consider advancing a sum of money for the project owner and transfer this sum into an advance account opened at the Vietnam Development Bank to help the project owner pay small expenses or pay for items of the project in the country, reducing the number of capital withdrawals from the NIB.

The advance account limit depends on the project's size, characteristics and spending need and shall be decided by the NIB for each project.

- First withdrawal of capital into the advance account:

Based on the advance account limit and capital use plan already agreed with the NIB, the project owner shall send to the Ministry of Finance the following documents:

* Written request for advance, clearly stating the legal grounds for advance, enclosed with necessary payment instructions (to-be-advanced amount not exceeding the advance account limit, and advance account number).

* Plan on capital disbursement from the project's advance account.

* Additional explanatory documents when so requested by the NIB.

Within 5 working days after receiving a complete and valid dossier and payment documents, the Ministry of Finance shall consider and sign a capital withdrawal application and send it to the NIB.

Within 15 working days after receiving the Ministry of Finance's capital withdrawal application, the NIB shall consider and transfer money into the project's advance account if approving advance payment (or send to the Ministry of Finance a letter notifying the reason for rejection of such payment).

- Withdrawal of additional capital into the advance account:

To withdraw additional capital based on expenses actually paid from the advance account, the project owner shall send to the Ministry of Finance the following documents:

* Written request for withdrawal of additional capital into the advance account, clearly stating the legal grounds for withdrawal and necessary payment instructions (to-be-added amount may be lower than or equal to the advanced amount).

* Statement of expenses from the advance amount, made by the project owner, indicating each expense item (date of payment, amount in domestic currency, exchange rate and amount converted into USD/EUR, payment details, beneficiary), and certified by the Vietnam Development Bank.

* Statement of the project's advance account, certified by the Vietnam Development Bank.

* Debt acknowledgement contract signed between the project owner and the Vietnam Development Bank, bearing a true-copy mark of the project owner.

Within 5 working days after receiving a complete and valid dossier and payment documents, the Ministry of Finance shall consider and sign a capital withdrawal application and send it to the NIB.

Within 15 working days after receiving the Ministry of Finance's capital withdrawal application, the NIB shall consider and transfer money into the project's advance account if accepting additional advance payment (or send to the Ministry of Finance a letter notifying the reason for rejection of such payment).

5. Reporting regulations

5.1. In the course of project implementation, the project owner shall send to the Ministry of Finance, the Ministry of Planning and Investment and the Vietnam Development Bank the following reports:

Project report, no later than 6 months after finishing capital disbursement.

Annual audit report and other information on the project owner's financial situation when so requested of the Ministry of Finance and the NIB.

The above reports should be translated into English to be concurrently sent to the NIB under the Agreement.

5.2. The Vietnam Development Bank shall quarterly report to the Ministry of Finance on the implementation of projects funded with on-lent loans and plans for repayment of on-lent loans for the subsequent quarter.

Article 3. Organization of implementation

This Circular takes effect on February 15, 2012.

The Vietnam Development Bank and project owners shall strictly comply with this Circular.

Any problems arising in the course of implementing projects and the credit limit should be promptly reported to the Ministry of Finance for study and settlement.

ANNEX 1

FINANCING CONDITIONS

To be financed by the NIB, projects must be more competitive and/or help improve the environment under the NIB's regulations and financing conditions. In addition, for non-member stales, to be financed by the NIB. projects must serve common benefits of the borrowing state and member states.

Raising competitiveness

One of the two major financing conditions is raising competitiveness of member states. Competitiveness is seen as a country's capacity to attain high sustainability regarding wealth and prosperity, which is commonly assessed through per-capita average GDP.

According to this definition, competitiveness may be improved through increasing the total value of products and services or increasing productivity on labor input and initial capital. In the short term, there are many factors affecting a country's competitiveness. In the long term, increased value of goods and services a country may create from its tangible capital and human capital is mostly decisive to such country's competitiveness.

An economy is a combination of many production units. Therefore, the economy of a country is competitive when companies of the country raise their competitiveness. Hence, the NIB's starting point for assessing a project's competitiveness-creating effect is such project's effects on participating companies. The NIB assesses both direct and indirect effects.

Direct effects are normally commercial effects on a participating company, such as increasing human capital or tangible capital. improving accessibility to contractors or markets, or developing business practices. A project may directly affect the community or a larger region, e.g.. through its lower transportation costs.

Indirect effects include effects from innovations and new market practices, and competitiveness-raising pressure on other companies in the same sector.

Areas of financing:

- Investment in infrastructure, such as transportation;

- Big energy projects;

- Large investment in improving production processes and R&D; and,

- Financing SMEs' operations through financial intermediaries.

Environmental improvement

Environmental improvement is one of the NIB's two financing conditions, meaning that the NIB provides loans for projects to prevent and improve environmental pollution.

In assessing a project's environmental impacts, the NIB shall compare expected effects on the environment before and after the project is implemented. A project will be regarded as helping improve the environment if it can bring net profits for the environment. Environmental areas drawing the NIB's attention include production and management of clean resources; environmental technologies; reduction of gaseous emissions; and renewable energies. When appraising environmental impacts, the NIB shall pay attention to the above key areas and quantitatively appraise benefits for the environment.

Member states

The NIB belongs to 5 Nordic countries and 3 Baltic countries, namely Denmark. Estonia. Finland, Iceland, Latvia. Lithuania. Norway and Sweden.

EXCLUSION LIST

* Activities regarded as illegal under the (national) laws of host countries or under international conventions and treaties.

* Banned activities under the laws of host countries or under international conventions concerning the protection of biodiversity resources or cultural relics.¹

* Activities failing to comply with relevant regulations on occupational health and safety (OHS) (the EU's OHS regulations or the ILO's major labor criteria and EHS (Environment, Health and Safety) instructions on OHS issues).

* Production of or trade in products containing PCBs.²

* Production of or trade in pharmaceuticals, pesticides/herbicides and other toxic substances which are internationally banned or excluded from production.³

* Production of or trade in ozone layer-depleting substances which are internationally excluded from production.⁴

* Trade in wild animals or products thereof under the CITES.⁵

* Production of or trade in or use of durable asbestos fibers or asbestos-containing products.

* Drag-net fishing in the ocean, using nets with length exceeding 2.5 km.

• Transportation of oil or other toxic substances in oil ships, failing to comply with IMO requirements.⁶

1. Relevant international conventions referred la herein include without limitation the Convention on Conservation of Migratory Species of Wild Animals (the Bonn Convention); the Convention on Wetlands of International Importance, especially as Waterfowl Habitat (the Ramsar Convention); the Convention on the Conservation of European Wildlife and Natural Habitats (the Bern Convention); the Convention on World Heritage: and the Convention on Biodiversity.

2 Poly chlorinated biphenyls, a group of very toxic chemicals. PCPs may be found in oil pump transformers, capacitors and switching structures during 1950-1985.

3 Reference documents mentioned herein include revised Council Regulation (EEC) No. 2455/92 concerning the import and export of certain dangerous chemicals: the Integrated List of products whose consumption or sale has been banned, cancelled or severely restricted and not approved by governments; the Convention on Procedures for Agreement and Prior Infonned Consent of Some Dangerous Chemicals and Plant Protection Drugs in International Trade (the Rotterdam Convention); the Stockholm Convention on Persistent Organic Pollutants; the WHO-recommended classification of pesticides by hazard.

4 The ozone layer-depleting substances (ODSs): Chemical mixtures react one another and deplete the stratospheric ozone layer, creating very large "ozone holes". 'The Montreal Protocol lists ODSs and their effects and phasing-out. 5 CITES: Convention on International Trade in Endangered Plant and Animal Species.

6 Including: ships failing to satisfy requirements of MARPOL SOLAS Certification (including without limitation and failure to comply with ISM code); these ships are on the European Commission's black list or are banned under the Paris Memorandum of Understanding on Control of National Ports (Paris MOU) and cargo ships failing to satisfy standards under I3G MARPOL. Not to use cargo ships with unique shells aged more than 25 years.

LIST OF ENVIRONMENT-RELATED ACTIVITIES

* Activities within, adjacent to or in upper parts of land areas owned by indigenous people and/or vulnerable groups, including land areas and water sources used for livelihood such as livestock pasturing, hunting or fishing.

* Activities within, adjacent to or in upper parts of designated conservation zones indentified by national law or international convention, scientific research sites and habitats of rare and precious or endangered species, fishing areas of economic importance, and perennial or primitive growth forests of ecological significancet[¹].

* Activities which are likely to adversely impact areas of cultural or archaeological significance.

* Activities related to involuntary resettlement.

Note: [¹] Reference regulatory documents: IUCN guidelines for protected areas.-