Experts proposing resolutions for indebted BOT project investors

There have been many proposals from experts in the field aimed to aid investors of BOT infrastructure projects and avoid creating bad debts for credit institutions, while keeping the burden from falling on to residents and transport companies.
A highway toll station put out of business since March 2017
A highway toll station put out of business since March 2017

Restructuring debt

BOT investors are on the verge of bankruptcy after being forced to close down multiple highway toll stations to appease the locals.

The State has repeatedly declined requests to let operating stations raise their toll fee on the grounds that the whole economy is being affected by Covid-19.

At least 9 BOT related companies would go bankrupt if the schedule for increased road fee were postponed until 2022, the Ministry of Transport (MOT) said.

Many experts and business leaders in the field stepped up with various solutions to the problem, including the extension of operation time for toll stations, and restructuring bank loans for investors.

The latter is backed by many investors since it ensures debts are solved while stations will not need to be running for too long.

Specifically, this solution calls for credit institutions to reduce interest rates and not put investors in the doubtful debt, allowing investors to pay principal first and interest later.

Meanwhile, Head of the Prime Minister’s (PM) Economic Advisory Group suggests that investors can auction off BOT traffic projects to other companies with more resources.

However, experts say the frequently changing policies and regulations on taxes and fees or management and use of public assets is a high risk factor, discouraging investors and credit institutions from investing in large infrastructure projects.

Appealing to private investors

MOT have proposed measures to resolve problems for established BOT traffic projects, including using State budget to cover for projects already built, but got put out of commission in some Central provinces.

Another request was for the PM to consider increasing toll rates under BOT contracts for projects with sharp revenue declines at a reasonable time and rate to limit the impact on transport costs and national economic development.

In terms of upcoming projects, especially solutions for the North - South expressway, MOT requested policies aimed at limiting risks for investors and credit institutions. Among which, the most notable solution is that the State budget must share about 51% of the total investment capital, mainly for site clearance work.

These solution, however, are still not appealing enough, evident by the fact that only 4 out of 5 bidding packages in the North - South expressway PPP project are registered.

On the other hand, experts are concerned that if credit institutions do not grant loans to investors within 6 months, bidding results will be revoked under current regulations.