In some specific cases approved by the Management Council, organizations and individuals take loan from other credit institutions are able to request debt guarantee from VEPF.

Targeted customers

• Projects appraised and agreed to be loaned by a credit institution can submit application for debt guarantee of VEPF;

• Financial plan and refund plan is endorsed by VEPF;

• Project owners need to prove assured asset which is approved by VEPF.

Implementation

• Guarantee level and legal authorities to decide

  • The guarantee level to a certain project can not exceed the loan amount;

  • The General Director of VEPF can decide which guarantee level apply to a certain case; otherwise the Chairman of the Management Council shall decide;

• Period for Dept guarantee

  • Debt guarantee duration is appropriate with the loan duration agreed by both project owner and the credit institution but can not break VEPF's regulations on loan duration;

• Fees of guarantee

  • An amount of fee need to be paid to VEPF and is equivalent to part of the guarantee amount in percent (%). Detailed fees are guided by the Ministry of Finance;

• Drawing of standby financing in debt guarantee

  • Annually, VEPF sets up a fund for debt guarantee in percent (%). It is part of the total guarantee and is used when the project owner fails to return the debt to the credit institution in time. If the fund is not used up by the end of a year, it will be transferred to the next year's fund. If the fund is used up before the end of a year, the Management Council will report to the Minister of Natural Resources and Environment and the Minister of Finance in order to testify before the Prime Minister. That amount of fund is decided by the Ministry of Finance;

•  Set up the Risk Fund for debt guarantee

  • Annually, VEPF also sets up a fund for risk management of debt guarantee. It aims to cover the expenses paid to credit institutions that can not be refunded by project owner later. This amount is also ruled by the Ministry of Finance;

• Risk management and legal authorities to risk management:

When the credit institution requires debtor to refund in time while the project owner can not meet the requirement, VEPF will substitute to pay.

• After taking responsibility for debt guarantee, VEPF requests project owner to sign a covenant with VEPF about the the amount of money Vietnam Environment Protection Fund shall pay on behalf of the project owner, and at the same time, liquidate the assured assets to cover the expenses or prosecute a claim for damages if project owner intentionally violate his/her duties as mention in the guarantee contract with VEPF.

• The General Director of VEPF is responsible for consulting the Management Council about assured assets liquidation or prosecution a claim regarding law regulations.

• Risk management fund for debt guarantee is used when liquidation of assured assets can not cover the cost that VEPF paid to the credit institution on behalf of the project owner. In that case, the Management Council should report to the Minister of Natural Resources and Environment and Minister of Finance in order to testify before the Prime Minister.

Application and procedure for debt guarantee is ruled in The regulations of operation of VEPF.