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THE MINISTRY OF
CONSTRUCTION
THE GOVERNMENT PRICING COMMITTEE
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SOCIALIST REPUBLIC OF
VIET NAM
Independence - Freedom – Happiness
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No:
03/1999/TTLT-BXD-BVGCP
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Hanoi, June 16, 1999
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JOINT CIRCULAR
GUIDING THE METHOD OF DETERMINING AND COMPETENCE TO DECIDE
CONSUMPTION PRICES OF CLEAN WATER IN URBAN AREAS, INDUSTRIAL PARKS AND RURAL
POPULATION CLUSTERS
Clean water is a product essential for the daily
life, production and service activities of all population strata. The supply of
clean water to satisfy the entire society’s demand therefor, especially in
urban areas, industrial parks and rural population clusters, has become an
extremely imperative issue.
On April 28, 1997, the Ministry of Construction
and the Government Pricing Committee issued Joint Circular No. 02/TTLB to guide
the method of determining and the competence to decide the consumption prices
of clean water in urban areas, industrial parks and rural population clusters.
Due to numerous changes in the Law on Enterprise Income Tax and the Law on
Value Added Tax, the investment capital sources and management organization in
water plants, it is necessary to make appropriate amendments and supplements.
In furtherance of the Prime Minister’s Directive
No. 40/1998/CT-TTg of December 14, 1998 on enhancing the management and
development of urban water supply, the Ministry of Construction and the
Government Pricing Committee hereby jointly guide the method of determining and
the competence to decide the consumption prices of clean water to be uniformly
applied in urban areas, industrial parks and rural population clusters, as
follows:
A. THE PRINCIPLE FOR AND
METHOD OF DETERMINING THE CLEAN WATER CONSUMPTION PRICES
I. THE PRINCIPLE FOR
DETERMINING CLEAN WATER CONSUMPTION PRICES:
1. The determination of clean water consumption
prices must demonstrate the Party’s and the State’s guidelines, viewpoints and
policies in the cohesive relationship between the economic development and the
social life;
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3. The clean water consumption prices shall be
set specifically and rationally for each kind of clean water consumers: clean
water used for daily life by households and administrative and non-business
agencies; for production, business and/or services (households using clean
water for their production, business and/or service activities). The clean
water consumption prices shall be set according to its use purposes,
irrespective of whether the consumers are domestic enterprises,
foreign-invested enterprises, Vietnamese or foreigners.
II. THE METHOD OF DETERMINING
CLEAN WATER PRODUCTION COST AND CONSUMPTION PRICE
I. Clean water production cost:
The clean water production cost includes direct
materials cost, direct labor cost and general production cost.
a/ Direct materials cost: is the cost of raw
materials, fuel and materials used to directly turn out the product, such as:
cost of crude water (for enterprises that have to buy crude water); auxiliary
materials for water treatment; fuels and power;...
The materials cost shall be determined on the
following basis:
+ The used materials volume, that must not
exceed the limits set by the competent authority (excluding materials lost
during the course of procurement and preservation).
+ The materials prices: are those publicized by
the State and reasonable market prices at the time of calculation.
b/ Direct labor cost: includes amounts paid to
laborers directly engaged in water production, including: wages and salaries,
remuneration and allowances of wage nature, shift meal grant, social insurance
and health insurance premium, and trade union fund.
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The mid-shift meal grant shall be paid to the
laborers engaged in business operations of the enterprises according to the
current regulations.
The expenses for social insurance, health
insurance and trade union fund shall be calculated on the basis of the
enterprises’ wage funds according to the State’s current regulations.
c/ General production cost: is general expenses
arising at workshops and business sections of enterprises such as: wages,
allowances, shift meal grant paid to workshop laborers, expenses for materials,
tools and instruments supplied to workshops; social insurance, health insurance
and trade union fund for workshop officials and employees; fixed asset
depreciation; expenses for services purchased from outside; and expenses in
cash other than those mentioned above.
Depreciation of fixed assets used at workshops
shall be determined on the following basis:
- For fixed assets created from the State
budget’s capital source:
The management, use and depreciation of such
fixed assets shall comply with the Ministry of Finance’s Decision
No.1062-TC/QD/CSTC of November 14, 1996 and other relevant legal documents.
- For fixed assets created from other capital
sources:
The management and use of such fixed assets
shall comply with the above-said regulations; but the deduction of their
depreciation shall be made according to the terms of water supply projects’
investment loans from foreign countries, international financial institutions
and other sources.
2. The overall production cost of clean water:
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a/ The clean water production cost (already
mentioned in Section II.1)
b/ Sale expense: includes all expenses related
to the sale of product or service such as: wages, allowances of wage nature,
mid-shift meal grant, social insurance and health insurance premium and trade
union fund for the salesmen; expenses for advertisement and services purchased
from outside,...
Sale expense shall be determined according to
the State’s current regulations.
c/ Enterprise management expense: includes
expenses for the enterprise-managing and-running apparatus and those for the
entire enterprise, such as: depreciation of fixed assets used in service of the
enterprise-managing and-running apparatus (according to the principle mentioned
in section of the general production cost); expenses for wages, remuneration,
allowances and shift meal grant paid to the directorate and managerial
personnel in various sections and divisions, social insurance, health insurance
and trade union fund for the enterprise managing apparatus; expenses for
materials and stationery, taxes and fees, expenses for services purchased from
outside for the enterprise office and other expenses covered by common fund of
the entire enterprise, such as: reserves for possible decrease of prices of
goods in stock and bad debts; audit, guest reception and transaction expenses;
deducted remittances to the superior authorities; expenses for scientific
research and technological renewal; rewards for inventions and innovations,
expenses for environmental protection, education, training and laborers’
healthcare, and allowance(s) for female laborers according to the current
regimes.
The overall production cost of clean water
product includes the following items:
Ordinal Expense contents Symbols number
1 Direct materials expense Cvt
2 Direct labor cost CNC
3 General production cost Csxc
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5 Goods sale expense: CB
6 Enterprise management expense CQ
Overall production cost (4+5+6) GTtb
3. Commercial water output:
The commercial water output shall be determined
according to the following formula:
SLtp = SLsx - SLhh
SLtp: commercial water output;
SLsx: water production output is the water
volume calculated according to the annual exploitation plan of each water
supply plant set by the People’s Committee of the province or centrally-run
city (herein referred to as the provincial People’s Committee).
SLhh: water wastage is the lost water volume for
which the charge cannot be collected due to the poor technical conditions and
management level of each water supply plant during the process of its clean
water production and distribution. The water wastage shall be determined in
percentage on the water production output. The specific water wastage
percentage of each plant shall be decided by the provincial People’s Committee.
The wastage percentage set till the year 2000 must not exceed 30% for the new
water supply system and 40% for the old water supply system (including water
for washing the plants’ technical systems as prescribed). Such wastage percentage
shall be readjusted for each period of time depending on the situation of
investment, upgrading of technical systems and the raising of management
capability of the plants.
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a/ Average consumption price
The average consumption price shall be
determined by the following formula:
Gttbq
=
GTtb
+ TNct + Ftn
SLtp
Gttbq: Average consumption price;
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SLtp: Commercial water output;
TNct: Pre-calculated taxable income (i.e. former
norm profit);
Ftn: Water drainage expense
- The pre-calculated taxable income shall be set
for each enterprise by the provincial People’s Committee on the basis of the
current regulations on financial management regime.
- Water drainage expense is the one calculated
in percentage on the overall production cost for the sewer dredging, regular
repair and maintenance of water drainage system. Basing him/herself on the
actual conditions of his/her locality, the president of the provincial People’s
Committee shall prescribe the specific level of water drainage expense, which
must not be lower than 10% of the overall production cost of clean water
product. The management and use of collected water drainage charge shall be
prescribed on the basis of the State Budget Law by the provincial People’s
Committee in service of the sewer dredging, regular repair and maintenance of
the water drainage system. Such collection amount shall not be included in the
income of the clean water producing and trading enterprises.
b/ Clean water consumption price applicable to
each subject:
The appropriate price calculation coefficient
shall be determined on the basis of the average clean water consumption price
and the clean water volume consumed by each subject in the locality.
The clean water consumption price shall be
calculated by the progressive method with higher and higher prices for larger
and larger consumed volume of water, in order to encourage households to use
water economically and avoid wastefulness.
The specific price for each water consumer shall
be determined on the basis of the average water volume used by each kind of
consumers, but must not be lower than the average clean water consumption price
(mentioned in Section 4.a above).
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The price calculation coefficient applicable to
each clean water consumer must not exceed the maximum price calculation
coefficients specified in the following table:
Water consumers
or use purposes
Clean water
volume consumed by subjects in the month
Maximum price
calculation coefficient
Level
Rate %
For households’
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Administrative and non-business agencies
Material production activities
Service business
First 16 M3
From over 16 M3 to 25 M3
From over 25 M3 to 25 M3
Over 35 M3
According to actually consumed volume
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According to actually consumed volume
SH1
SH2
SH3
SH4
HC
SX
DV
0.8
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1.2
1.5
1.2
2
3.5
Average total commercial water output
100
1
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In cases where the clean water consumption
price, after being accurately and adequately calculated according to the above
guidance, is higher the current sale price, the provincial People’s Committee
shall have to readjust it step by step, so as to ensure that such clean water
consumption price shall soon be accurately and adequately calculated. For the
immediate future, the clean water consumption price must not be lower than 75%
of that already accurately and adequately calculated.
B. THE COMPETENCE TO DECIDE
AND CONTROL CLEAN WATER CONSUMPTION PRICES
1. In each period, basing itself on the actual
situation of the production and consumption of clean water in urban areas, industrial
parks and rural population clusters, the Ministry of Construction shall assume
the prime responsibility and coordinate with the Government Pricing Committee
in studying, supplementing and amending the method of determining the clean
water consumption price to make it more appropriate.
2. The provincial People’s Committees shall
decide the clean water consumption prices and payment prices (to be paid by the
water consumers and determined equal to the clean water consumption prices plus
value added tax) in their respective localities, and direct the functional
bodies in inspecting the observance of the clean water consumption prices in
urban areas, industrial parks and rural population clusters.
3. The clean water producing and trading
companies shall submit to the provincial People’s Committees plans of clean
water consumption prices. The provincial/municipal Finance and Pricing Services
shall coordinate with the provincial/municipal Construction Services or
provincial/municipal Communication and Public Work Services in evaluating the
plans of clean water consumption prices, then submitting them to the provincial
People’s Committees. Annually, the provincial functional bodies shall have to
revise the factors constituting the clean water consumption price, then propose
them to the provincial People’s Committees for appropriate amendments and
supplements thereto.
4. Clean water producing and trading enterprises
shall have to regularly inspect the water consumption and water charge payment
by consuming households, and take timely measures to tackle water wastage and
under-collection of water charges.
C. ORGANIZATION OF
IMPLEMENTATION
1. The presidents of the People’s Committees of
the provinces and centrally-run cities shall direct the clean water producing
and trading companies in devising plans on clean water consumption prices,
organize the evaluation thereof and decide the clean water consumption prices
and payment prices in their respective localities; and at the same time send
their decisions to the Ministry of Construction and the Government Pricing
Committee for monitoring purpose.
2. The Ministry of Construction and the
Government Pricing Committee shall organize the periodical or irregular
inspections of the formulation, promulgation and management of clean water
consumption and payment prices by all provinces and centrally-run cities as
well as clean water producing and trading enterprises according to the
provisions of this Circular.
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Any problems arising in the course of
implementation of this Circular shall be reported by the localities to the
Ministry of Construction and the Government Pricing Committee for study and
appropriate amendments and supplements.
THE MINISTRY OF
CONSTRUCTION
VICE MINISTER
Nguyen Tan Van
THE GOVERNMENT PRICING
COMMITTEE
DEPUTY HEAD
Le Van Tan