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MINISTRY OF
INDUSTRY AND TRADE OF VIETNAM
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SOCIALIST
REPUBLIC OF VIETNAM
Independence - Freedom - Happiness
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No. 31/2022/TT-BCT
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Hanoi, November
8, 2022
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CIRCULAR
AMENDMENTS TO
CIRCULAR NO. 57/2014/TT-BCT DATED DECEMBER 19, 2014 OF THE MINISTER OF INDUSTRY
AND TRADE ON METHODS AND PROCEDURES FOR DEVELOPING, PROMULGATING ELECTRICITY
GENERATION PRICE RANGE AND CIRCULAR NO. 57/2020/TT-BCT DATED DECEMBER 31, 2020
OF THE MINISTER OF INDUSTRY AND TRADE ON METHODS FOR DETERMINING ELECTRICITY
GENERATION PRICE AND POWER PURCHASE AGREEMENT PRICE
Pursuant to Decree No. the Government's Decree
No. 98/2017/ND-CP dated August 18, 2017 on functions, tasks, entitlements and
organizational structure of the Ministry of Industry and Trade;
Pursuant to the Law on Electricity date December
3, 2004; the Law on amendments to the Law on Electricity dated November 20,
2012; and the Law on amendments to the Law on Electricity dated January 11,
2022;
Pursuant to Decree No. 137/2013/ND-CP dated
October 21, 2013 of the Government elaborating the Law on Electricity and the
Law on amendments to the Law on Electricity;
At request of the Director of Electricity
Regulatory Authority of Vietnam;
The Minister of Industry and Trade promulgates
Circular on amendments to Circular No. 57/2014/TT-BCT dated December 19, 2014
of the Minister of Industry and Trade on methods and procedures for developing,
promulgating electricity generation price range and Circular No. 57/2020/TT-BCT
dated December 31, 2020 of the Minister of Industry and Trade on methods for determining
electricity generation price and power purchase agreement price.
Article 1. Amendment to Circular No.
57/2014/TT-BCT dated December 19, 2014 of the Minister of Industry and Trade on
methods and procedures for developing, promulgating electricity generation
price range
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“2. “a standard power plant” refers to a
thermo-electric plant with capacity of popular assemblies determined in the
national electricity development planning that represents a type of thermo-electric
plant with the same electricity generation technology, used fuel and is used to
calculate electricity generation price range for such power plant.”
2. Amend Clause 4 Article 2 as follows:
“4. “total investment” refers to total
investment of the project determined in accordance with applicable regulations
and law, fundamental design, and other contents of feasibility study of
construction project.”
3. Amend Clause 2 Article 3 as follows:
“2. For thermo-electricity plant: ceiling costs
mean electricity generation price of the standard power plant with the methods
for determining electricity generation price of standard power plant are
specified under Articles 5 through 8 hereof.”
4. Amend Clause 3 Article 6 as follows:
“3. Investment rate means the investment in 1 kW of
average capacity of the standard power plant (excluding costs for port,
infrastructures, storage, regasification, and transport of LNG from port
warehouse to power plant) and is calculated using data in the approved
feasibility study of construction project, and total investment effective at
the time of calculating electricity generation price range or data negotiated
under power purchase agreement (if any), and is updated based on foreign
exchange rate at the time of calculation.”
5. Amend Point a Clause 4 Article 6 as follows:
“a) Loan interest rate rd (%) is calculated using
weighted average interest rate of loans in VND and foreign currency according
to the following formula:
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In which:
DF: Percentage of loans in foreign
currency in total loans as specified under Appendix I hereof (%);
DD: Percentage of loans in VND in total
loans as specified under Appendix I hereof (%);
rd,R: Interest of loans in foreign
currency determined on the basis of interest of loans in foreign currency of
power plant projects where negotiation on electricity price has been carried
out within 5 years prior to the date of calculating electricity generation
price range (%/year);
rd,D: Interest of loans in VND determined
on the basis of interest of loans in VND of power plant projects where
negotiation on electricity price has been carried out within 5 years prior to
the date of calculating electricity generation price range (%/year).”
6. Amend Clause 5 Article 6 as follows:
“Annual average electricity at the point of
delivery Abq (kWh) of the Standard Power Plant is determined using
the following formula:
Abq = Pt
x Tmax x (1 - kCS)
In which:
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Tmax: Number of operation hours at
maximum capacity (hour);
kCS: Average power attenuation rate of
the entire economic life of the power plant based on technical dossiers of
manufacturers. The case where average power attenuation cannot be identified,
average power attenuation rates of power plants with similar technology and
install capacity (%) shall prevail.”
7. Amend Article 8 as follows:
“Article 8. Methods for determining variable
cost of Standard Power Plant for the year of application of the price range
Variable cost of Standard Power Plant for the year
of application of the price range (VC) is the component to recover costs of
fuel and other variable costs calculated with the following formula:
VC = HR x Pnlc
x (1 + f)
In which:
VC: Variable costs of Standard Power Plant
(VND/kWh);
HR: Net heat rate calculated under load specified
under Appendix I attached hereto, expressed as kcal/kWh, kJ/kWh or BTU/kWh;
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Pnlc: Costs of primary fuel of Standard
Power Plant (VAT not included), expressed in VND/kcal, VND/kJ, or VND/BTU, and
determined as follows:
- In case of a coal-fired thermal power plant, coal
price already covers depreciation, operation, management, and insurance costs
(if any) but does not cover transport rate. If transport rate cannot be
identified in accordance with fuel supply agreement, costs of primary fuel
shall be determined using fuel costs under fuel sale agreement for the primary
fuel;
- In case of gas turbine combined cycle power plant
using natural gas, primary fuel costs refer to gas cost at the wells without
including costs for transporting the gas to power plants;
- In case of gas turbine combined cycle power plant
using LNG, primary fuel costs include LNG import costs, LNG import duties (if
any), costs for transporting LNG to regasification ports and do not include
costs for storage, regasification, and distribution after regasification (if
any).
If power plants have not entered into fuel supply
agreements, data under agreements between project developers and fuel suppliers
or data calculated by counseling organizations shall prevail.
8. Amend Article 10 as follows:
“Article 10. Procedures for developing and
promulgating electricity generation price range
1. Within 15 working days from the date on which
Feasibility study for construction investment of power plants is approved.
Project developers of these power plants are responsible for providing
Feasibility study for construction investment for Vietnam Electricity (EVN).
2. Before November 1 of each year, the EVN is
responsible for:
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b) Propose Standard Power Plant and parameters
involved in the calculation of electricity generation price for Standard Power
Plant under Appendix I hereof depending on implementation of power purchase
agreements and produce documents on calculation of electricity generation price
range in accordance with Article 11 hereof and request Electricity Regulatory
Authority of Vietnam (ERAV) to appraise:
c) Calculate ceiling costs of hydroelectricity
plants using methods under Article 9 hereof.
3. Within 5 working days from the date on which
documents on calculation of electricity generation price range under Point b
Clause 2 of this Article are received, the ERAV is responsible for inspecting
legitimacy of the documents. If necessary, the ERAV shall request the EVN to
amend or clarify contents of the documents. Within 15 working days from the
date on which the request for revision is received, the EVN is responsible for
submitting reports explaining contents of the documents as requested.
4. Within 20 working days from the date on which
legitimate documents and reports clarifying contents of the documents sent by
the EVN are received, the ERAV is responsible for choosing Standard Power
Plants and organize appraisal of electricity generation price range proposed by
the EVN.
5. Within 15 working days from the date on which
electricity generation price range is appraised, ERAV is responsible for
completing documents and requesting the Minister of Industry and Trade to
approve electricity generation price range for the following year and
publishing on website of the ERAV. The case where electricity generation price
range of the following year has not been announced, the latest valid
electricity generation price range shall prevail.”
9. Amend Clause 1 Article 11 as follows:
“1. Presentation of the EVN pertaining to selection
of parameters of Standard Power Plants and calculation of electricity
generation price range of power plants under Point b and Point c Clause 2
Article 10 hereof.”
10. Amend net heat rate and primary fuel costs
under Appendix 2 as follows:
1
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HR
kcal/kWh or kJ/kWh or BTU/kWh
2
Primary fuel costs
Pnlc
VND/kcal or VND/kJ or VND/BTU
Article 2. Amend Circular No. 57/2020/TT-BTC
dated December 31, 2020 of the Minister of Industry and Trade on methods of
determining electricity generation prices and power purchase agreement value
1. Amend Clause 4 Article 3
as follows:
“4. Power purchase agreement price for comparing
with electricity generation price range in the base year
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In case the base year of a thermal power plant
lacks electricity generation price range, PPA price of the thermal power plant
shall be calculated on the basis of corresponding cost components in order to
compare with electricity generation price range of the latest year applied to
the power plant:
b) In case projects have commenced without entering
into PPA before the effective date hereof:
PPA price must vary within electricity price range
in the PPA negotiation year, in which PPA price of thermal power plants for the
purpose of comparing with electricity generation price range shall be
calculated on the basis of cost components corresponding to cost components
serving calculation of electricity generation price range.”
2. Amend Clause 3 Article 7
as follows:
“3. Variable cost adjusted by other factors of
power plants in the base year is determined using the following formula:
VCkb
=
Cvlp +
Ckđ + Ck
(VND/kWh)
AGN
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Cvlp: Total annual auxiliary material
cost of power plants determined based on quantity and unit price of auxiliary
materials used for electricity generation in the base year (VND); If data
required for the calculation of total annual auxiliary material costs in the
base year is insufficient, the costs components can be calculated using data
from a year with sufficient data and converted to the base year at a rate of
2,5%/year;
Ckd: Total initiation costs include fuel
costs, other costs serving initiation (VND); number of initiation sessions
agreed upon by both parties on the basis of electrical grid demand and
operational characteristics of power plants; If data required for the
calculation of total initiation costs in the base year is insufficient, these
costs can be calculated using data from a year with sufficient data and
converted to the base year at a rate of 2,5%/year;
Ck: Annual regular repair and
maintenance costs including regular repair and maintenance costs calculated on
the basis of total construction and equipment investment of power plants,
percentage of regular repair and maintenance costs agreed upon by both parties
without exceeding value under Annex 1 hereof and costs for dredging port entry
agreed upon by both parties (if any) (VND). If data required for the
calculation of navigation channel dredging costs in the base year is
insufficient, these costs can be calculated using data from a year with
sufficient data and converted to the base year at a rate of 2,5%/year;
AGN: Average electricity generated over
multiple years at delivery points between the Buyer and the Seller and
calculated according to Clause 1 Article 6 hereof (kWh).
3. Add Clause 5 Article 12
as follows:
“5. The base year of power plants negotiating
electricity price under finalized investment capital shall be the year in which
the investment capital is finalized.”
4. Amend Clause 2 Article
13 as follows:
“2. On the basis of practical loan capacity and
financial capacity of projects, both parties shall negotiate about average
fixed price of power plants and convert to annual fixed cost (FCj:
fixed cost of year j) as long as average fixed cost does not change compared to
mutually agreed value and following principles are complied:
a) Financial discount rate when calculating annual
fixed price agreed by both parties using the IRR of power plants;
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5. Amend Point c Clause 3
Article 15 as follows:
“c) Components of variable costs adjusted according
to other variations of power plants in the year j VCkj is
determined using the following formula:
VCkj
= VCkb x (1 + (l - 1) x kHS) x (1 + i)m-1
In which:
VCkb: Components of variable
costs adjusted according to other variations of power plants in the base year
determined under Clause 3 Article 7 hereof;
i: Inflation rates of components of variable prices
adjusted according to other variations based on rates under Appendix I hereof.
kHS: Percentage of capacity reduction in
year j (%);
l: Year of commercial operation of power plants
(starting from commercial commencement date of power plants). The first
commercial operation year of power plants start from commercial commencement
date of the first generator groups to the end of the first commercial operation
year, l = 1);
m: Order of payment year starting from the base
year (in case of the base year, m = 1).”
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“6. In case a power plant has entered into PPAs,
the case where the parties must negotiate in order to revise formula of
variable cost components adjusted according to other variations of power plants
is specified under Point c Clause 3 Article 15 hereof.”
7. Amend Point c Clause 1.3
Section I of Appendix V of the sample Power Purchase Agreement attached to the
Circular as follows:
“c) Components of variable costs adjusted by other
variations:
Components of variable costs adjusted according to
other variations of power plants in the year j VCkj
(VND/KWh) is determined using the following formula:
VCkj
= VCkb x (1 + (l - 1) x kHS) x (1 + i)m-1
In which:
VCkb: Components of variable
costs adjusted by other variations of power plants in the base year is …
(VND/kWh);
kHS: Percentage of capacity reduction in
year j (%);
l: Year of commercial operation of power plants
(starting from commercial commencement date of power plants). The first
commercial operation year of power plants start from commercial commencement
date of the first generator groups to the end of the first commercial operation
year, l = 1);
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i: Inflation rates of components of variable prices
adjusted according to other variations based on rates under Appendix I hereof.
Article 3. Entry into force
1. This Circular comes into force from December 28,
2022.
2. Annul Article 4 of Circular No. 57/2014/TT-BCT
dated December 18, 2014 of the Minister of Industry and Trade.
3. Annul Article 27 of Circular No. 57/2020/TT-BCT
dated December 31, 2020 of the Minister of Industry and Trade.
4. Difficulties that arise during the
implementation of this Circular should be reported to the ERAV or the Ministry
of Industry and Trade for consideration./.
PP. MINISTER
DEPUTY MINISTER
Dang Hoang An
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