Circular No. 57/2020/TT-BCT method to determine electricity generation prices
Guidance on method to determine electricity generation prices
The Ministry of Industry and Trade issues the Circular No. 57/2020/TT-BCT dated December 31, 2020 providing method to determine electricity generation prices and power purchase agreement.
Electricity generation prices of a power plant shall be determined on a basis of rational expenses of the project owner during the entire economic life of the project and the financial internal rate of return (IRR) not exceeding 12%.
Remarkably, for power plants with power purchase agreement expired but economic life unexpired: The electricity generation price stated in the current power purchase agreement shall continue to be applied for the next years until the expiration of the economic life.
Components of price for operation and maintenance of the power plant is revised according to the following principles:
Firstly, components of price for operation and maintenance by major repair expenses and other expenses are revised according to the average cost slippage rate as specified. The two parties shall study and propose mechanism of revision of components of prices price for operation and maintenance by major repair expenses and other expenses for foreign currency-based items;
Secondly, cost for operation and maintenance by workforce cost shall be revised according to changes to region-based minimum wage at the time of payment or according to CPI index announced by the General Statistics Office but not exceed 2.5%/year.
This Circular takes effect on February 22, 2021.
For further details of the Circular 57/2020/TT-BCT, Click here
translation of the Official Gazette of the Vietnam News Agency
THE MINISTRY OF INDUSTRY AND TRADE
THE SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness
Hanoi, December 31, 2020
On providing method to determine electricity generation prices and power purchase agreement
Pursuant to the Electricity Law dated December 03, 2004 and the Law Amending and Supplementing a Number of Articles of the Electricity Law dated November 20, 2012;
Pursuant to the Government’s Decree No. 98/2017/ND-CP dated August 18, 2017 defining the functions, tasks, powers and organizational structure of the Ministry of Industry and Trade;
Pursuant to the Government’s Decree No. 137/2013/ND-CP dated October 21, 2013, detailing a number of articles of the Electricity Law and the Law Amending and Supplementing a Number of Articles of the Electricity Law;
At the proposal of the Director of the Electricity Regulatory Authority;
The Minister of Industry and Trade hereby promulgates the Circular on providing method to determine electricity generation prices and sequence to inspect power purchase agreement.
Article 1. Scope of regulation and subjects of application
1. This Circular provides regulations on:
a) Method to determine the electricity generation prices and power purchase agreements applicable to types of power plants specified in Clause 2 of this Article.
b) Sequence to inspect power purchase agreement.
2. This Circular applies to the following subjects:
a) Power plants connected with the national electric system with the total installed capacity of more than 300MW, power plants with the installed capacity of 300MW or under that volunteer to join the electricity market;
b) Other concerned organizations and individuals;
c) This Circular does not apply to small sized hydroelectric power plants that apply avoidable cost tariffs, multi-target strategic hydroelectric power plants, independent power plants (those were invested in the form of Build - Operate – Transfer (BOT)), power plants that only supply auxiliary services, biomass power plants, wind power plants, solar power plants, waste-to-energy plants and power plants using solid wastes;
For other power plants without a separate mechanism provided by the Prime Minister and the Ministry of Industry and Trade, regulations specified in Article 9 of this Circular shall be complied with.
Article 2. Interpretation of terms
In this Circular, the terms below are construed as follows:
1. Seller means the electric generating unit.
2. Buyers mean the Vietnam Electricity (or representative unit according to decentralization or authorization), the Northern Power Corporation, the Central Power Corporation, the Southern Power Corporation, Hanoi Power Corporation, Ho Chi Minh City Power Corporation, big electricity-using customers or other electricity wholesale buyers in accordance with the electricity market’s regulations.