Circular 12/2025/TT-BCT on method of determining electricity generation service price; principle of calculating electricity price to implement power projects; main content of a power purchase agreement

THE MINISTRY OF INDUSTRY AND TRADE __________ No. 12/2025/TT-BCT

THE SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness ________________________ Hanoi, February 1, 2025

 

CIRCULAR

Method of determining electricity generation service price; principle of calculating electricity price to implement power projects; main content of a power purchase agreement

 

Pursuant to the Electricity Law dated November 30, 2024;

Pursuant to the Government’s Decree No. 96/2022/ND-CP dated November 29, 2022 providing the functions, tasks, powers and organizational structure of the Ministry of Industry and Trade; Decree No. 105/2024/ND-CP dated August 1, 2024 amending and supplementing a number of articles of Government’s Decree No. 96/2022/ND-CP and Government’s Decree No. 26/2018/ND-CP dated February 28, 2018 on the Charter of organization and operation of Vietnam Electricity;

At the request of the Director of the Electricity Regulatory Authority;

The Minister of Industry and Trade promulgates a Circular providing method of determining electricity generation service price; principle of calculating electricity price to implement power projects; main content of a power purchase agreement.

 

Chapter I

GENERAL PROVISIONS

 

Article 1. Scope of regulation and subjects of applications

1. This Circular provides detailed guidance on Clause 3, Article 12, Clause 5, Article 44, Point g, Clause 1, Article 51 of the Electricity Law No. 61/2024/QH15 on the method of determining electricity generation service price; principle of calculating electricity price to implement power projects; main content of the power purchase agreement.

2. This Circular applies to the following subjects:

a) Power plants operating in the territory of the Socialist Republic of Vietnam connected to the national power system;

b) Other relevant agencies, organizations and individuals.

3. The content on the method of determining electricity generation service price; principle of calculating electricity price to implement power projects; main content of the power purchase agreement stipulated in this Circular shall not apply to the following subjects: multi-purpose strategic hydropower plants, small renewable energy power plants applying the avoided cost tariff mechanism, independent power plants invested in the form of Build - Operate - Transfer (BOT), power plants and generating sets providing ancillary services; power plants applying the electricity purchase price mechanism in documents of competent authorities.

Article 2. Interpretation of terms

In this Circular, the following terms are construed as follows:

1. Electricity seller is the electricity generating unit that owns the power plant.

2. Electricity buyer includes Vietnam Electricity (or its representative unit according to the hierarchy and authorization), Northern Power Corporation,  Southern Power Corporation, Central Power Corporation, Hanoi City Power Corporation, Ho Chi Minh City Power Corporation, and other electricity wholesalers according to the regulations of the competitive electricity market.

3. Investor is an agency, organization or individual that owns capital, borrows capital or is assigned to directly manage and use capital to carry out investment activities in power projects.

4. Electricity delivered is the total electricity delivered by the electricity seller to the electricity buyer.

5. Electricity generating unit is an electricity unit that owns one or more power plants.

6. Electricity system and electricity market operation unit is the National Power System and Electricity Market Operator Company Limited or another name depending on the competitive electricity market's development level.

7. Fuel purchase agreements refer to agreements between electricity generating units and fuel trading units to supply fuel to power plants, signed in accordance with relevant laws, ensuring a legal fuel source and a competitive and transparent price.

8. Contracts for storage, regasification and distribution of liquefied natural gas (LNG) fuel are agreements between electricity generating units or fuel trading units and LNG storage investment and management units for storage, regasification and distribution, and supply of gas fuel to power plants that are signed in accordance with relevant laws, ensuring competitive and transparent prices.

9. Fuel transportation agreements are agreements between electricity generating units or fuel trading units and fuel transportation units to transport fuel to power plants, signed in accordance with relevant laws, ensuring competitive and transparent prices.

10. Base year is the year in which the total approved investment is used to calculate the electricity generation service price.

11. New power plant is a newly invested and built power plant or a newly invested expanded part of a power plant that has not yet signed a power purchase agreement for the first time.

12. Net heat rate is the amount of heat consumed to produce one kWh of electricity at the electricity delivery point (BTU/kWh or kJ/kWh or kCal/kWh).

13. Total investment is the total construction investment cost of the project determined according to relevant laws, which is satisplant to basic design and other details under construction investment feasibility reports.

14. Adjusted total investment is the total investment adjusted according to the law on construction in effect at the time of negotiating the price of electricity generation services.

15. Finalized investment capital is all legal costs required in the investment process to put the project into operation. Legal costs are costs incurred within the scope of the approved project, design, and estimate; the construction contract signed in accordance with the laws; including adjustments and supplements approved in accordance with regulations and within the authority. The finalized investment capital must be within the total investment limit approved (or adjusted) in accordance with the laws.

 

Chapter II

METHOD OF DETERMINING ELECTRICITY GENERATION SERVICE PRICE; PRINCIPLE OF CALCULATING ELECTRICITY PRICE TO IMPLEMENT POWER PROJECTS

 

Section 1

METHOD OF DETERMINING ELECTRICITY GENERATION SERVICE PRICE FOR NEW POWER PLANT

 

Article 3. Principles for determining electricity generation service prices

1.                 The power purchase agreement price of the power plant is determined based on:

a) Legitimate and allowable expenses of the project owner during the entire economic life of the project;

b) The internal rate of return (IRR) does not exceed 12%.

2.                 The power purchase agreement price is agreed upon by the electricity seller and the electricity buyer and is built according to the method prescribed in Article 4 of this Circular.

3.                 The power purchase agreement price excludes value-added tax, water royalty, water resource exploitation licensing fee, forest environmental service fee, environmental protection fee for solid waste and industrial wastewater (applicable to thermal power plants) and other taxes, fees, and other monetary receipts as prescribed by competent state management agencies (except for taxes and fees already calculated in the electricity generation service price plan).

4.                 Power purchase agreement price for comparison with the electricity generation price bracket in the base year:

a) The price of the power purchase agreement in the base year shall not exceed the electricity generation price bracket issued by the Minister of Industry and Trade in the base year, in which the power purchase agreement price of the power plant used for comparison with the electricity generation price bracket is calculated based on cost components corresponding to the cost components of the electricity generation price bracket calculation;

b) In case the base year does not have an electricity generation price bracket, the power purchase agreement price is calculated by converting the corresponding cost components to compare with the nearest electricity generation price bracket after the base year of that type of power plant.

Article 4. Method of determining the power purchase agreement price in the base year of a power plant

The power purchase agreement price in the base year P_C (VND/kWh) is determined according to the following formula:

P_C = P^CĐ + P^BĐ

1. P^CĐ (VND/kWh) is the fixed price in the base year, determined according to the following formula:

P^CĐ = FC + FOMC_b

In which:

FC:	The average fixed cost is determined under Article 5 of this Circular (VND/kWh);
FOMCb ­­:	The fixed operation and maintenance cost in the base year is determined under Article 6 of this Circular (VND/kWh).

2. P^BĐ (VND/kWh) is variable price in the base year, determined as follows:

a) For thermal power plants, P^BĐ is determined according to the following formula:

In which:

	The variable price component adjusted according to the fluctuation of the main fuel cost of the power plant in the base year is determined according to the method prescribed in Clause 1, Article 7 of this Circular (VND/kWh);
	The variable price component adjusted according to the fluctuation of the auxiliary fuel cost of the power plant in the base year is determined according to the method prescribed in Clause 2, Article 7 of this Circular (VND/kWh);
	The variable price component adjusted according to other fluctuations of the power plant in the base year is determined according to the method prescribed in Clause 3, Article 7 of this Circular (VND/kWh);
	The main fuel transportation price for power generation in the base year is determined according to the method prescribed in Clause 4, Article 7 of this Circular (VND/kWh).

b) For hydroelectric, solar and wind power plants: P^BĐ equals 0 (zero).

3. Costs for experimentation, testing operation and acceptance of power plants: Payment of costs for experimentation, testing operation and acceptance arising before the commercial operation date shall be agreed upon by the electricity seller and the electricity buyer to ensure that they are not counted in duplicate in the total approved investment of the project.

Article 5. Method of determining average fixed cost of power plant

1. The average fixed cost of the power plant (FC) is determined on the basis of the financial analysis of the project according to Form 1 and Form 2 specified in Appendix II issued with this Circular. Input parameters for creating the average fixed cost of the power plant (FC) are determined in accordance with Clause 2 of this Article.

2. Main input parameters used in calculating the average fixed cost of the power plant (FC):

a) Investment costs: Investment costs are determined based on the total investment (or adjusted total investment) in effect at the time of negotiating the electricity generation service price or the finalized investment capital for power plants negotiated under Article 15 of this Circular and used to calculate the electricity generation service price, including all costs under the investment responsibility of the electricity seller taking into account the connection point of the power plant including the following items: power plant; infrastructure, wharf for the power plant, electricity storage system (if any for renewable energy plants), investment costs for the power grid from the power plant to the connection point, other related costs and costs allocated to the project (if any);

b) Economic life: Determined according to the provisions in Appendix I issued with this Circular, unless there is a document from a competent state authority approving the economic life of the project different from the provisions in this Circular, that document shall apply (year);

c) Average electricity generation over multiple years at the electricity delivery point (A_GN) is calculated as follows:

In which:

ANM :	Electricity generation at the plant's output terminal (excluding the electricity storage system) according to the basic design in effect at the time of negotiation (kWh). For thermal power plants, ANM is calculated according to the following formula: ANM = Pt x Tmax Pt : Capacity of generator terminal at an approved design (kW); Tmax : The average number of operating hours at maximum capacity over multiple years of the plant is applied according to the document of the competent state authority in case there is a document of the competent state authority approving Tmax or according to the provisions in Appendix I issued with this Circular. For power plants whose Tmax is not specified in Appendix I issued with this Circular, this parameter is agreed upon by the electricity seller and the electricity buyer.
ttd :	The rate of self-consumption electricity and step-up transformer loss of the plant, loss of power line to the electricity delivery point to the national power system (if any) is agreed upon by the electricity seller and the electricity buyer, determined according to the approved basic design or the technical documents of the equipment manufacturer at the time of negotiation (if any) but does not exceed the value in the approved basic design (%) or applied according to the document of the competent authority (if any);
kCS :	The rate of capacity reduction is calculated as an average for the entire economic life of the thermal power plant (if any) agreed upon by the electricity seller and the electricity buyer, determined according to the approved basic design or technical documents of the equipment manufacturer at the time of negotiation (if any).

In case A_GN cannot be determined according to the above formula, the electricity seller and the electricity buyer shall determine it according to the basic design, the technical design converted to the power delivery point in effect at the time of negotiation (for wind power plants, the two parties shall agree to determine the output according to the expected level P50). In case A_GN cannot be determined according to the approved technical design or basic design, it shall be determined according to the document of the competent state authority. In case A_GN cannot be determined according to the document of the competent state authority, A_GN shall be agreed upon by the electricity seller and the electricity buyer.

d) Depreciation period of each main fixed asset group (year): Determined based on the depreciation period of each main fixed asset group according to the depreciation time frame prescribed by relevant laws in each period or documents of competent state authority permitting other depreciation (if any);

dd) The ratio of equity capital, loan capital and phasing of investment capital in the total investment is determined according to the decision approving the investment project, actual capital mobilization for the project at the time of negotiation, in accordance with regulations issued by competent state authority. The minimum equity capital ratio is 15% of the total project investment;

e) Loan interest rate and loan repayment period during operation: determined based on loan contracts, documents between the investor and credit institutions and lending banks.

In case the total loan capital in loan contracts or legal documents between investors and credit institutions is lower than the total loan capital in the electricity price calculation plan, the remaining loan capital shall be agreed upon by the electricity seller and the electricity buyer based on the following principles: The minimum loan repayment period is 10 years and the regulations on loan interest rates are as follows:

e1) Foreign currency loan interest rate is determined by the average interest rate of SOFR (Secured Overnight Financing Rate) for the 180-day average term (180 Days – Average) of 36 consecutive months from the first day of the nearest March, June, September or December of the negotiation year announced by the Fed (Website: www.newyorkfed.org) plus the bank's loan arrangement fee rate of 3%/year;

e2) The domestic currency loan interest rate is determined by the average of the 12-month post-paid deposit interest rates in Vietnamese Dong for individual customers of the previous 60 consecutive months from the first day of the nearest March, June, September or December of the negotiation year of four commercial banks (Joint Stock Commercial Bank for Foreign Trade of Vietnam, Vietnam Joint Stock Commercial Bank for Industry and Trade, Joint Stock Commercial Bank for Investment and Development of Vietnam, Vietnam Bank for Agriculture and Rural Development or legal successors of these banks) plus the service fee rate of the banks of 3%/year.

g) Corporate income tax rate, other taxes and fees: Determined according to relevant laws.

Article 6. Method of determining the operation and maintenance cost of power plants

The operation and maintenance cost in the base year FOMC_b (VND/kWh) is determined by the following formula:

In which:

	The operation and maintenance price based on major repair costs and other costs in the base year, is determined in accordance with Clause 1 of this Article (VND/kWh);
	The operation and maintenance cost based on labor costs in the base year, is determined in accordance with Clause 2 of this Article (VND/kWh).

1. The operation and maintenance cost based on major repair costs and other costs in the base year (VND/kWh) is determined according to the following formula:

(VND/kWh)

In which:

:	Applying the method of calculating total major repair costs and other costs TCscl at five facilities according to the following formula:

TC_scl = VĐT_XD+TB k_scl + C_cdk

In which:

VĐTXD+TB	Total construction costs and equipment costs are determined based on the total investment specified at Point a, Clause 2, Article 5 of this Circular (VND);
kscl :	The ratio of major repair costs and other costs (%) of the power plant shall be agreed upon by the electricity seller and the electricity buyer but shall not exceed the one specified in Appendix I issued with this Circular. For power plants whose kscl is not specified in Appendix I issued with this Circular, the kscl shall be agreed upon by the electricity seller and the electricity buyer;
Ccdk :	The cost of dredging port entry, infrastructure fees, and other related costs are agreed upon by the electricity seller and the electricity buyer (if any) (VND). In case there is no data to calculate this cost in the base year, the electricity seller and the electricity buyer agree to calculate the total value of this cost at the time of negotiation and back it to the base year at a rate of 2.5%/year (VND);
AGN :	Electricity generated on average over multiple years at the electricity delivery point between the electricity seller and the electricity buyer (kWh) is determined under Point c, Clause 2, Article 5 of this Circular.

2. The operation and maintenance cost based on labor cost in the base year (VND/kWh) is determined according to the following formula:

 

(VND/kWh)

In which:

TCnc :

Total labor costs at the five facilities include salary costs, social insurance costs, health insurance, unemployment insurance, union fees, and other accompanying allowances (VND); The total labor cost TCnc in the base year is determined based on the total labor cost of the plant and calculated and converted to the base year as follows: In case the salary level applied to calculate the plant's labor costs is equal to the regional minimum wage of the year in which the electricity price is calculated: The conversion rate to the base year is determined according to the regional minimum wage; In case the total labor cost cannot be determined according to the above case, apply the method of calculating the total labor cost TCnc in the base year according to the following formula: TCnc = VĐTXD + TB knc In which: VĐTXD + TB: Total construction costs and equipment costs are determined based on the total investment specified at Point a, Clause 2, Article 5 of this Circular (VND); knc: The labor cost ratio (%) of the power plant shall be agreed upon by the electricity seller and the electricity buyer and shall not exceed the provisions in Appendix I issued with this Circular. For power plants whose knc is not specified in Appendix I issued with this Circular, knc shall be agreed upon by the electricity seller and the electricity buyer; AGN :  Electricity generated on average over multiple years at the electricity delivery point between the electricity seller and the electricity buyer that is calculated under Point c, Clause 2, Article 5 of this Circular (kWh).

 

Article 7. Method of determining variable price of thermal power plant

The variable price of the thermal power plant in the base year P^BĐ (VND/kWh) is determined by the following formula:

In which:

	The variable price component adjusted according to the fluctuation of the main fuel cost of the power plant in the base year is determined according to the method prescribed in Clause 1 of this Article (VND/kWh);
	The variable price component adjusted according to the fluctuation of auxiliary fuel cost of the power plant in the base year is determined according to the method prescribed in Clause 2 of this Article (VND/kWh);
	The variable price component adjusted according to other fluctuations of the power plant in the base year is determined according to the method prescribed in Clause 3 of this Article (VND/kWh);
	The price of transporting main fuel for power generation in the base year is determined according to the method prescribed in Clause 4 of this Article (VND/kWh).

1. The variable price component adjusted according to the fluctuation of the main fuel cost of the power plant in the base year  is determined according to the following formula:

(VND/kWh)

In which:

The average net heat rate of a power plant using the main fuel agreed upon by the electricity seller and the electricity buyer, that must not be higher than the basic design/technical design corresponding to the total investment used to calculate the electricity price or the parameters of the equipment manufacturer calculated corresponding to the load specified in Appendix I issued with this Circular (kcal/kWh or kJ/kWh or BTU/kWh or kg/kWh);

Fuel price in the base year, calculated by the weighted average of fuel purchase agreements or other agreements (excluding value-added tax) (VND/kcal or VND/kJ or VND/BTU or VND/kg).

2. The variable price component adjusted according to the fluctuation of auxiliary fuel cost of the power plant in the base year  is determined according to the following formula:

(VND/kWh)

In which:

	The average net heat rate of a power plant using auxiliary fuel agreed upon by the electricity seller and the electricity buyer (kg/kWh or kcal/kWh or kJ/kWh or BTU/kWh);
	Fuel price in the base year is equal to the weighted average of fuel purchase agreements or agreements (excluding value-added tax) (VND/kg or VND/kcal or VND/kJ or VND/BTU).

3. The variable price component adjusted according to other fluctuations of the power plant in the base year is determined by the following formula:

(VND/kWh)

In which:

Cvlp:	The total annual auxiliary material cost of a power plant is determined based on the volume and unit price of auxiliary materials used for power generation in the base year (VND). In case there is no data to calculate the total annual auxiliary material cost in the base year, it is allowed to use these cost components at times when there is sufficient data and back it to the base year at a rate of 2.5%/year;
Ckd:	Total initiation costs include fuel costs, other costs serving initiation (VND); the number of allowed initiation sessions is agreed upon by the electricity seller and the electricity buyer based on the power system demand and operating characteristics of the power plant. In case there is no data to calculate the total initiation cost in the base year, it is allowed to calculate the value of this total cost at the time of negotiation and back it to the base year at the rate of 2.5%/year;
Ck:	Annual regular maintenance and repair costs include regular maintenance and repair costs calculated based on the total investment capital for construction and equipment of the power plant, the rate of regular repair costs is agreed upon by the electricity seller and the electricity buyer without exceeding the value under the provisions in Appendix I issued with this Circular. For power plants whose such rate is not specified in Appendix I issued with this Circular, the electricity seller and the electricity buyer will agree;
AGN­:	Average electricity generation over multiple years at the electricity delivery point between the electricity seller and the electricity buyer is calculated under Point c, Clause 2, Article 5 of this Circular (kWh).

4. The main fuel transportation price of the power plant in the base year is determined according to the following formula:

(VND/kWh)

In which:

The average net heat rate of a power plant is determined in accordance with Clause 1 of this Article;

The main fuel transportation price for power generation in the base year (excluding value-added tax) (VND/kcal or VND/kJ or VND/BTU or VND/kg) is determined as follows: For coal-fired thermal power plants: equal to the weighted average according to coal transportation contracts or agreements; For natural gas thermal power plants: equal to the weighted average price of gas pipeline transportation services for electricity production approved by competent authorities in accordance with the Law on Prices and other relevant laws ; For LNG-fired thermal power plants: equal to the weighted average price of storage, regasification, transportation and distribution services of liquefied natural gas for electricity production approved by competent authorities in accordance with the Law on Prices and other relevant laws ; For waste-to-energy, biomass-based, and new-energy power plants: the electricity seller and the electricity buyer will agree on the actual conditions of the power plant; For thermal power plants using a combination of fuels: the electricity seller and the electricity buyer agree according to the actual conditions of the power plant; For fuel purchase agreements in which the main fuel price is  including the main fuel transportation price, collection, transportation, distribution, storage, and recycling fees, the main fuel transportation price  equals 0 (zero)

Article 8. Power plants having no regulation on methods of determining electricity generation service prices

In case the power plants have no method of determining the electricity generation services price or electricity generation price bracket, the electricity buyer and the electricity seller shall agree to create a method of determining the electricity generation services price suitable to the reality of the power plant and report to the Ministry of Industry and Trade for consideration and guidance.

Article 9. Temporary price

In case the price of the power purchase agreement has not yet been reached, the electricity seller and the electricity buyer have the right to agree on a temporary price to be applied until the official price is agreed upon.

Article 10. Method of determining electricity generation service prices for solar and wind power plants that have signed power purchase agreements with Vietnam Electricity but do not fully meet the conditions for applying electricity prices according to the Prime Minister's Decisions

The method of determining the electricity generation services price for solar and wind power plants that have signed power purchase agreements with Vietnam Electricity but do not meet the conditions for applying the electricity purchase price prescribed in the Prime Minister’s Decision No. 11/2017/QD-TTg dated April 11, 2017, Decision No. 13/2020/QD-TTg dated April 6, 2020, Decision No. 37/2011/QD-TTg dated June 26, 2011, Decision No. 39/2018/QD-TTg dated September 10, 2018 is prescribed as follows:

1. The electricity seller and the electricity buyer shall, based on the principles for determining the electricity generation services price in this Circular, develop a plan for the electricity generation services price of the power plant:

a) The base year of the power plant negotiating the electricity generation services price is the commercial operation year of the power plant;

b) For the part of the power plant that does not have a power generation service price, the power generation service price is determined based on the input parameters of the entire power plant.

2. Average annual electricity delivered is determined as follows:

a) Based on the basic design (or technical design when it cannot be determined according to the basic design) appraised by the competent state authority (for wind power plants, the two parties agree to determine the output according to the expected P50);

b) In case it is not possible to determine by using provisions of Point a of this Clause, the electricity seller and the electricity buyer shall reach an agreement based on the technical parameters in the basic design dossier or the technical design dossier used in the notification of appraisal results of the competent state authority. In case the annual electricity delivered is determined based on the basic design, the total investment according to the basic design shall be used, in case the annual electricity delivered is determined based on the technical design, the total investment according to the corresponding technical design shall be used.

3. The operation and maintenance cost in the base year of power plant FOMC_b is determined as follows:

(VND/kWh)

In which:

TC:	The total operation and maintenance costs of the power plant are determined by the following formula: TC = VĐT k

In which:

VĐT:	Power plant investment cost (VND);
k:	The operation and maintenance cost ratio (%) of the power plant is agreed upon by the electricity seller and the electricity buyer without exceeding the rate on the provisions in Appendix I issued with this Circular.

4. Other parameters for calculating the electricity generation services price, the method of determining the power purchase agreement price of the power plant at the time of payment, and the principle of determining the fixed price each year of the power purchase agreement are agreed upon by the electricity seller and the electricity buyer based on the provisions in Chapter II of this Circular.

5. Documents for negotiating power purchase agreements shall comply with the provisions of Clause 1, Article 19 of this Circular.

Article 11. Principles for determining electricity selling price in bidding for selection of investors to implement power projects

In the case of organizing a bidding for the selection of investors to implement power projects in accordance with Clause 1, Article 19 of the Electricity Law, the electricity price in the bidding dossiers is built according to the principles in Chapter II of this Circular. The data set for calculating the proposed electricity price is based on the bidding dossiers and the consulting unit.

 

Section 2

METHOD OF DETERMINING THE ELECTRICITY GENERATION SERVICES PRICE OF POWER PLANTS WHICH HAVE BEEN COMMERCIALLY OPERATED

 

Article 12. Method of determining electricity generation service price for power plant whose power purchase agreements have expired but the power plant has not yet reached the end of its economic life

For power plants (which have negotiated and signed power purchase agreements in accordance with Circular No. 41/2010/TT-BCT, Circular No. 56/2014/TT-BCT, Circular No. 57/2020/TT-BCT, Circular No. 07/2024/TT-BCT) whose power purchase agreements have expired but the power plant has not yet reached the end of its economic life, the electricity seller and the electricity buyer agree on the electricity generation service price applicable for the following years until the end of the economic life, ensuring that the average fixed cost does not change compared to the price agreed upon by the electricity seller and the electricity buyer.

Article 13. Method of determining electricity generation service price for power plant that has reached the end of its economic life

1. The fixed price of a power plant that has reached the end of its economic life is determined according to the principle of ensuring that the power plant recovers the costs of electricity production and business activities. The price calculation period is agreed upon by both parties or according to the major repair cycle of the main equipment and the agreement on a reasonable profit. In case there is a document from a competent state authority approving the price calculation period, the approval document from the competent state authority shall apply.

2. The variable price of a thermal power plant that has reached the end of its economic life is determined based on provisions of Article 7 of this Circular, taking into account factors consistent with actual operation.

3. Average electricity output is determined based on the power plant capacity according to the approved design and T_max specified in Appendix I issued with this Circular. For power plants whose T_max is not specified in Appendix I issued with this Circular, the average electricity output is determined based on actual statistical data of the most recent cycle which is consistent with the time of the next pricing cycle.

4. In case the power plant has reached the end of its economic life and there is investment in upgrading the power plant, the electricity seller and the electricity buyer shall agree and negotiate the power purchase agreement price of the power plant under Articles 4, 5, 6 and 7 of this Circular and in accordance with the depreciation time of the main equipment to be upgraded.

5. The term of the power purchase agreement for a power plant that has expired its economic life is agreed upon by the electricity seller and the electricity buyer based on the major repair cycle of the main equipment.

Article 14. Method of determining electricity generation service price for power plants with valid power purchase agreements but the electricity generation service price has expired or power plants whose BOT contracts have expired and have been handed over to the Government or power plants applying the electricity purchase price mechanism in documents of competent authorities and power plants that have been put into commercial operation but the power purchase agreement has expired

1. The price of electricity generation services is determined based on the principle of ensuring that the plant recovers investment costs (if any), electricity production and business costs and agrees on a reasonable profit.

2. The time for calculating the electricity generation services price is based on the remaining economic life of the power plant or the remaining term of the power purchase agreement or as agreed by the two parties.

3. Average output is determined based on the power plant capacity according to the approved design and T_max specified in Appendix I issued with this Circular. For power plants whose T_max is not specified in Appendix I issued with this Circular, the average electricity output is determined based on actual statistical data of the most recent cycle, which is consistent with the time of the next pricing cycle.

4. The variable price of a thermal power plant is determined based on the provisions of Article 7 of this Circular, taking into account factors consistent with actual operations.

5. Operation and maintenance costs are agreed upon by the electricity seller and the electricity buyer.

6. The investment cost for calculating the electricity generation services price is determined based on the remaining value of the asset at the time the electricity generation service price expires or the power purchase agreement expires, plus the costs of renovation and upgrading (if any).

Article 15. Method of determining electricity generation service price for power plants renegotiated according to finalized investment capital

For power plants renegotiating electricity generation service prices according to the finalized investment capital specified in Clause 1 and Clause 2, Article 27 of this Circular:

1. After determining the finalized investment capital, the electricity seller is responsible for sending the electricity buyer documents related to the finalized investment capital.

2. The electricity seller and the electricity buyer shall renegotiate the electricity price according to the following principles:

a) Method of determining the power purchase agreements price as prescribed in Article 4 of this Circular;

b) Parameters for calculating the price of the power purchase agreement are specified in Article 4 of this Circular and the input parameters are updated at the same time as determining the finalized investment capital;

c) The power purchase agreement price compared with the electricity generation price bracket shall not exceed the electricity generation price bracket of the commercial operation year of the entire power plant;

d) The electricity generation service price is applied from the date of commercial operation of the power plant. The annual fixed price shall be implemented under Article 16 of this Circular, do not adjust the annual fixed price of the years before the time the electricity seller and the electricity buyer sign the agreement to amend or supplement the power purchase agreement according to the electricity price determined on the basis of the finalized investment capital;

dd) The base year for power plants negotiating electricity generation service prices according to the finalized investment capital is the commercial operation year of the entire power plant.

 

Section 3

METHOD OF DETERMINING THE POWER PURCHASE AGREEMENTS PRICE BY EACH YEAR OF POWER PURCHASE AGREEMENTS

 

Article 16. Principles for determining annual fixed prices of power purchase agreements

1.                 The electricity seller and the electricity buyer have the right to apply the agreed average fixed cost for each year during the contract term. In case the electricity seller and the electricity buyer agree to convert the agreed average fixed cost into an annual fixed price, the determination of these fixed prices must comply with the principles specified in Clause 2 of this Article.

2. Based on the actual loan conditions and financial capacity of the project, the electricity seller and the electricity buyer agree on the average fixed cost of the power plant as a fixed cost each year (FC_j Fixed cost of year j) as long as the average fixed cost does not change compared to the price agreed upon by the electricity seller and the electricity buyer and complies with the following principles:

a) The financial discount rate when calculating the annual fixed price agreed by the electricity seller and the electricity buyer is equal to the internal rate of return (IRR) of the power plant;

b) The investor shall fulfill the obligation to repay loans for investment in the construction of power plants according to the loan repayment period.

Article 17. Principles for adjusting electricity generation service prices of each year under power purchase agreements

1. The components of the operation and maintenance cost of the power plant are adjusted according to the following principles:

a) The components of the operation and maintenance cost based on major repair costs and other costs are adjusted according to the average cost inflation rate specified in Appendix I issued with this Circular. The electricity seller and the electricity buyer shall consider and agree on the mechanism for adjusting the components of the operation and maintenance cost based on major repair costs and other costs for items in foreign currency;

b) The components of operation and maintenance cost according to labor costs are adjusted according to fluctuations in the regional minimum wage at the time of payment or according to the CPI index announced by the Central Statistical Office without exceeding 2.5%/year.

2. Annually, based on the total loan in foreign currency, the loan repayment plan in foreign currency, the figures on principal repayment in practice, the exchange rate agreed by the electricity seller and the electricity buyer in the electricity generation service price plan, the exchange rate implemented in the previous year, the electricity seller and the electricity buyer shall calculate and agree on the payment plan for the difference in exchange rate. The FED exchange (VND) rate difference is calculated according to the following formula:

In which:

m:	Number of foreign currencies in the electricity generation service price plan agreed by the electricity seller and the electricity buyer (type);
n:	Number of times principal payments in foreign currency i in the calculation year (times);
Di,j :	Amount of principal debt in foreign currency paid for the jth time of foreign currency i in the calculation year;
:	Exchange rate of the jth payment of foreign currency i in the year (.../VND);
:	Base exchange rate of foreign currency i agreed upon by the electricity seller and the electricity buyer in the electricity generation service price plan (.../VND).

Article 18. Method of determining the the power purchase agreement price of the power plant at the time of payment

The power purchase agreement price of the power plant at the time of payment for electricity bill in month t, year j P_C,j,t (VND/kWh) is determined according to the following formula:

In which:

	Fixed price in year j is determined under Article 16 of this Circular (VND/kWh);
:	Operation and maintenance cost in month t, year j is determined according to the provisions in Clause 1 of this Article (VND/kWh);
	Variable price in month t, year j is determined according to Clause 2 of this Article (VND/kWh).

1.                 Operation and maintenance cost in month t, year j is determined by the following formula :

In which:

	Operation and maintenance cost components based on major repair costs and other costs in year j are determined according to the provisions in Point a of this Clause (VND/kWh);
	Operation and maintenance cost components based on labor costs in month t, year j are determined according to the provisions in Point b of this Clause (VND/kWh).

a) The components of the operation and maintenance cost based on major repair costs and other costs are determined according to the following formula:

In which:

	Operation and maintenance costs based on major repair costs and other costs in the base year are determined according to the method prescribed in Clause 1, Article 6 of this Circular;
i:	Operation and maintenance component price slippage rate based on major repair costs and other expenses specified under Appendix I issued with this Circular;
l:	Order of payment year from the base year (for base year, l=1) .

b) The operation and maintenance cost components based on labor cost in month t, year j ( ) are determined as follows:

In case the salary calculated in the electricity price plan is equal to the regional minimum wage, the operation and maintenance cost components based on labor costs are determined according to the following formula:

In which:

	Operation and maintenance costs based on labor costs in the base year are determined according to the method specified in Clause 2, Article 6 of this Circular ;
	Regional minimum wage at the time of payment in month t, year j (VND/month);
	Regional minimum wage in the base year (VND/month).

In case the total of labor costs TC_nc are calculated according to the ratio of construction and equipment investment capital, the operation and maintenance cost component based on labor cost is determined according to the following formula (VND/kWh):

In which:

	Operation and maintenance costs based on labor costs in the base year are determined according to the method specified in Clause 2, Article 6 of this Circular;
:	The slippage rate of the operation and maintenance cost component based on labor costs is determined according to the ratio of the consumer price index (CPI) in year (j-1) compared to year (j-2) issued by the Central Statistics Office in December of year (j-1) without exceeding 2.5%/year;
l:	Order of payment year starting from the base year (for Base Year l = 1, i1 = 0).

2. The variable price of the thermal power plant in month t, year j ( ) (VND/kWh) is determined according to the following formula:

In which:

	The components of variable prices adjusted according to the fluctuation of the main fuel cost of the power plant in month t, year j are determined according to Point a of this Clause (VND/kWh);
	The components of variable prices adjusted according to the fluctuation of auxiliary fuel costs of the power plant in month t, year j are determined according to Point b of this Clause (VND/kWh);
	The components of variable prices adjusted according to other fluctuations of the power plant in year j are determined according to Point c of this Clause (VND/kWh);
	The main fuel transportation price of the power plant in month t, year j is determined according to Point d of this Clause (VND/kWh).

a) The components of variable prices adjusted according to the fluctuation of the main fuel cost of the power plant in month t, year j  are determined according to the following formula:

In which:

	The average net heat rate is determined in Clause 1, Article 7 of this Circular;
kHR :	The coefficient of adjusting the average net heat rate to actual operating conditions depending on the cooling water temperature, ambient temperature, humidity, and load agreed by the electricity seller and the electricity buyer or according to reality for each operating cycle;
kHS :	Percentage of capacity reduction in year j (%);
l:	Order of years of commercial operation of the plant;
	The main fuel price for electricity generation at the time of payment in month t, year j is calculated by the weighted average of the volume of invoices under fuel purchase agreements during the period agreed upon by the electricity seller and the electricity buyer.

 b) Variable price component adjusted according to fluctuations in auxiliary fuel costs of the power plant in month t, year j is determined by the following formula:

In which:

	The components of variable price adjusted according to fluctuations in auxiliary fuel costs of the power plant in the base year are determined in Clause 2, Article 7 of this Circular ;
kHS:	Percentage of capacity reduction in year j (%);
l:	Order of years of commercial operation of the plant;
	The auxiliary fuel price for power generation at the time of payment in month t, year j is calculated by the weighted average of the volume of invoices under fuel purchase agreements during the period agreed upon by the electricity seller and the electricity buyer.
	The price of auxiliary fuel for electricity generation in the base year is determined in Clause 2, Article 7 of this Circular.

c) The components of variable price adjusted according to other fluctuations of the power plant in year j are determined by the following formula:

In which:

	The components of variable price adjusted according to other fluctuations of the base year power plant are determined in Clause 3, Article 7 of this Circular;
i:	The inflation rate of the variable price component adjusted according to other fluctuations is according to the rate specified in Appendix I issued with this Circular;
kHS :	Percentage of capacity reduction in year j (%);
l:	Order of commercial operation years of the plant (calculated from the commercial operation date of the power plant, the first commercial operation year of the power plant is calculated from the commercial operation date of the first generating set, l = 1);
m:	Order of payment year starting from the base year (for base year m = 1).

d) The main fuel transportation price of the power plant in month t, year j  (VND/kWh) is determined according to the following formula:

In which:

	The average net heat rate is determined in Clause 1, Article 7 of this Circular;
kHR :	The coefficient of adjusting the average net heat rate to actual operating conditions depending on the cooling water temperature, ambient temperature, humidity, and load agreed by the electricity seller and the electricity buyer or according to reality for each operating cycle;
kHS :	Percentage of capacity reduction in year j (%);
l:	Order of years of commercial operation of the plant;
	The main fuel transportation price at the time of payment in month t, year j is calculated by the weighted average of the volume of invoices under fuel transportation agreements and LNG storage, regasification and gas distribution contracts (if any) (excluding value-added tax), specifically as follows: For coal-fired thermal power plants: equal to the weighted average according to coal transportation contracts or agreements; For natural gas thermal power plants: equal to the weighted average of the price of gas pipeline transportation services for electricity production approved by competent authorities in accordance with the Law on Prices and other relevant laws; For LNG-fired thermal power plants: equal to the weighted average price of storage, regasification, transportation and distribution services of liquefied natural gas for electricity production approved by competent authorities in accordance with the Law on Prices and other relevant laws; For waste-to-energy, biomass-based, and new-energy power plants: the electricity seller and the electricity buyer will agree on the actual conditions of the power plant; For thermal power plants using a combination of fuels: the electricity seller and the electricity buyer shall agree upon the actual conditions of the power plant; For fuel purchase agreements that include the main fuel transportation price, the main fuel transportation price component  equals to 0 (zero).

3. Total initiation cost in month t of thermal power plant  (VND) determined by the following formula:

In which:

u:	Order of the generating sets of power plant;
U :	Number of the generating sets of the power plant ;
f:	Fuel type (for main fuel f = 1; auxiliary fuel f = 2);
s:	Initiation status of the generating set;
S:	Initiation status number of the generating set;
pu,f,s :	Number of ignition times of generating set u, using fuel f, in initiation status s in a month;
Mu,f,s :	Amount of fuel consumed (kg) or heat consumption of gas (BTU) for an instance of initiation of generating set u, using fuel f, in initiation status s;
Du,f,s :	Fuel unit price for an instance of initiating generating set u, using f, in initiation status s is calculated in VND/kg and in VND/BTU;
	Total other costs for an instance of initiating, in dollars.

4. Regulations on payment of initiation costs:

a) For thermal power plants: comply with regulations on the competitive electricity market issued by the Ministry of Industry and Trade;

b) For waste-to-energy, biomass-based, and new-energy power plants: agreed upon by the electricity seller and the electricity buyer.

 

Chapter III

POWER PURCHASE AGREEMENT

 

Article 19. Main contents of power purchase agreement

1. The main content of the power purchase agreement specified in Appendix III issued with this Circular is the basis for the electricity seller and the electricity buyer to negotiate and sign. The electricity seller and the electricity buyer have the right to negotiate and agree to supplement the terms specifically stipulated in the power purchase agreement in accordance with the laws of Vietnam.

2. The language used is Vietnamese. In case the electricity seller has a foreign investor(s), the electricity seller and the electricity buyer may agree to employ another contract written in English.

Article 20. Documents for negotiating power purchase agreements between the power seller and the power buyer

1. Documents proposed for negotiating power purchase agreements for new power plants include:

a) Draft power purchase agreement according to the main contents specified in Appendix III issued with this Circular;

b) Approval for investment guidelines or the decision on investment guidelines or investment registration certificate of the project;

c) Decision on investment in construction of the project with explanation and appraisal report of the plant investment project by an independent consultant and attached documents;

d) Decision on approving total investment for the first time or the adjusted total investment of the project effective at the time of negotiating the electricity generation services price and the main contents of the basic design of the investment project related to the negotiation of the power purchase agreement, the basic design appraisal report and the document notifying the results of the basic design appraisal, the appraisal of the total investment of the state management agency on construction according to regulations (if any);

dd) Agreement on connecting the power plant to the national power grid with the power plant's connection plan;

e) Loan agreements or documents between project developers and creditors, plans or actual disbursement of loan;

g) Fuel supply agreement for power plants, clearly stating fuel prices for power generation, fuel transportation prices, LNG storage prices, regasification and gas distribution prices and associated surcharges, fuel delivery points and fuel supply period;

h) Documents calculating capacity and electricity loss of transformers, power lines from step-up transformers to connection points with the national power grid and documents calculating self-consumed electricity in power plants;

i) Documents on calculating the net heat rate for thermal power plants;

k) The electricity selling price plan is determined according to the method prescribed in Section 1 and Section 3, Chapter II of this Circular;

l) Other relevant documents (if any).

2. Documents for negotiating power purchase agreements of commercially operated power plants include:

a) Draft power purchase agreement according to the main contents specified in Appendix III issued with this Circular;

b) Available power purchase agreements;

c) Technical dossiers of power plants, technical specifications of SCADA/EMS systems, protective and automatic relays, machine P-Q operational characteristics, PQ operating characteristics of the generating sets up to the present time;

d) Fuel supply agreements for power plants;

dd) The electricity selling price plan of the power plant is determined according to the provisions in Chapter II of this Circular;

e) Audited financial statements or relevant documents of the power plant of the nearest years up to the time of negotiating the power purchase agreement;

g) Other relevant documents (if any).

 

Chapter IV

IMPLEMENTATION PROVISIONS

 

Article 21. Responsibilities of the State management agency of electricity under the Ministry of Industry and Trade

Guiding and inspecting the implementation of the provisions of this Circular. If necessary, proposing amendments and supplements to the Circular to be suitable for practical needs and ensure legal compliance.

Article 22. Responsibilities of Vietnam Electricity

1. Presiding over and coordinating with the electricity buyer and seller to calculate and agree on a payment plan for exchange rate differences in the implementation of the power purchase agreement in accordance with this Circular.

2. Presiding over and coordinating with the electricity buyer and seller to consider calculating and consolidating power purchase agreements to be suitable for the actual operations of the electricity generating unit, increase operation efficiency, and reduce the overall costs of the national power system upon request from the electricity seller and buyer.

Article 23. Responsibilities of the Electricity Buyer

1. Negotiating power purchase agreements with electricity sellers in accordance with this Circular; being responsible for ensuring the accuracy, reasonableness and validity of the data and documents provided.

2. Coordinating with the electricity seller to calculate and agree on the exchange rate difference in the implementation of the power purchase agreement in accordance with this Circular, and providing it to Vietnam Electricity for consideration of payment options.

Article 24. Responsibilities of the Electricity Seller

1. Negotiating with the electricity buyer on the power purchase agreement according to regulations; being responsible for ensuring the accuracy, reasonableness and validity of the data and documents provided.

2. Providing full information, being responsible for, ensuring the accuracy, reasonableness, and validity of data and documents provided to relevant units and agencies during the negotiation and inspection of power purchase agreements.

3. The electricity seller is responsible for organizing the selection of fuel suppliers and fuel transporters and signing fuel purchase and transport contracts in compliance with legal regulations, ensuring fairness, competition and transparency.

4. The Seller is responsible for controlling fuel supply and transportation contracts to ensure legitimate fuel origin, competitive and transparent prices in accordance with relevant laws.

5. Coordinating with the electricity buyer to calculate the exchange rate difference in the implementation of the annual power purchase agreement in accordance with this Circular, and providing it to Vietnam Electricity for consideration of the payment plan.

Article 25. Responsibilities of fuel suppliers and transporters

Signing framework contracts, fuel supply agreements, fuel transportation agreements and other related fuel contracts in accordance with the law, ensuring fairness, competition and transparency.

Article 26. Adjustment of electricity generation service prices

The electricity seller and the electricity buyer shall renegotiate the electricity generation service price in the signed power purchase agreement in accordance with Clause 4, Article 52 of the Electricity Law.

Article 27. Transitional provisions

1. For power plants that have signed power purchase agreements according to the method prescribed in Circular No. 57/2020/TT-BCT, Circular No. 56/2014/TT-BCT, Circular No. 51/2015/TT-BCT and new power projects started before September 19, 2017, when there is finalized investment capital, the electricity seller and the electricity buyer have the right to request to recalculate the electricity generation service price according to the approved finalized investment capital as prescribed in Article 15 of this Circular.

2. For power plants that have signed power purchase agreements according to the method prescribed in Circular No. 41/2010/TT-BCT, when there is an opinion from a competent state authority on renegotiating electricity prices according to the settlement capital, the electricity seller and the electricity buyer shall recalculate the electricity generation service price according to the approved finalized investment capital as prescribed in Article 15 of this Circular.

3. For power plants that have signed a power purchase agreement, the power seller and the power buyer have the right to negotiate and agree to amend the power purchase agreement in accordance with this Circular.

4. For each stage of the competitive electricity market, the electricity seller and the electricity buyer are responsible for amending and supplementing the terms of the power purchase agreement to comply with the regulations of each level of the competitive electricity market.

5. For the exchange rate difference that has no payment plan before Circular No. 07/2024/TT-BCT takes effect, the electricity seller and the electricity buyer shall calculate and agree on the exchange rate difference payment plan for this period according to the provisions of Circular No. 07/2024/TT-BCT.

6. For power projects with special connection items invested before the effective date of this Circular, the method of determining special connection prices in Circular No. 07/2024/TT-BCT shall continue to be applied.

Article 28. Effect

1. This Circular takes effect on February 1, 2025.

2. To annul the Minister of Industry and Trade’s Circular No. 07/2024/TT-BCT dated April 12, 2024 stipulating the method of determining electricity generation prices and power purchase agreements.

3. To annul Article 4 of the Minister of Industry and Trade’s Circular No. 13/2017/TT-BCT dated August 3, 2017 amending and supplementing a number of articles of the Minister of Industry and Trade’s Circular No. 57/2014/TT-BCT dated December 19, 2014 stipulating methods and procedures for developing and promulgating electricity generation price brackets.

4. During the implementation process, if any problems arise, organizations and individuals are responsible for reporting to the Ministry of Industry and Trade for consideration, amendment and supplementation as appropriate./.

 

PP. THE MINISTER DEPUTY MINISTER     Truong Thanh Hoai