Decision No. 168/QD-TTg dated February 7, 2017 of the Prime Minister on approving the project for restructuring the electricity sector in the 2016 – 2020 period with the orientation to 2025

THE PRIME MINISTER

Decision No. 168/QD-TTg dated February 7, 2017 of the Prime Minister on approving the project for restructuring the electricity sector in the 2016 – 2020 period with the orientation to 2025

Pursuant to the Law on Government organization dated June 19, 2015;

Pursuant to Law on Electricity dated December 3, 2004; Law on amendments to the Law on Electricity dated November 20, 2012;

Pursuant to Decision No. 63/2013/QD-TTg dated November 8, 2013 of the Prime Minister on road map, conditions, and structure of electricity sector for formulation and development of electricity market levels in Vietnam;

Pursuant to Decision No. 2146/QD-TTg dated December 1, 2014 of the Prime Minister on approval for Project for restructuring the industry and trade sector to serve national industrialization, modernization and sustainable development until 2020, with a vision to 2030;

At the request of the Minister of Industry and Trade,

DECIDES:

Article 1.To approve the Project for restructuring of electricity sector in the period of 2016 – 2020 with an orientation to 2025, in particular:

I. OBJECTIVES

1. Enhance effectiveness in business of the electricity sector associated with continuation of its restructuring in line with market mechanism, and strengthen the transparency, equality, and fair competition in the international integration background.

2. Establish the organizational structure of the electricity sector in such a manner as to facilitate the operation of wholesale electricity market in conformity with development orientations of retail electricity market.

3. Improve the effectiveness of the electricity regulation for the purpose of ensuring the sustainable electricity system and meeting requirements for providing electricity safely, stably, and efficiently.

4. Apply electricity prices in line with market mechanism under the state’s management and electricity market levels.

II. RESTRUCTURING OF ELECTRICITY SECTOR IN THE PERIOD OF 2016 - 2020

1. From 2016 to 2018

a) Generation stage

- Equitize Power Generation Corporations affiliated to Vietnam Electricity (EVN), Vietnam National Oil and Gas Group (PVN), Vietnam National Coal and Mineral Industries Group (Vinacomin) in accordance with the plan that has been approved by the Prime Minister. The Power Generation Corporations shall keep being affiliated to the Groups and have at least 51% of their shares held by the Groups.

- The Power Generation Corporations shall, after the equitization, carry out new projects for power sources as specified in the Planning for development of national electricity in the period of 2011 – 2020 with a vision to 2030 that has been approved by the Prime Minister.

- The Power Generation Corporations shall formulate and implement projects for enhancing the enterprise administration, ensuring the high competitive capacity, profitable operation, and increasing the ratio of equity for development investment upon the request of domestic and international financial institutions.

- Encourage plants using renewable energy that meet given requirements to participate directly in the pilot wholesale electricity market.

b) Transmission stage

Maintain the structure model of National Power Transmission Corporation in the form of single-member limited liability company of which the whole charter capital is held by EVN.

c) Distribution – retailing stage

- Maintain the structure model of Power Corporations in the form of single-member limited liability company of which the whole charter capital is held by EVN.

- Formulate a regulatory mechanism between Power Corporations that meet requirements of wholesale electricity market.

- Gradually separate the costs of distribution and retailing incurred by Power Corporations.

d) Electricity market and electricity system operation stage

- National Load Dispatch Center shall keep performing the function of electricity market and electricity system operation.

- Formulate a project for converting the National Load Dispatch Center into an electricity market and electricity system operation single-member limited liability company which is eligible for independent accounting in EVN.

dd) Management of power measurement data in the electricity market

- National Load Dispatch Center shall be in charge of management of power measurement data in the wholesale electricity market.

- National Power Transmission Corporation, Power Corporations, Electric Power Trading Company, Center of Communications and Information Technology shall be in charge of collecting, managing, and storing power measure data within their scope of management as prescribed by the Ministry of Industry and Trade.

e) Electricity regulation authority

Renovate the model of Electricity Regulatory Authority affiliated to the Ministry of Industry and Trade in such a manner as to meet requirements pertaining to management and supervision of the wholesale electricity market and enhance the effectiveness of electricity regulation.

2. From 2019 to 2020

a) Consider divesting state capital in Power Generation Corporations to under the dominance rate and separate Power Generation Corporations from the Groups according to a report on evaluation of performance given within 2 years of equitization in accordance with the Decision of the Prime Minister on criteria and list of state-owned enterprise classification.

b) Put power plants invested under BOT contract form (BOT power plants) into operation of wholesale electricity market, in particular:

- Power plants that have entered into BOT contracts are encouraged to participate in the wholesale electricity market.

- Power plants that have not entered into BOT contracts are encouraged to decrease capacity and guaranteed output, and participate in the wholesale electricity market.

c) Initiate plans for putting large power plants which are extremely important in respect of socio-economic, national defense and security aspects into operation of wholesale electricity market.

d) Continue separating costs of distribution and retailing incurred by Power Corporations as preparation step for operation of the retail electricity market. Initiate the regulatory mechanism between Power Corporations that meet requirements of wholesale electricity market.

dd) Convert the National Load Dispatch Center into an electricity market and electricity system operation single-member limited liability company which has legal status and eligible for independent accounting in EVN and to be completed before the operation of the wholesale electricity market.

III. ORIENTATIONS OF ELECTRICITY SECTOR STRUCTURE IN THE PERIOD OF 2021 - 2025

1. Keep separating and doing accounting of costs of distribution and retailing in Power Corporations and create a competitive environment that is equal and transparent in retailing between participants of the market.

2. Equitize Power Corporations in line with the road map that has been decided by the Prime Minister, in particular:

- Ensure the state-owned capital rate in Power Corporations in accordance with the Decision of the Prime Minister on criteria and list of state-owned enterprise classification

- Examine the feasibility of the following plans: Equitize Power Corporations, do not separately equitize each power company affiliated to Power Corporations; do not equitize electricity distribution stage but only equitize electricity retailing stage.

3. Formulate and initiate a plan that convert the electricity market and electricity system operation single-member limited liability company into an independent entity in terms of personnel, legality, finance, without shared benefits with the electricity seller and the electricity purchaser, of which the whole charter capital is held by the state.

4. Keep conducting the regulatory mechanism between Power Corporations and mechanism of retail prices that meet requirements of retail electricity market.

IV.  IMPLEMENTATION ORGANIZATION

1. The Ministry of Industry and Trade

a) Take charge and cooperate with relevant agencies in reviewing Law on Electricity, Law on amendments to Law on Electricity and relevant legislative documents so as to request competent authorities to approve necessary amendments to the Project for restructuring of electricity sector in the period of 2016 – 2020 with an orientation to 2025.

b) Expedite and direct relevant units to execute the Project for restructuring of electricity sector in the period of 2016 – 2020 with an orientation to 2025 that has been approved.

c) Take charge and cooperate with relevant agencies in requesting the Prime Minister to consider plans for equitization of Power Generation Corporations, in accordance with the schedule of restructuring of electricity sector that has been approved.

d) Research and propose incentives for BOT power plants to participate in the electricity market.

d) Approve and initiate the project for putting large power plants which are extremely important in respect of socio-economic, national defense and security aspects into operation of wholesale electricity market.

e) Create incentives for power plants using renewable energy to participate in the open wholesale electricity market, keep applying incentive prices according to applicable regulations or directly participate in the wholesale electricity market.

g) Direct the separation of costs between the distribution and retailing according to applicable regulations.

h) Research and change policies for electricity prices of the phases in accordance with electricity market levels; propose policies for electricity distribution prices in accordance with the orientations of retail electricity market development.

i) Formulate policies for regulation among Power Corporations in the wholesale electricity market; formulate a system of electricity prices according to market mechanism with the state regulation.

k) Direct the formulation of a project for converting the National Load Dispatch Center into an electricity market and electricity system operation single-member limited liability company which is eligible for independent accounting in EVN and submit it to the Prime Minister for consideration.

l) Send the Prime Minister a plan for renovating the structure model of Electricity Regulatory Authority affiliated to the Ministry of Industry and Trade; take charge and cooperate with the Ministry of Finance in formulating and submitting collecting policies for regulation of wholesale electricity market and retail electricity market to competent authorities for approval.

m) Create and submit a design of the retail electricity market to the Prime Minister.

2. The Ministry of Finance

a) Cooperate with the Ministry of Industry and Trade in considering the plan for equitization of Power Generation Corporations, and then submitting it to the Prime Minister for consideration.

b) Take charge and cooperate with the Ministry of Industry and Trade in considering difficulties arising during the restructuring of electricity sector and equitization of Power Generation Corporations, and then submitting it to the Prime Minister for consideration, including:

- The issues relating to representatives of state capital owner in Power Generation Corporations with Government guarantees upon the implementation of equitization.

- Decrease of proportion of state-owned shareholding in Power Generation Corporations after the equitization.

- Plans for converting the borrowers in a loan agreement with Government guarantees as the Groups into the Power Generation Corporations after the equitization.

c) Cooperate with the Ministry of Industry and Trade in formulating regulation mechanism among Power Corporations in wholesale electricity market, and collecting mechanism for the regulation of wholesale electricity market and retail electricity market.

Article 2.This Decision takes effect on the signing date.

Article 3. Ministers, Heads of ministerial-level agencies, Heads of Governmental agencies, the Presidents of People’s Committees of provinces and central-affiliated cities, Chief of Steering Committee of enterprise renovation and development, Presidents of the Member assembly, and General Directors of EVN, PVN, Vinacomin, and relevant agencies shall implement this Decision./.

For the Prime Minister

The Deputy Prime Minister

Trinh Dinh Dung