Decision No. 2233/QD-TTg 2020 the Scheme on developing a competitive energy market through 2030

DECISION

Approving the Scheme on developing a competitive energy market through 2030, with a vision toward 2045

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THE PRIME MINISTER

Pursuant to the Law on Organization of the Government dated June 19, 2015; the Law amending and supplementing a number of articles of the Law on Organization of the Government and the Law on Organization of Local Governments dated November 22, 2019;

Pursuant to the Electricity Law dated December 03, 2004 and the Law on Amending and Supplementing a Number of Articles of the Electricity Law dated November 20, 2012;

Pursuant to the Petroleum Law dated July 06, 1993 and the Law Amending and Supplementing a Number of Articles of the Petroleum Law dated June 09, 2000 and June 03, 2008;

Pursuant to the Mineral Law dated November 17, 2010;

Pursuant to the Government's Resolution No. 98/NQ-CP dated October 03, 2017 promulgating the Government's Action Program to implement the Resolution No. 10-NQ/TW dated June 03, 2017 of the 12^th Party Central Committee, at its 5^th session, on private economic development has become an important driving force of the socialist-oriented market economy;

Pursuant to the Political Bureau’s Resolution No. 55-NQ/TW dated February 11, 2020, on orientation of Vietnam's national energy development strategy through 2030, with a vision toward 2045;

Pursuant to the Government's Resolution No. 140/NQ-CP dated October 02, 2020, on promulgating the Government’s Action Program on implementing the Political Bureau’s Resolution No. 55-NQ/TW dated February 11, 2020, on orientation of Vietnam's national energy development strategy through 2030, with a vision toward 2045;

At the request of the Minister of Industry and Trade;

DECIDES:

Article 1. To approve the Scheme on developing a competitive energy market through 2030, with a vision toward 2045, with the following contents:

I. SCOPE AND OBJECTIVES OF THE SCHEME

The scope of the Scheme including 03 energy sub-sectors (coal, gas and electricity) that play an important and key role in the energy production and consumption chain in Vietnam.

1. General objectives:

To build, form and develop a fair competitive energy market (coal, gas, electricity), according to each phase, with the state’s regulation, ensuring national energy security, contributing to meeting the requirements of socio-economic growth and implementing the Party and State's goals and policies, enhancing international integration.

2. Specific objectives:

a) To ensure national energy security, contributing to maintaining security and national defense and developing the country's independent and autonomous economy; to provide sufficient high-quality energy for socio-economic development.

b) Transforming the energy sector into a state-regulated competitive market mechanism, ensuring a healthy, transparent, fair, non-discriminating, appealing competition, and diversification of investment and business methods in the energy sector; at the same time, to rationally and efficiently exploit and use domestic energy resources.

c) To develop a synchronous and interconnected energy market among sub-sectors of coal, gas and electricity; ensuring transparent and market-regulated energy prices.

d) Coal market: To imply the Government's direction on the supply of coal for electricity production (especially BOT thermal power plants with the Government guarantee for coal supply contracts) and coal export; step by step transform the coal market towards a fully competitive market, market participants perform transactions, purchase and sell coal, provide services for coal trading in compliance with market regulations and practices.

dd) Gas market: To gradually build a legal framework as a basis for implementing a competitive business model for CNG, LPG and LNG gas business activities: building a roadmap, operating a competitive market for downstream gas distribution with the application of the regulations on the right to lease and use a third-party infrastructure; continuing to implement the commitments of the Government and the signed commercial commitments for gas collection and distribution systems developed on the basis of domestic gas exploitation projects.

e) The electricity market: To consolidate the development and expansion of the competitive wholesale electricity market; to create a solid premise for transition to fully competitive electricity retail market according to the roadmap approved by the Prime Minister.

II ROADMAP FOR DEVELOPMENT OF THE ENERGY MARKET

1. Roadmap for development of the gas market

a) The period from 2021 to the end of 2025:

- To maintain the current gas market model for the competition of natural gas extraction and import (by pipeline systems) with an upstream purchasing hub for each gas extraction and distribution system (except for projects approved by the Government with other mechanisms in gas sale and purchase contracts); competition in importing and distributing in the domestic market (without using pipes) for LPG, CNG;

- To permit contractors, investors of new gas exploitation projects (Blue Whale, Block B, etc.) to choose to negotiate to sell gas directly to consumers or wholesalers for PVN/PVGas;

- To implement a new business model for imported LNG projects (participants importing LNG sell gas directly to customers);

- To develop and complete a legal framework as a basis for implementing the right to lease and use third-party infrastructure, including technical, commercial and financial provisions, regulations and standard that need to be completed before applying;

- To develop and promulgate a system of technical and safe standards and regulations on construction and operation of LNG warehouses at ports of entry, LNG transport equipment, ensuring quality, design, execution, construction and operation of LNG gas projects;

- Gas market in the period of 2021 to 2025 should be built and developed on the principle of promoting the leading role of specialized state-owned enterprises (Vietnam Oil and Gas Group and PetroVietnam Gas Joint Stock Corporation) in order to ensure national energy security; should take advantage of experience, available infrastructure and optimize investment, especially in the beginning stage of importing LNG; at the same time, encourage foreign and domestic private enterprises to invest in LNG import infrastructure to increase investment resources and diversify gas supplies for the national economy.

b) The period from 2026 to the end of 2030:

- To gradually build a competitive market model for downstream gas distribution by applying regulations on the right to lease and use third-party infrastructure. The state agency shall consider and direct the construction and application of charges for the use of shared infrastructure and supervise the import and distribution of gas for electricity;

- To continue implementing the Government's commitments and signed commercial commitments, gas collection and distribution systems shall be developed on the basis of domestic gas exploitation projects;

- To continue promoting the core role of specialized state-owned enterprises: at the same time, enhance the attraction of foreign and private enterprises to invest and do business in the gas sector.

c) The period from 2031 to the end of 2045:

- To continue maintaining the implementation of commitments at the Government level and signed and valid commercial commitments related to gas exploitation projects in the country and of foreign investors (if any):

- To sufficiently operate the competitive market in import and distribution of downstream gas pipeline and the right to lease and use third-party infrastructure; synchronously operate Vietnam's gas market and Vietnam's electricity market;

- To develop and supplement a legal framework to complete and well operate the competitive gas market.

2. Roadmap for development of the coal market

a) The period from 2021 to the end of 2025:

- To maintain the model of state-owned enterprises which plays a key role in the exploitation, production and trading of coal in the nation; increase attraction of foreign enterprises and private enterprises to invest and do business in coal trading, especially coal import.

- To maintain the current coal supply model for consumers. To be specific:

+ With regard to coal used for electricity production purpose: To comply with the direction of the Prime Minister in the Directive No. 29/CT-TTg dated December 02, 2019, according to which, the investor of coal-fired power plants (except for BOT thermal power plants with the Government guarantee for coal supply contracts) shall be responsible for supplying legal coal sources in the lifetime of the factory; ensuring a sufficient and stable supply of coal for the plant's operation through the signing of long-term, medium-term and short-term coal trading contracts with the Vietnam National Coal - Mineral Industries Holding Corporation Limited. The North Eastern Corporation or other coal suppliers have legal sources of coal, ensuring competitive and efficient coal price; coal suppliers shall be responsible for providing stable coal to power plants (especially for BOT power plants with the Government guarantee for coal supply contracts) under signed contracts;

+ With regard to coal for consumers used for purposes other than electricity: To carry out competitive bidding or approving agreements and signing coal sale and purchase contracts with market fluctuation prices, ensuring compliance with legal regulations;

+ With regard to coal used for export purpose: Types of high-quality coal that is not needed in Vietnam shall be exported by domestic coal-producing units in accordance with the annual direction of the Prime Minister.

b) The period from 2026 to the end of 2030:

- To continue implementing the coal sale and purchase contracts guaranteed by the Government and the signed and valid coal commercial contracts; and export coal under the direction of the Prime Minister;

- To continue boosting the role of state-owned enterprises specialized in taking the core role in domestic coal mining, production and trading in the country;

- To gradually form a coal market with various sellers and buyers, diversify coal sources (coal produced domestically, blended and imported coal) and focal points supplying coal to consumers;

- To research and develop tools and legal framework to complete, manage and operate a fully competitive coal market.

c) The period from 2031 to the end of 2045:

- To continue implementing the coal sale and purchase contracts guaranteed by the Government and the signed and valid coal commercial contracts; export coal under the direction of the Prime Minister;

- To operate a fully competitive coal market in coal market segments, market participants shall conduct transactions, purchase and sell coal, provide services for coal trading in compliance with market regulations and practices; encouraging foreign and private enterprises to invest and do business in the coal sector;

- To review, adjust and supplement tools and legal framework to complete, manage and operate a fully competitive coal market.

3. Roadmap for development of the electricity market

a) The period from 2021 to the end of 2025: To consolidate and complete the competitive electricity wholesale market; build and put into operation the competitive electricity retail market according to the schedule specified in the Prime Minister's Decision No. 63/2013/QD-TTg dated November 08, 2013 on the roadmap, conditions and structure of the electricity industry to form and develop all electricity market levels in Vietnam.

b) The period from 2026 onwards: Completing, developing and expanding the scope of the competitive electricity retail market.

III SOLUTIONS

1. General solutions

a) Solutions regarding organization and management of the energy sector:

- To improve the capacity of the state management apparatus for the energy sector in order to promptly solve legal problems and barriers;

- To complete the legal framework for the energy sector in accordance with the development stages of the energy market (gas, coal, electricity) and policies to boost the development of renewable energy. Legal normative documents must be updated promptly to suit the realities arising in the implementation process, at the same time ensuring consistency, avoiding overlaps or conflicts among regulations;

- To implement the restructuring of the energy sector with a specific roadmap, suitable for the development stages of the energy market, ensuring clear separation between fields, stages of natural monopoly and those with competitive potential in the energy industry in order to improve transparency, efficiency, and non-discrimination among energy market participants;

- To develop gas and coal markets in association with the policy of prioritizing and stabilizing gas and coal supplies for electricity production in order to ensure national energy security;

- To develop an appropriate tax and fee policy for the energy sector, ensuring harmony of state interests, corporate interests and community benefits.

b) Solutions regarding the planning for energy sector development:

To immediately implement and complete the National Energy Master Plan for the period 2021 - 2030, with a vision toward 2050 2050 (Planning tasks prescribed in the Prime Minister’s Decision No. 1743/QD-TTg dated December 03, 2019) and the National electricity development planning for the period 2021 - 2030, with a vision toward 2045 (Planning tasks prescribed in the Prime Minister’s Decision No. 1264/QD-TTg dated October 01, 2019), in which ensuring consistency among development planning options for coal, gas and electricity sub-sectors.

c) Solutions regarding energy price:

- To gradually put energy prices to operate according to the competitive market mechanism, ensuring the correct reflection of reasonable, valid, and public costs. The State shall only regulate prices and fees for natural monopolies in the energy industry, or in non-competitive sectors and regions;

- To adjust electricity retail prices in accordance with price fluctuations in coal and gas markets.

d) Solutions regarding science and technology application:

- To promote the application of scientific and technological advances in all fields of the energy industry, boost automation in the operation and control stages of production lines in order to improve production and business efficiency and protect the environment;

- To build energy database; increase investment in information collection and analysis, and energy market forecasting.

dd) Solutions regarding training, awareness raising, human resources and international cooperation:

- To train and develop human resources to meet the demands of management, consulting, and operating the competitive energy market;

- To strengthen international cooperation to attract investment capital, provide technical assistance and boosting technology transfer, develop institutions and policies, train human resources, provide preferential loans, give credit guarantees, and facilitate access to capital from international financial institutions for projects in the energy sector.

2. Solutions regarding development of the gas market

a) To supplement regulations on the gas market to the Petroleum Law and complete the legal document system of the gas industry to support the preparation of investment and construction of warehouse projects for importing and distributing LNG in the market and implementing the gas market roadmap.

b) To add the task of directing the gas market to the State Steering Committee for key oil and gas projects, in which the Ministry of Industry and Trade shall play the role of standing agency of the Steering Committee to implement the Vietnam gas market roadmap.

c) To promote investment in projects of investment in mining, gas infrastructure, import of gas, gas-fired power, LNG boil-off recycling to meet domestic demand.

3. Solutions regarding development of the coal market

a) To implement the long-term coal sale and purchase contract mechanism for large coal consumers; develop electronic contracts for coal trading; research, test coal listing on commodity exchanges with futures, derivative contracts.

b) As for imported coal: To promote research and explore sources of imported coal as a basis for building and implementing the strategy of coal import and investment in coal mining abroad; consider organizing the implementation of coal import through major coal enterprises that are qualified and meet the coal trading conditions as prescribed in order to promote their strengths in negotiation when buying coal in large quantity. To study to apply coal price index to specific coal import transactions. To be specific:

- From now to 2025: To study international coal index suitable for reference price of coal imported to Vietnam;

- The period from 2025 onwards: To pilot and continue completing the implementation of coal price index in import coal transactions if they are appropriate for specific conditions of Vietnam.

To control the domestic coal selling price according to the market mechanism, ensure to fully offset costs with a reasonable profit margin for coal producers to meet the need for additional investment in capacity maintenance and expansion investment to increase coal production, taking into account economic efficiency - the society of domestically produced coal.

d) To build infrastructure for coal production and trading suitable to export and import demands of each region and geographical location, especially ports serving coal transshipment and coal import.

dd) To encourage domestic and foreign enterprises to enter into joint ventures or associate with coal enterprises in order to:

- Carry out coal mining projects in areas where the coal industry has not yet mastered the technology (coal mining under civil, industrial, water storage areas, etc.);

- Invest in infrastructure construction for coal industry development.

e) To support for investment in the development of the coal industry in association with ensuring energy security through the following solutions:

- Policies to support investment in coal exploration in an appropriate manner for coal resource development;

- Investment in the construction of infrastructure for coal production, supply and import.

g) To renovate and restructure coal production and trading organizations:

- To continue focusing on coal production under the model of group companies to create large corporations/corporations capable of competing in domestic and international markets;

- To promote the implementation of the Enterprise Restructuring Scheme approved by competent authorities;

- To arrange coal-producing enterprises in the direction of consolidating a number of mines with the same mineral down deeply in order to increase capacity, productivity, and reduce coal production costs.

h) To timely adjust and supplement the salary, health care, social welfare, housing, and insurance mechanisms and policies to attract workers to work in coal mines (especially pit coal mines).

4. Solutions regarding development of the electricity market

a) To complete the competitive electricity wholesaling market;

- To implement the restructuring of the electricity industry according to the Prime Minister's Decision No. 168/QD-TTg dated February 07, 2017, ensuring the transparent, fair and efficient operation of the electricity wholesale market;

- To complete the operating mechanisms of the spot electricity market, support mechanisms for the operation of the spot electricity market, and the information technology infrastructure system serving the wholesale electricity market; ensure the electricity market operates in accordance with the approved design model.

b) To build and operate the competitive electricity retail market:

- To study and develop a project to restructure the electricity industry for the competitive electricity retail market in accordance with the approved design model of the competitive electricity retail market;

- To reviewing, supplement and complete legal regulations serving the operation and regulation of the competitive electricity retail market;

- To review, study and adjust legal regulations on electricity retail price mechanism to suit the electricity retail market. To remove barriers to ensure transparent electricity prices, based on the principle of the competitive market in accordance with the Resolution No. 55-NQ/TW dated February 11, 2020 of the Politburo.

Article 2. Organization of implementation

1. The Ministry of Industry and Trade shall

a) Take responsibility for managing and directing the construction and development of a competitive energy market through 2030, with a vision toward 2045. Build and submit to the competent authorities for consideration and approval of projects on coal industry restructuring for coal market development; and designing coal market models in line with the approved roadmap.

b) Preside over, and cooperate with related ministries and branches in, elaborating, amending, supplementing, submitting to competent authorities for promulgation, or promulgating according to competence mechanisms, policies and legal documents for energy market development in each period.

c) Take the charge in reviewing and completing infrastructure conditions, restructuring the energy sector, implementing necessary solutions to build and develop the energy market according to the roadmap approved by the Prime Minister.

d) Preside over, and cooperate with related ministries and branches in, building and submitting to the Government for promulgating a policy on energy prices according to the market mechanism, ensuring the balance of interests between the State, enterprises and consumers.

dd) Take charge of building long-term, medium-term and annual coal export plans for types of coal for which domestic demands do not exist, and submit them to the Prime Minister for consideration and approval.

2. The Ministry of Finance shall

a) Preside over, and cooperate with the Ministry of Industry and Trade and related ministries and branches in, reviewing and considering legal normative documents on tax and fee policies suitable to the formation and development of the energy market.

b) Preside over, and cooperate with the Ministry of Industry and Trade in, studying and reporting to the Prime Minister financial mechanisms and policies serving the development of the competitive energy market.

c)  Preside over, and cooperate with related ministries and branches in, studying, piloting and applying coal price indexes in imported coal transactions.

3. The Ministry of Resource and Environment shall

a) Preside over, and cooperate with relevant local authorities in, directing timely settlement of problems and speeding up the licensing of coal exploration and mining to ensuring the progress of exploration and investment in mine construction and coal mining in accordance with relevant plans.

b) Improve the quality of coal exploration and mining licensing to ensuring licensed enterprises are capable of conducting coal exploration and investment. Improve efficiency and strengthen inspection and supervision of exploration to ensuring reliability, and maximum exploitation of coal resources associated with labor safety and environmental protection.

c) Promote the overall assessment of the Northeast coal basin, the basic investigation of coal resources in the Red River coal basin as a basis for planning and implementing coal exploration projects.

d) Preside over, and cooperate with related ministries and branches in, speeding up the implementation of the master plan on basic geological surveys of minerals in the 2021 - 2030 period, with a vision toward 2050 (including coal minerals), synchronously and timely with the national energy master plan for the period 2021 - 2030, with a vision toward 2050.

dd) Study and propose suitable mechanisms to allow enterprises to participate in the implementation of the basic investigation of coal resources at their own expenses; consider licensing exploration to the bottom of the coal layer to improve the efficiency of coal exploration.

4. Ministry of Planning and Investment shall

a) Preside over, and cooperate with the Ministry of Industry and Trade, the Ministry of Finance and related ministries and branches in, building and submitting to competent agencies, under their jurisdiction, to support investment in coal exploration, to build infrastructure for coal import, and invest abroad to exploit coal to serve domestic demand.

b) Develop mechanisms and policies to allow economic groups and state corporations to negotiate and sign long-term contracts to import energy sources at market prices and in line with international practices.

5. The Ministry of Science and Technology shall Develop mechanisms and policies to encourage and promote the research, transfer and application of modern science and technology to mine coal at the depth of below -300 at the Northeast coal basin; exploit and effectively use coal basin in Red River Delta; coal mining under industrial, civil, water storage areas; exploit and efficiently use low-calorific coal resources and other coal products.

6. The Ministry of Transport shall

a) Update, adjust and supply the planning for seaports, canals and inland traffic systems in accordance with regulations to meet demands for coal transport and transshipment of import and export; ensuring the principle of optimal use of land and water surface funds, to ensure the sustainable development of the gas, coal and maritime industry in the overall marine economic strategy of Vietnam.

b) Agree on detailed master plan for specialized seaports importing LNG and transshipment of imported coal which is proposed as an addition to the plan for the development of Vietnam's seaport system.

7. The Ministry of Defence, the Ministry of Public Security, the Ministry of Construction, the Ministry of Science and Technology and the State Bank of Vietnam shall Coordinate, study, complete and organize the implementation of specific tasks and solutions related to the coal industry and the coal market.

8. People’s Committees of provinces and centrally run cities shall

a) Coordinate with state management agencies and enterprises in supplementing and completing the socio-economic development planning of the province, city and economic zones, industrial zones, completing planning on land and sea surface use (if any) taking into account the construction of gas and coal industry projects.

b) Give priority to the reserve of land and water surface for the construction of gas industry works and coal industry works.

c) Take responsibility for compensation, resettlement and site clearance for gas, coal and electricity industry works according to regulations.

d) Closely coordinate with relevant agencies and enterprises in the management of coal production activities in accordance with the law; review, update and promptly adjust the borderline prohibiting and temporarily prohibiting mineral activities. Consider giving priority to the maximum exploitation of coal resources before investing in the construction of surface solid works in the process of adjusting land use planning to serve the socio-economic development.

9. Enterprises operating in the energy industry

a) The Vietnam Oil and Gas Group (Petro Vietnam) and enterprises operating in the gas industry:

- Specialized state-owned enterprises (Vietnam Oil and Gas Group, PetroVietnam Gas Joint Stock Corporation) shall play a key role in implementing gas business models, especially the investment in infrastructure construction, gas import for electricity production and other consumers on the basis of promoting available resources and experience; building a strong brand in the international gas business, step by step developing regional and international markets, participating extensively in all supply stages of the LNG value chain, including investment in upstream, liquefaction, transportation and sales;

- Enterprises shall be responsible for the investment and construction of gas projects according to the planning and investment policy approved by the competent authorities;

- Enterprises assigned by the State to implement the LNG import project shall be responsible for organizing the construction of the infrastructure for LNG import; managing, operating and importing LNG according to regulations;

- To preside over studying plans for exploitation and use of gas resources from Blue Whale, Block B and other miners: including plans to import LNG, recycle gas boil-off and provide gas consumers with reasonable and efficient gas consumption, in accordance with demands; reporting to the Ministry of Industry and Trade for consideration and submission to the Prime Minister.

b) The Vietnam National Coal - Mineral Industries Holding Corporation Limited, North Eastern Corporation and coal mining and trading enterprises shall:

- Conduct coal mining and supply tasks in accordance with the planning schemes, plans and contracts with coal users:

- The Vietnam National Coal - Mineral Industries Holding Corporation Limited and the North Eastern Corporation shall: Conduct well the leading role in supplying coal for domestic consumption in accordance with the roadmap for developing the coal market; invest in power source projects according to assigned tasks.

c) The Vietnam Electricity (EVN) shall:

- Invest and complete the information technology infrastructure system serving the operation of the electricity market by levels;

- Implement regulations, plans and restructuring the Group according to the plan approved by the Prime Minister.

Article 3. Ministers, heads of ministerial-level agencies and government-attached agencies, chairpersons of People’s Committees of provinces and centrally run cities, Directors General of the Vietnam Electricity, Vietnam Oil and Gas Group, Vietnam National Coal - Mineral Industries Holding Corporation Limited, and related agencies and units shall be responsible for implementing this Decision./.