Vietnam

Screen Shot 2019-04-12 at 4.11.14 PMBy Huynh Hoang Sang, bizconsult Law Firm

 

 

The number of solar power projects (SPP) in Vietnam has grown quickly in recent years, especially after the Prime Minister promulgated Decision No.11/2017/QD-TTg (Decision 11) on April 11, 2017, providing a mechanism for encouraging development of solar power in Vietnam. This Decision took effect from June 1, 2017 and expires on June 30, 2019.

With the expiry date fast approaching, SPP investors are focused on the construction and completion of such SPPs before the benefits of Decision 11 come to an end. There are two main benefits. Firstly, Decision 11 allows SPPs to be eligible for the exemption and/or the reduction of import duties, corporate income tax, land levy, land rent and water surface rent in accordance with application laws of Vietnam (Art 10, Art 11 of Decision 11). Secondly, Decision 11 also provides a compulsory responsibility of Vietnam Electricity (EVN) as an electricity buyer to purchase all of the electricity created by SPPs (Art 9.1 of Decision 11).

Screen Shot 2019-04-12 at 4.16.21 PM

Following Decision 11, the Ministry of Industry and Trade (MOIT) issued Circular 16/2017/TT-BCT (Circular 16) on September 12, 2017 regarding project development and sample of power purchase agreements (PPA) mandatorily applied to SPPs, including rooftop solar power projects (rSPPs) and grid-connected solar power project (gSPPs). One of the noteworthy points of Circular 16 is that the investor shall only be permitted to form a gSPP if it is approved in the provincial or national solar power planning or provincial or national power development planning (Art 10.1 of Circular 16). However, the investor of rSPP shall only need to register the connecting terminal with the electricity company at provincial level for the rSPP having capacity under 1 megawatt (MW) or follow the regulatory procedures for inclusion of rSPP having capacity of 1MW or over in the solar power development planning (Art 11 of Circular 16).

As of March 11, 2019, the MOIT further issued Circular 05/2019/TT-BCT (Circular 05) to amend and supplement a number of articles of Circular 16, which provides a specific electricity pricing and new template of PPA for rSPP. In particular, the electricity pricing for rSPP prior to January 1, 2018 is unchanged but after January 01, 2018, it shall be adjusted in accordance with the exchange rate between VND/USD as publicly announced by the State Bank of Vietnam (SBV) on the last working day of the previous year (Art 1.1 of Circular 05). The adhesion of exchange rate herein may be an issue for the investor as it may be treated as a violation under Ordinance on Foreign Exchange Control and its guiding regulations. If this was the case, the investor would be subject to a fine up to VND250 million (US$10,700) (Art 24.6 (c) of Circular 32/2013/TT-NHNN).

Further to Circular 05, the new sample of PPA for rSPP replaces two previous templates of PPA of rSPP as attached in Circular 16 and makes it more preferable on the scope of electricity trading, payment method, rights and obligations of the parties (Art 1.2 of Circular 05). This sample is compulsory for purchasing of electricity by and between EVN and electricity seller for a term of 20 years from the commercial operation of rSPP (Art 7.1 of PPA of rSPP attached in Circular 05). The parties are permitted to supplement some new articles without making any change of the principal contents of this agreement (Art 18.3 of Circular 16). During the term of this agreement, any requirement on amendment of the agreement must be notified to other party 15 days in advance (Art 7.2 of PPA of rSPP attached in Circular 05). The SPP investors, especially for rSPP, should place importance to this Circular and the new sample PPA of rSPP before the effective date of Circular 05 (April 25, 2019).

 

Screen Shot 2019-03-12 at 5.41.37 PM

W: www.bizconsult.vn

Hanoi:
T: (84) 0) 24 3933 2129
F: (84) 0) 24 3933 2130
E: info-hn@bizconsult.vn

Ho Chi Minh:
T: (84) 0 28 3910 6559
F: (84) 0 28 3910 6560
E: info-hcm@bizconsult.vn

M: (84) 9 1801 9209
E: sanghh@bizconsult.vn

Related Articles by Firm
Tightening regulations on corporate bonds issuance in Vietnam
Decree 81 is said to be an attempt to tighten and control corporate bonds issuance in Vietnam in the wake of a worrisome proliferation ...
The Law on Investment 2020
The current economic situation in Vietnam has revealed various disadvantages and loopholes in the legal framework, especially under the backbone law on investment.
Vietnam: Release of long-awaited guidance on Competition Law
The long-waited guidance on the Competition Law — the Decree 35/2020/ND-CP (Decree 35) — was issued on March 24, 2020 with effect from May 15, 2020, and casts light on certain prominent provisions of the Competition Law, such as economic concentration ...
Vietnam: Liability exemption due to the Covid-19?
On April 1, 2020, the Vietnamese prime minister issued Decision No. 447/QD-TTg to officially declare Covid-19 a nationwide epidemic. The Covid-19 pandemic, along with the application of certain preventive measures of the Vietnamese competent authorities have greatly affected most Vietnamese-based enterprises ...
Changes to investor selection for land-using projects under Vietnam’s Law on Bid
Significant amendments to the scope and process of for selection of investors of PPP projects and land-using projects.
Vietnam: New regulations on automobile transport business
After a long time in the drafting stage, the Government issued Decree No. 10/2020/ND-CP (Decree 10) on January 17, 2020, regulating automobile transport business and conditions for conducting automobile transport business ...
Vietnam: Sweeping reform to securities market
The New Law is said to be a radical improvement to securities market regulations in Vietnam and is expected to overcome those shortcomings observed for the past 10 years ...
Vietnam: New Labour Code taking effect on January 1, 2021
The participation in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA) poses numerous requirements on the reform of laws, including labour laws ...
Legal issues on peer-to-peer lending business in Vietnam
Peer-to-peer (P2P) lending has been growing rapidly in Vietnam, along with the development of financial technology ...
Use of public property as payment in Vietnamese build-transfer projects
Under this new and favourable regulation, projects will attract more investor interest from across the region.
Vietnam: New guidance on forex management to FDI enterprises
Some significant improvements regarding capital transactions and M&A pertaining to foreign-invested enterprises in Vietnam ...
Vietnam: Tightened policy on import of used machineries, equipment and technological lines
From 2015, the import of used machineries and technological lines is subject to the Circular 23/2015/TT-BKHCN, which contains some inadequate points causing difficulties in import of used machineries, technological lines, especially those of more than 10 years old in fact ...
New law on competition takes effect
Vietnam’s National Assembly passed the new Law on Competition (New Competition Law) on June 12, 2018 and it will be taking effect on July 1, 2019, 14 years after the implementation of the Law on Competition 2004 ...
Encouraging foreign direct investment in Vietnam's education sector
One of the noteworthy points under Decree 86 is educational association, which is defined as twinning between Vietnamese private kindergartens ...
Reform of regulations on private issuance of corporate bonds in Vietnam
One of the most notable points under Decree 163 is that the requisite conditions for issuing corporate bonds have been significantly liberalised ...
Reform of regulations on private issuance of corporate bonds in Vietnam
The conditions for issuing corporate bonds have been significantly liberalised ...
Related Articles
"You can’t manage what you don’t measure"
….so said a General Counsel in a recent discussion we had about the use of data in their legal department.
Electronic signatures and virtual meetings — the Bermuda, British Virgin Islands and Cayman Islands legal framework
The introduction globally of travel restrictions and containment measures arising from Covid-19 has significantly disrupted business, including creating logistical issues in closing corporate or financing transactions or holding board and shareholders’ meetings ...
Related Articles by Jurisdiction
Vietnam Insurance Market – Share/Capital Acquisition
The Vietnamese insurance market is heating up with many high-valued M&A deals over the last two years ...
Vietnam: New regulations on liquor trading
On September 14, 2017, the government promulgated Decree No. 105/2017/ND-CP on liquor trading (Decree 105) ...
New schedule for foreign owned capital to implement trading and related activities
On May 21st, 2007 the Ministry of Trade (currently Ministry of Industry and Trade (MOIT)) promulgated Decision No. 10/2007/QD-BTM to announce the schedule for implementation of trading …
Latest Articles
"You can’t manage what you don’t measure"
….so said a General Counsel in a recent discussion we had about the use of data in their legal department.
Are you ready for the global tax reform?
A brief discussion on how MNCs should respond to the OECD’s new measures relating to Automatic Exchange of Information and Transfer Pricing issues