Joint Circular No. 01/1999/TTLT/BVGCP-BCN guiding the implementation of electricity sale prices for household consumption in rural areas.

JOINT CIRCULAR

Guidelines for Implementing Electricity Sales Prices for Domestic Consumption

 in Rural Households

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Pursuant to Document No. 1303/CP-KTTH dated November 3, 1998, issued by the Government, regulating electricity sales prices for domestic consumption in rural households, the Inter-Ministerial Committee on Pricing under the Government and the Ministry of Industry hereby provide guidelines for implementing electricity sales prices for domestic consumption in rural households as follows:

I/ GENERAL PROVISIONS:

1\. The electricity sales price for domestic consumption in rural households (hereinafter referred to as rural household electricity) shall be set within the overall framework of adjusting the national electricity pricing system.

2\. The guidance prices below shall apply in areas with national power grids.

3\. The State encourages diversification of investment and management models for selling electricity from meter boxes to rural households according to this Circular.

4\. It is strictly prohibited to implement private contractor packages.

II\. OBJECTS AND SCOPE OF APPLICATION OF ELECTRICITY SALES PRICES FOR DOMESTIC CONSUMPTION IN RURAL HOUSEHOLDS

1\. Electricity sales prices for domestic consumption in rural households shall apply to rural electricity management models selected by the People's Committees of provinces and cities based on specific characteristics and conditions of each locality, including state-owned enterprises, private enterprises, service cooperatives, village electricity boards, and provincial electricity companies under the Vietnam Electricity Corporation (referred to as rural electricity management organizations).

2\. Electricity sales prices for domestic consumption in rural households:

2.1\. The maximum price for selling electricity for domestic consumption in rural households at commune and village levels shall be uniformly applied at 700 VND/kWh.

2.2\. For places (villages, communes) where the current electricity sales price to rural households is lower than the maximum price of 700 VND/kWh, the People's Committees of provinces and cities shall coordinate with the electricity sector to continue directing rural electricity management organizations to sell electricity directly to rural households at the current price, without increasing the sales price.

2.3\. For places where the current electricity sales price to rural households exceeds the maximum price of 700 VND/kWh, the People's Committees of provinces and cities shall direct financial, pricing, and industrial departments, along with rural electricity management organizations, to cooperate with provincial electricity companies to find technical solutions (such as upgrading power grids, replacing non-compliant meters, balancing phases, etc.) and organizational measures (eliminating private contractors, applying suitable management models such as village electricity boards, cooperatives, and rural electricity management enterprises) to reduce power losses and operational costs, ensuring that the electricity sales price to rural households reaches the maximum price of 700 VND/kWh.

In exceptional cases, if the aforementioned measures still fail to bring the electricity sales price for domestic consumption down to the maximum price (700 VND/kWh), the rural electricity management organization must report to the People's Committee of the province or city to establish a reasonable sales price. These organizations are responsible for implementing the approved price and taking measures to quickly reduce prices above the maximum to the maximum level.

2.4\. For places without existing power grids, where the Vietnam Electricity Corporation invests according to government regulations to bring electricity to rural areas and villages, and provincial electricity companies under the Vietnam Electricity Corporation directly enter into electricity purchase and sale contracts with rural households, the sales price for domestic consumption shall be 700 VND/kWh.

This price also applies to rural electricity management organizations (excluding provincial electricity companies under the Vietnam Electricity Corporation) participating in new rural power grid development investments. In exceptional cases requiring higher prices than the maximum, implementation shall follow the provisions of Section 2.3 of Point 2, Chapter II, above.

2.5\. For places where rural households have already entered into direct electricity purchase and sale contracts with the electricity sector according to the national pricing schedule before the issuance of Document No. 1303/CP-KTTH dated November 3, 1998, they shall continue to operate at the current price.

3\. Electricity sales prices for other purposes:

Rural electricity management organizations (including provincial and city electricity companies under the Vietnam Electricity Corporation) shall sell electricity for other purposes such as production, milling, food processing, and service operations according to three scenarios:

* For power grids managed by provincial and city electricity companies under the Vietnam Electricity Corporation, the sales price for other purposes mentioned above shall be based on the national pricing schedule during each period.

* For power grids managed by rural electricity management organizations (excluding the Vietnam Electricity Corporation) selling electricity for domestic consumption at prices not exceeding 700 VND/kWh, the sales price for other purposes shall also be based on the national pricing schedule during each period.

* For power grids managed by rural electricity management organizations selling electricity for domestic consumption at prices higher than 700 VND/kWh, these organizations must report to the People's Committees of provinces and cities to establish sales prices for other purposes such as production, milling, food processing, and services according to the principle of gradually achieving the national pricing schedule during each period. These organizations are responsible for implementing the approved prices by the People's Committees of provinces and cities.

4\. When electricity users consume electricity for multiple purposes, separate meters should be installed for each purpose to apply appropriate prices. If separate meters cannot be installed, both parties in the electricity purchase and sale agreement shall base their agreement on the load capacity and usage time to reasonably determine the sales price.

III\. STRUCTURE AND METHODS FOR CALCULATING ELECTRICITY SALES PRICES TO RURAL HOUSEHOLDS:

1\. The structure of electricity sales prices and methods for calculating sales prices to rural households include the following items:

1.1. The purchase price of electricity at the wholesale level at the total meter installed at the transformer station of the village, commune shall be determined by the State. For some villages and communes without a transformer station that must purchase electricity through agencies, enterprises, military units to serve the daily consumption needs of rural households, such electricity shall be purchased at the wholesale price at the total meter installed at the transformer according to the prices prescribed by the State during each period.

1.2. The cost of electricity losses from the total meter installed at the transformer station of the village, commune to the rural household.

Currently, this cost accounts for a large proportion. Rural electricity management organizations need to manage strictly and implement measures to reduce electricity losses: households using electricity must have accurate meters measured and verified by specialized agencies, sealed and stamped, and suitable for the load of electricity usage. Strengthening the reinforcement of the power grid, regularly clearing the power line corridors, ensuring quality and safety. Electricity used for public services and other purposes in the village, commune without charging electricity fees (public lighting, commune station, schools, People's Committee of the commune, etc.) shall not be included in the cost of electricity losses.

Strictly handle cases of violation of internal regulations and rules in the use of electricity. Absolutely no form of electricity quota shall be allowed.

1.3. Labor costs for rural commune electricity management staff:

Based on the income level in the village, commune and the results of the operation and management of the power grid by the rural electricity management organizations to determine labor costs and income levels of electricity management staff appropriately.

1.4. Depreciation costs for substations and transmission lines: The rural power grid system is formed from various sources of capital (Central budget, local budget, cooperatives, loans or contributions from the people). Therefore, depreciation costs need to be reasonable to ensure that the selling price of electricity does not exceed the ceiling price of 700 dong per kWh. In cases where loan repayments lead to a higher selling price than the ceiling price, it must be approved by the Provincial People's Committee and publicly announced to the electricity users.

1.5. Repair costs:

- Regular repair costs (minor repairs) are calculated based on actual requirements to be reasonable.

- Major repair costs (overhauling the power grid) are included in the electricity price but shall not exceed the ceiling price (700 dong per kWh) sold to rural households. If it exceeds the ceiling price, the rural electricity management organization shall report to the Provincial People's Committee to mobilize funds: basic depreciation (if any), local government budget or contributions from electricity users.

1.6. Management costs: These are costs for office supplies, tools, and other necessary expenses to support the operation of electricity buying and selling.

1.7. In cases where power grid assets are formed from loans, interest payment costs shall be included in the selling price of electricity.

2. The calculation of value-added tax on the electricity prices sold to rural households by rural electricity management organizations shall be carried out in accordance with specific regulations of the Government.

IV. ORGANIZATION OF MANAGEMENT AND SALE OF ELECTRICITY TO RURAL HOUSEHOLDS

1. Rural electricity management organizations (including provincial and municipal power companies) shall organize the management and direct sale of electricity to rural households at the prices specified in points 2 and 3 of Section II above.

2. Rural electricity management organizations must develop pricing plans to be approved by the Provincial People's Committee and publicly announced to electricity users.

3. Rural electricity management organizations must conduct statistics and accounting transparently and accurately in accordance with the national statistical and accounting regulations.

V. RESPONSIBILITIES FOR MANAGING RURAL ELECTRICITY:

1. Provincial and Municipal People's Committees:

1.1. Based on the specific characteristics and conditions of the locality, select models for managing and selling electricity to rural households (excluding provincial and municipal power companies under Vietnam Power Corporation). Rural electricity management models shall be established according to the principle of ensuring effective, safe, and high-quality operations, with particular attention to the price of electricity sold to rural households.

1.2. Direct relevant agencies under the province, city to cooperate with provincial and municipal power companies under Vietnam Power Corporation in training, capacity building, and vocational training for rural power grid operation and management staff.

1.3. Assign responsibilities to local authorities (districts, communes) to cooperate with rural electricity management organizations and provincial and municipal power companies in protecting assets, preventing electricity theft, and clearing power line corridors.

1.4. Direct relevant agencies at the local level such as the Industry Department, Finance and Price Department, and Local State Inspectorate to regularly inspect and audit the organization of electricity sales to rural households, particularly focusing on preventing electricity losses and the price of electricity sold.

2. Vietnam Power Corporation:

2.1. Direct provincial and municipal power companies to manage, operate, and sell electricity to rural households at the prices specified in points 2 and 3 of this circular for power grids managed by provincial and municipal power companies under Vietnam Power Corporation.

2.2. Direct power companies to cooperate with provincial and municipal People's Committees in implementing this circular.

2.3. Be responsible for guiding and assisting rural electricity management organizations in training power grid operation and management staff and organizing the sale of electricity to rural households. These costs shall be accounted for in the training costs of Vietnam Power Corporation.

2.4. Guide rural electricity management organizations to establish management regulations and operational procedures to ensure safety and efficiency.

2.5. Provincial and municipal power companies shall regularly coordinate with local functional agencies in inspecting the management, operation, and sale of electricity to rural households and the price of electricity sold to rural households.

VI. IMPLEMENTATION PROVISIONS:

1. This circular shall take effect fifteen days from the date of signature. Decree No. 18/TT-LB dated August 3, 1992, issued jointly by the Ministry of Energy (now the Ministry of Industry) and the State Price Control Board (now the Government Price Control Board) is hereby repealed.

2. Vietnam Power Corporation, Provincial and Municipal People's Committees, and organizations managing and operating power grids in rural areas shall be responsible for implementing this circular.

3/ The Government Price Control Board and the Ministry of Industry shall direct, supervise, inspect, and audit the implementation of this Circular, and continue to monitor, summarize, and supplement it as necessary for appropriateness.

During the course of implementation, if any difficulties arise, they are requested to be reported to the Government Price Control Board and the Ministry of Industry for timely resolution.