Circular No. 02/2015/TT-BXD guiding the method for pricing wastewater services

CIRCULAR

Guidelines for the valuation method of wastewater services 

Pursuant to Decree No. 62/2013/NĐ-CP dated June 25, 2013 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Construction;

Pursuant to Decree No. 60/2003/NĐ-CP dated June 6, 2003, promulgated by the Government detailing and guiding the implementation of the Law on State Budget;

Based on Decree No. 130/2013/NĐ-CP dated October 16, 2013 of the Government on production and supply of public goods and services;

Pursuant to the Government Decree No. 80/2014/NĐ-CP dated August 6, 2014 on Drainage and Wastewater Treatment;

Pursuant to Decree No. 177/2013/NĐ-CP dated November 14, 2013 of the Government detailing and guiding the implementation of certain Articles of the Law on Prices;

Considering the proposal of the Director of the Economic Construction Department;

The Minister of Construction issues this Circular guiding the valuation method of wastewater services.

Article 1. Scope of Regulation and Applicability

1. This Circular guides the method for determining the price of wastewater treatment services (hereinafter referred to as the price of wastewater treatment services) for various types of drainage systems to serve as the basis for establishing, approving pricing plans, and setting the price of wastewater treatment services applicable in cities, industrial zones, economic zones, export processing zones, high-tech zones (hereinafter referred to as industrial zones), and concentrated rural residential areas.

2. This Circular applies to organizations, individuals, and households within Vietnam; foreign organizations and individuals engaged in drainage activities on Vietnamese territory; and organizations and agencies with authority to establish, review, and approve pricing plans for wastewater treatment services.

3. Industrial clusters are encouraged to apply the provisions of this Circular.

Article 2. Method for Determining Total Actual Costs for Implementing Wastewater Treatment Services

1. The total actual reasonable costs for implementing wastewater treatment services for each type of drainage system, serving as the basis for calculating the full cost and the price per one cubic meter (m3) of wastewater, must be calculated according to the standards, regulations, and economic-technical norms for drainage management and wastewater treatment published or issued by competent authorities, including the following costs:

2. For wastewater treatment services in cities, industrial zones, and concentrated rural residential areas, the content of each cost item is determined as follows:

a) Direct material costs include expenses for raw materials, fuels, chemicals, power directly used, and other auxiliary materials for implementing drainage and wastewater treatment.

Direct material costs are determined by multiplying the quantity of each type of material used by its corresponding unit price; wherein:

- The quantity of materials used for drainage and wastewater treatment shall be based on the standards, regulations, and economic-technical norms for drainage and wastewater treatment published or issued by competent authorities in accordance with the law. For materials not covered by such standards, regulations, or norms, the entity preparing the wastewater treatment service pricing plan shall establish a norm for calculation within the pricing plan and submit it for approval by the provincial People's Committee.

- The material price is the actual purchase price according to the price set or announced by competent authorities or the market price recorded on invoices at the time of calculation (for materials subject to state price regulation through registration, declaration, negotiation, or public information disclosure) plus (+) reasonable circulation costs to the location of wastewater treatment (if applicable).

b) Direct labor costs include monetary payments made by drainage units to direct production workers such as wages, salaries, and allowances with wage characteristics, meal allowances, social insurance, health insurance, unemployment insurance, trade union fees, and other expenses stipulated for direct wastewater treatment and drainage workers, including:

- Labor costs, including wages and salaries, are determined by multiplying the number of working days according to the economic-technical norms for wastewater treatment and drainage published or issued by competent authorities by the corresponding daily wage rate (the daily wage rate includes the basic wage and allowances stipulated by law);

- Meal allowances between shifts (if any) for workers participating in enterprise operations in accordance with current laws;

- Social insurance, health insurance, unemployment insurance, hazardous job allowances, trade union fees, and other expenses (if any) for direct wastewater treatment and drainage workers in accordance with current laws;

c) Common production costs include indirect production costs (other than direct material and direct labor costs specified in points a and b of Clause 2 of this Article) incurred by units implementing the enterprise's activities, including depreciation, repair of fixed assets; material, tools, and equipment costs for workshops; wages, allowances, meal allowances (if any) paid to workshop staff; social insurance, health insurance, unemployment insurance, and trade union fees for workshop staff; testing and standardization costs for effluent discharge systems, external service costs, and other monetary costs included in the cost price according to legal provisions.

The method for determining material, service, and labor costs in common production costs is applied as stipulated in points a and b of Clause 2 of this Article.

Depreciation costs for fixed assets are implemented in accordance with the Ministry of Finance's regulations on the management, use, and depreciation of fixed assets.

d) Business management costs are the total costs incurred for the management and operation machinery of the enterprise, including common costs of the entire enterprise such as depreciation, repair of fixed assets serving the management and operation within the enterprise; salaries, wages, allowances, and mid-shift meal expenses (if any) paid to the board of directors and managerial staff in various departments; social insurance, health insurance; unemployment insurance and trade union fees of the enterprise's management machinery; office material and equipment costs, taxes, fees, and service costs purchased externally for the office; other common costs for the entire enterprise such as interest payments, inventory reserve write-downs, bad debt provisions, hospitality and transaction costs, scientific research costs, technological innovation costs, initiative and improvement costs, environmental protection costs, education and training costs, medical expenses for the enterprise’s employees, costs for female workers, and other management costs according to current regulations. Business management costs are allocated to product cost based on appropriate criteria for the products of the enterprise such as water treatment and discharge, construction installation, and other products of the enterprise (if any); other management costs according to current legal regulations.

The method for determining material and service costs, labor costs, and fixed asset depreciation costs in business management costs shall be applied as prescribed in points a, b, and c of Clause 2 of this Article.

3. When determining the total production and business costs of a wastewater unit, it must accurately and fully account for reasonable and legitimate actual costs; exclude costs that cannot be included in the total production and business costs according to the general valuation method for goods and services issued by the Ministry of Finance and relevant legal provisions.

Common costs not solely serving the wastewater service but related to multiple areas of activity within the wastewater unit and costs that must be allocated during the calculation period shall be implemented according to accounting laws and relevant legal provisions and as stipulated in this Circular.

Article 3. Valuation of Wastewater Services

1. The total cost of 1 cubic meter of wastewater is determined by the following formula:

Where:

a) ZTB: is the average total cost of 1 cubic meter of wastewater. Unit of measurement: VND/cubic meter.

b) CT: is the total cost of wastewater service as determined under Article 2 of this Circular.

c) SLT: is the total volume of wastewater collected, transported, and treated by the drainage system. Unit of measurement: cubic meters.

The total volume of wastewater collected, transported, and treated by the drainage system includes wastewater from households and other types of wastewater discharged into the drainage system. The volume of household wastewater is determined according to Article 39 of Decree No. 80/2014/NĐ-CP dated August 6, 2014, of the Government on Drainage and Wastewater Treatment; if households using centralized clean water systems install flow meters for wastewater, the volume of wastewater will be calculated based on the flow meter readings. Households are encouraged to install flow meters for wastewater (except for domestic sewage). The volume of other types of wastewater is calculated and determined according to standards, technical regulations, and current regulations.

: Total volume of wastewater collected and treated by the wastewater system (unit: m

GDVTN = {ZTB + (ZTB x P)} x K

Where:

GDVTN: is the wastewater service fee.

ZTB: is the average total cost of 1 cubic meter of wastewater.

P: is the regulated profit margin ratio. Based on the actual business conditions of wastewater units and the average income of local residents, the provincial People's Committee shall determine a reasonable profit margin ratio in the structure of the wastewater service fee and ensure that it is at least 5% of the total cost of wastewater service.

K: is the adjustment factor dependent on the pollutant content, determined based on the pollutant content in the wastewater (excluding domestic sewage) and is determined based on the average COD (mg/l) index of each type of wastewater according to its usage characteristics or type of activity generating wastewater or for specific entities. The COD content is determined based on the results of accredited laboratory analysis. The K factor is determined as follows:

The wastewater service fee determined according to the formula in Clause 2 of this Article does not include value-added tax (VAT).

Article 4. Organization of Implementation

1. The Ministry of Construction shall take the lead in periodically or urgently inspecting the establishment and issuance of regulations on managing wastewater service fees in localities and inspecting the development of pricing plans; compliance with laws on wastewater service fees by wastewater units as stipulated in this Circular.

2. The provincial People's Committee has the responsibility to manage state activities related to wastewater and wastewater treatment within its jurisdiction; approve the wastewater service fee between the wastewater unit and the owner of the drainage system to determine the management and operation contract price; depending on the specific socio-economic conditions of the locality, the provincial People's Committee decides the timeline and level of wastewater service fees for households within its jurisdiction.

If the wastewater service fee at the local level decided by the provincial People's Committee is lower than the correctly and sufficiently calculated costs of wastewater services and a reasonable profit margin, then the provincial People's Committee must subsidize from the local budget to ensure the rights and legitimate interests of the wastewater unit.

3. The Department of Construction shall take the lead in coordinating with the Department of Finance, the Department of Natural Resources and Environment, and other relevant departments to inspect the establishment and implementation of decisions on wastewater service fees applicable to entities related to these services in the locality, advise the provincial People's Committee to promptly address any arising issues; simultaneously compile reports to the Ministry of Construction for monitoring and adjustment when necessary.

4. The handling of carryover matters shall be carried out according to Article 47 of Decree No. 80/2014/NĐ-CP dated August 6, 2014, of the Government on Drainage and Wastewater Treatment.

Article 5. Effective Date

1. This Circular takes effect from June 1, 2015.

2. In the course of implementation, if there are any difficulties, agencies and units are requested to report to the Ministry of Construction for consideration and guidance on resolution./.