JOINT CIRCULAR
Guidelines for transferring, receiving, and refunding investment capital for rural low-voltage power distribution networks
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Based on Decree No. 189/2007/NĐ-CP dated December 27, 2007 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Industry and Trade;
Pursuant to Decree No. 118/2008/NĐ-CP dated November 27, 2008 of the Government on the functions, tasks, powers, and organizational structure of the Ministry of Finance;
Pursuant to the Electricity Law dated December 3, 2004;
Based on Decision No. 21/2009/QĐ-TTg dated February 12, 2009 of the Prime Minister regarding electricity sales prices for 2009 and the years 2010-2012 under the market mechanism;
Implementing Circular No. 1287/VPCP-KTN dated March 2, 2009 of the Office of the Government guiding the implementation of the transfer, receipt, and refund of investment capital for rural low-voltage power distribution networks;
The Ministries of Industry and Trade and Finance hereby issue guidelines for the transfer, receipt, and refund of investment capital for rural low-voltage power distribution networks as follows:
PART I
GENERAL PROVISIONS
Article 1. Scope of Regulation and Applicability
Article 1. This Circular specifies the method for determining the value of assets of rural low-voltage power distribution networks in transfers; the method and sources of funds for refunding investment capital for rural low-voltage power distribution networks; the procedures for transferring, managing, and refunding investment capital for assets of rural low-voltage power distribution networks.
Article 2. This Circular applies to the owners of assets of rural low-voltage power distribution networks (hereinafter referred to as the Transferor), the Electricity Companies under the Vietnam Electricity Corporation (hereinafter referred to as the Recipient), and organizations and individuals related to the activities of transferring, receiving, and refunding investment capital for rural low-voltage power distribution networks (hereinafter referred to as the Rural Low-Voltage Power Distribution Network) according to the guidance provided in this Circular.
Article 2. Interpretation of Terms
1. Transferred rural low-voltage distribution network assets including the part of the power distribution network with voltage up to 0.4 kV comprising trunk lines and branch lines determined from the secondary side switchgear (circuit breaker, transformer) of the 6-35/0.4 kV transformer supplying electricity to villages and towns to the meter measuring the consumption of rural households, which are assets managed by rural electricity management organizations and transferred to the management and direct sale of electricity to rural households by the Vietnam Electricity Corporation (EVN).
2. Transferor are the owners or lawful representatives of the owners of the Rural Low-Voltage Power Distribution Network assets (limited liability companies, joint-stock companies, private enterprises, project management boards of localities, cooperatives, individuals) who voluntarily hand over or are subject to mandatory handover according to the decision of the People's Committee of provinces and centrally governed cities (due to not having the necessary conditions to sell electricity according to the tiered residential electricity price schedule as stipulated in Article 4 of Decision No. 21/2009/QĐ-TTg dated February 12, 2009 of the Prime Minister on electricity sales prices for 2009 and the years 2010-2012 under the market mechanism and Article 4 of Circular No. 05/2009/TT-BCT dated February 26, 2009 of the Ministry of Industry and Trade on electricity sales prices for 2009 and guidance on implementation).
In cases where the owner of the Rural Low-Voltage Power Distribution Network assets cannot be identified, the Chairman of the People's Committee of provinces and centrally governed cities shall designate relevant agencies or organizations to act as representatives of the Transferor.
3. Transferee are the Electricity Companies under the Vietnam Electricity Corporation or provincial city electricity companies authorized by the Electricity Company; limited liability companies of electricity companies held 100% by the Vietnam Electricity Corporation.
Article 3. Responsibilities of the Transferor and the Recipient
1. Responsibilities of the Transferring Party
The responsibilities of the transferring party include:
- Prepare complete files and certificates as prescribed in Article 4 of this Circular, take the lead together with the Recipient to conduct inventory and assess the remaining value of the Rural Low-Voltage Power Distribution Network; determine the structure of investment capital for the Rural Low-Voltage Power Distribution Network.
- Carry out the transfer of Rural Low-Voltage Power Distribution Network assets and related files, creating favorable conditions for the Recipient to receive, manage, and operate.
- Publicly announce to the people and related parties the portion of borrowed capital, raised capital, and investment capital that has been accepted for refund and implement the refund according to regulations. At the same time, they have the responsibility to refund capital to the people and related parties according to the decision of the competent authority.
2. Responsibilities of the Receiving Party
The responsibilities of the receiving party include:
- Conduct inventory and assessment of the remaining value of transferred assets together with the Transferor; determine the structure of investment capital for the transferred power distribution network.
- Receive, manage the power distribution network and related files. After receiving the transferred Rural Low-Voltage Power Distribution Network assets, record the increase in assets and capital from state funds or refund capital, or accept debt according to the decision of the competent authority.
- Organize the management and operation of the power distribution network in accordance with the provisions of the law. Develop and implement plans for capital refunds as stipulated in Articles 7 and 8 of this Circular.
Chapter II
TRANSFER AND RECEIVING FILES AND METHODS FOR DETERMINING THE VALUE OF ASSETS
RURAL LOW-VOLTAGE POWER DISTRIBUTION NETWORK IN TRANSFERS
Article 4. Transfer Documents
The transfer documents for the power distribution network assets include original documents as prescribed and documents prepared at the time of transfer. Specifically as follows:
1. Original documents include:
a) Investment decision, technical design, and approved budget estimate, completion acceptance record.
b) Accounting records related to determining the original cost and remaining value of the power distribution network assets, investment capital structure, and approved final settlement report by the competent authority.
c) Loan contracts with banks and other economic organizations (including loans from construction units); proof of other liabilities; reconciliation statements with bank or lender confirmation of debt; settlement documents (related to transferred power distribution networks) confirming amounts paid and outstanding debts at the time of transfer (if applicable).
d) Proof of loans from individuals based on loan commitment documents of the transferring party during the construction period: Resolution of the People's Council or People's Committee of the commune or Resolution of the Commune Cooperative Members' Congress; accounting records reflecting amounts repaid and outstanding debts at the time of transfer and related documents (if applicable).
đ) Proof of individual capital (receipts, contribution certificates to joint-stock companies, etc.), cooperative member capital used for construction projects.
2. Documents prepared at the time of transfer and receipt
The transferring party shall cooperate with the receiving party to prepare the transfer documents at the time of transfer according to the following contents:
a) Prepare a current layout diagram of the rural low-voltage power distribution network; current status documentation of low-voltage lines in accordance with Decision No. 34/2006/QĐ-BCN dated September 13, 2006, of the Ministry of Industry regarding rural power distribution network safety.
Based on the current status documentation of low-voltage lines that have been prepared, the transferring party shall cooperate with the receiving party to submit to the People's Committee of the district for confirmation of the current status of low-voltage lines to serve as a legal basis for future operation and management.
b) Prepare the Power Distribution Network Transfer Record according to the model specified in Appendix 1 of the Circular, including:
- Original transfer documents of the power distribution network as stipulated in Clause 1 of Article 4 of this Circular (if any) and listed in (Appendix 1.1);
- Prepare a summary table of quantities and analysis of the remaining value of the power distribution network assets (Appendix 1.2 or 1.3);
- Prepare a list identifying the structure of funds invested in the power distribution network as stipulated in Article 6 of this Circular (Appendix 1.4).
c) Prepare the Record Determining the Remaining Value of the Power Distribution Network according to the model specified in Appendix 2 of the Circular.
For projects handed over and completed the handover procedures from March 1, 2009 to the effective date of this Circular, the documents will be kept intact and additional Records Determining the Portion of Organizational and Individual Capital to be Refunded According to the Remaining Value of the Power Distribution Network Assets will be prepared according to the model specified in Appendix 3 of the Circular.
Article 5. Method for Determining the Remaining Value of Transferred Assets
Based on the actual management situation of the power distribution network assets of the transferring party, the remaining value of the transferred power distribution network assets will be determined according to one of the following two methods:
1. Accounting evaluation method: applied to assets managed in accordance with current laws.
2. Actual value evaluation method: based on the quantity and quality of the transferred assets, the actual value of the transferred power distribution network assets is determined as follows:
Where:
a) The actual quantity of the asset is determined based on the actual inventory data of the LĐHANT assets being transferred;
b) The unit price of each asset serving as the basis for determining the remaining value of the power distribution network assets is calculated according to the regulations in force at the time of transfer by the provincial level or according to the specialized electricity pricing system;
c) The remaining quality of each asset (%) is determined by both the transferring and receiving parties based on the actual quality of the asset, but the remaining quality ratio must be 10% or higher.
3. In case the transferring and receiving parties cannot agree on the remaining quality ratio of the transferred assets, both parties shall agree to select and sign a contract with valuation organizations announced annually by the Ministry of Finance to determine the remaining value of the transferred power distribution network assets as the basis for transfer. If the two parties cannot agree on selecting valuation organizations to determine the remaining value of the transferred assets, the transferring party shall be responsible for submitting to the provincial-level People's Committee for consideration and decision on selecting the valuation organization to determine the remaining value of the transferred power distribution network assets.
In cases where the cost of hiring a valuation organization exceeds the remaining value of the transferred assets, the Valuation Board shall submit to the provincial-level People's Committee for decision on the value of the transferred assets. The valuation organizations are responsible for the accuracy and legality of the valuation results in accordance with the law. Based on the valuation results of the aforementioned valuation organizations, the Department of Finance shall take the lead in coordinating with the Department of Industry and Trade to review and report to the provincial-level People's Committee for approval. The cost of hiring a valuation organization shall be shared equally by the transferring and receiving parties at a ratio of 50-50.
For assets invested without or not meeting the technical standards set out in Decision No. 34/2006/QĐ-BCN dated September 13, 2006, of the Minister of Industry regarding Technical Regulations for Rural Low-Voltage Power Distribution Network Safety, such as low-voltage lines constructed using self-made poles (such as bamboo poles, wooden poles, self-cast concrete poles, etc.) and metering systems not complying with the Measurement Law, these assets shall not be included in the valuation of the asset value. Initially, the transferring party shall be responsible for handing over the assets in their current condition for the receiving party to temporarily maintain power supply to residents. After taking over, the receiving party must plan to allocate funds to upgrade and replace the power distribution network to ensure safe and efficient operation, while recovering old assets and returning them to the transferring party.
For electric meters that have been approved by authorized agencies and are still within their service life, after inspection and calibration to meet technical standards, both parties may negotiate based on agreement on the remaining quality and market prices for such assets.
For electricity meters that have been approved by the competent authority for their model and are still within their usable period, after being calibrated and adjusted to meet technical standards, the two Parties shall agree based on a consensus regarding the remaining quality and market price of such assets.
Article 6. Determination of the Structure of Capital Sources for Construction Projects
Based on the asset handover dossier of Rural Electricity Distribution Network (Investment Decision, approved technical design and budget estimate, completion acceptance record of the project, etc.) and accounting books and related vouchers of the Rural Electricity Distribution Network investment project to determine the total investment capital, classify each source of capital as the basis for handling capital and assets when handing over as follows:
1. State budget capital includes: central government budget, local government budget, capital from national programs, agricultural tax exemption capital for electricity construction projects, state-owned enterprise capital...and untraceable capital.
2. Capital from organizations and individuals: capital from joint-stock companies, limited liability companies, private enterprises, cooperatives, capital raised from the public, individual capital.
3. Borrowed capital from domestic and foreign credit institutions and other units (including outstanding loan amounts of construction units) is determined based on the loan agreement at the time of construction project and confirmed by the credit institution or lender, creditor, and reconciliation statement of receivables and payables up to the handover date.
4. For joint investment projects where the Rural Electricity Distribution Network is only a component of the project, the determination of the structure of the Rural Electricity Distribution Network's investment capital is calculated proportionally according to the structure of the total investment capital of the entire project approved by the competent authority at the time of construction.
Chapter III
METHODS OF CAPITAL REPAYMENT AND SOURCES OF REPAYMENT IN HANDOVER
RURAL ELECTRICITY DISTRIBUTION NETWORK ASSETS
Article 7. Principles for Handling and Repaying Capital
The value of the Rural Electricity Distribution Network project handed over, as determined in the handover record and confirmed by each source of capital, shall be handled as follows:
1. For capital with a state budget origin: increase the state budget capital for the Receiving Party according to the actual remaining value of the handed-over assets and reduce the state budget capital for the Delivering Party according to the book value.
2. For capital from organizations and individuals, the Receiving Party repays according to the actual remaining value of the handed-over assets. If the Delivering Party is a business entity, it may account for the difference between the remaining book value and the actual remaining value of the handed-over assets as revenue or other operating expenses.
3. In cases where the Rural Electricity Distribution Network project is handed over using borrowed capital or other payable amounts with repayment commitments: if sufficient documentation as stipulated in point c, Clause 1, Article 4 of this Circular and approved by the provincial/municipal People's Committee, the Receiving Party shall repay the outstanding loan amount to the bank or other parties according to the loan contract or promissory note (maximum not exceeding the actual remaining value of the handed-over assets), while increasing business capital from the state budget for the difference between the reassessed actual received asset value and the amount to be repaid to the Delivering Party (if any).
4. In cases where the project is funded by multiple sources of capital, based on the initial value and structure of the investment capital, both Parties shall determine the corresponding proportion of each source of capital in the total remaining value of the project in the handover record and handle and repay capital according to the guidance in Clauses 1, 2, and 3 of this Article.
To be eligible for capital repayment as guided above, the representative of the Rural Electricity Distribution Network project owner must prepare complete documentation as stipulated in Clause 1, Article 4 of this Circular. Documentation for capital repayment must absolutely not be duplicated, altered, or erased from loan and debt documents.
In cases where there is no longer sufficient documentation, both the Delivering Party and the Receiving Party need to prepare a record describing the current status of the documentation and assets handed over, assess the actual remaining value of the handed-over assets, and submit to the provincial/municipal People's Committee for consideration and decision on capital repayment.
6. Time of determining the handover of LĐHANT projects and capital reimbursement
a) Rural Electricity Distribution Network projects handed over from the effective date of this Circular shall implement capital repayment according to the provisions of this Circular.
b) Rural Electricity Distribution Network projects that have completed handover from March 1, 2009 to before the effective date of this Circular shall be implemented according to the agreement signed by both parties; in cases where there is no agreement on capital repayment, they shall be implemented according to the provisions of this Circular.
c) Rural Electricity Distribution Network projects that have completed handover before March 1, 2009 shall remain as per the Handover Decision.
Article 8. Sources of funds, methods for repaying capital, and handling of incidental expenses arising from the transfer and receipt of rural low-voltage power grid assets (LĐHANT)
1. Source of capital repayment: Power companies shall use depreciation funds from the years 2010, 2011, and 2012 to repay capital to the transferring party or the People's Committee of the commune (for LĐHANT projects funded by community contributions).
2. Method of repayment
Based on the decision of the provincial People's Committee or the municipal People's Committee under the central government, power companies that take over LĐHANT projects shall directly repay the project owners according to the handover documents. For LĐHANT projects funded by community contributions, the power company shall transfer money to the People's Committee of the commune where the LĐHANT project is located for the commune to repay each contributing individual.
The repayment of capital to the project investors shall be evenly distributed over three years from 2010 to 2012. The capital repayment must be completed before December 31, 2012.
In cases where the transferred assets of LĐHANT were invested with borrowed funds (as stipulated in Clause 3, Article 6 of this Circular), the power companies and the project investors, along with creditors, shall jointly sign off on the debt transfer to the power company receiving the LĐHANT (the value of the debt transferred to the power company shall not exceed the actual remaining value of the transferred asset). The power company shall be responsible for repaying the debts to the creditors according to the initial agreement or the agreement between the creditor and the power company.
3. Expenses for the transfer and receipt of LĐHANT assets
a) Expenses related to the work of transferring and receiving LĐHANT assets (travel expenses, accommodation, working expenses...) shall be borne by the units sending staff members involved and recorded as production and business operation costs according to the prescribed regulations.
In cases where the transferring party is an individual: costs related to work associated with the transfer and acceptance of LĐHANT assets (travel expenses, accommodation, working expenses) shall be settled by the individual themselves.
b) Printing and meeting expenses shall be borne by the receiving party and recorded as business operation costs of the enterprise.
Chapter IV
PROCEDURE FOR TRANSFERRING, MANAGING, AND REPAYING CAPITAL OF RURAL LOW-VOLTAGE POWER GRID ASSETS
Article 9. Transfer and Receipt of LĐHANT Assets
1. Stage of Transfer and Receipt of Management and Operation: After the Decision of the Provincial People's Committee or the Municipal People's Committee regarding the transfer and receipt of LĐHANT assets, the transferring and receiving parties shall carry out the handover of assets; adjust the quantity of LĐHANT assets. The receiving party shall be responsible for accepting the LĐHANT assets for management and operation and organizing direct electricity sales to households.
2. Stage of Capital Repayment
The stage of capital repayment shall be carried out from 2010 to 2012. The capital repayment must be completed before December 31, 2012.
The receiving party shall be responsible for annually repaying capital to the transferring party using the depreciation funds allocated according to the regulations of the Ministry of Finance and the guidelines set forth in this Circular.
Article 10. Asset Valuation Council for LĐHANT
1. The Asset Valuation Council at the provincial or municipal level under the central government shall be established by the Chairman of the People's Committee of the province or municipality. In necessary cases, the Chairman of the provincial People's Committee may delegate authority to the People's Committee of the district to establish the Asset Valuation Council for LĐHANT if it has sufficient capacity.
2. Members of the Asset Valuation Council for LĐHANT include:
a) The Chairman of the Asset Valuation Council shall be held by the leader in charge of the industrial sector at the provincial or municipal level or the Chairman of the district People's Committee in cases of delegation.
b) Other members shall be representatives from the Finance and Industry and Trade departments at the same level, and representatives from the transferring party and the receiving party.
Additionally, the Chairman of the Asset Valuation Council may invite representatives of relevant agencies and departments at the local level to participate in the Asset Valuation Council.
3. The Asset Valuation Council for LĐHANT shall be responsible for organizing the assessment, preparing the valuation report of the remaining value of the transferred LĐHANT assets, confirming the structure of investment capital according to Article 6 of this Circular, and submitting it to the provincial or municipal People's Committee for approval as the basis for capital repayment and issuing decisions to increase capital for power companies under EVN.
Article 11. Procedures for the Transfer and Acceptance of LĐHANT Assets and Capital Repayment
1. The transferring party shall prepare the documents as stipulated in Clause 1, Article 4 of this Circular and send them to the receiving party.
2. Within fifteen days from the date the receiving party receives the documents sent by the transferring party, both parties shall conduct an inventory of the quantity and assess the remaining quality of each transferred asset according to the above guidance; prepare the handover document for LĐHANT assets and complete the transfer and receipt documents as stipulated in Article 4 of this Circular, and submit them to the Asset Valuation Council for review.
3. Based on the transfer and receipt documents prepared by both parties, the Asset Valuation Council shall be responsible for assessing the remaining value of the assets, determining the structure of investment capital, the outstanding loan value, and the amount of capital to be repaid, and submit these to the provincial or municipal People's Committee for approval.
4. Within fifteen days from the date of the provincial or municipal People's Committee's decision approving the two parties shall proceed with the handover and acceptance of LĐHANT assets. The implementation of asset adjustments, capital increases, or capital repayments between the two parties shall commence from the date of the provincial or municipal People's Committee's decision approving the value of the transferred assets.
Chapter V
IMPLEMENTATION
Article 12. Responsibilities of the People's Committee of Provinces and Cities under Central Government Direct Administration
The Chairpersons of the People's Committees of provinces and cities under central government direct administration shall be responsible for:
1. Based on the plan agreed upon with the Electricity Companies under EVN to transfer power assets, they shall instruct rural electricity business organizations within their jurisdiction that do not meet the conditions for selling electricity according to the tiered residential electricity price schedule as stipulated in Decision No. 21/2009/QD-TTg dated February 12, 2009, of the Government and Circular No. 05/2009/TT-BCT dated February 26, 2009, of the Ministry of Industry and Trade to implement the transfer of power assets in accordance with the guidelines set forth in this Circular to the management of the Electricity Companies under EVN.
2. Establish a valuation committee for power assets at the provincial level or delegate to the People's Committees of districts with sufficient capacity to establish a valuation committee for power assets (in cases where necessary).
3. Designate an appropriate organization to represent the transferring party in cases where the owner of the power assets cannot be determined.
4. Decide on the selection of a valuation organization to determine the remaining value of the power assets when the transferring party and the receiving party cannot agree on the remaining quality ratio of the transferred assets.
5. Approve the value of the transferred assets, the structure of investment capital, the outstanding loan value, and the amount of capital to be refunded as a basis for both parties to adjust asset increases or decreases or refund capital.
Article 13. Responsibilities of the Vietnam Electricity Group
The Vietnam Electricity Group shall be responsible for:
1. Direct and guide the Electricity Companies to cooperate with the transferring party, organizations receiving, managing, operating, and directly selling electricity to rural households; Develop plans to allocate funds for refunds, investments, upgrades, and renovations of rural low-voltage distribution networks to ensure safe operation and long-term electricity sales.
2. Annually (no later than March 31) compile and report to the Ministry of Industry and Trade and the Ministry of Finance on the results of the transfer and receipt of power assets, increased capital values, and capital refunds from the previous year.
3. After completing the program of transferring and receiving power assets, submit a comprehensive report to the Ministry of Finance and the Ministry of Industry and Trade on all results of the transfer and receipt of assets, increased capital values, and capital refunds from the asset transfer program.
Article 14. Effective Date
This Circular takes effect from March 22, 2010. During implementation, if there are any difficulties, units and localities are requested to report to the Ministry of Industry and Trade (Electricity Regulation Department) and the Ministry of Finance for timely coordination and resolution./.