Circular No. 07/2017/TT-BXD guiding the valuation methods for solid waste management services

CIRCULAR

Guidelines on the Method for Valuing Solid Waste Management Services

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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. 38/2015/NĐ-CP dated April 24, 2015 of the Government on the Management of Waste and Scrap Materials;

At the proposal of the Director of the Institute of Construction Economics and the Director of the Department of Construction Economics;

The Minister of Construction issues this Circular guiding the method for valuing solid waste management services.

Article 1. Scope of Regulation and Applicability

Article 1. This Circular guides the method for valuing solid waste management services as a basis for establishing, reviewing, and approving the price of solid waste management services.

Article 2. This Circular applies to organizations and individuals involved in establishing, reviewing, approving the price of solid waste management services, and implementing such services.

Article 2. Principles for Valuing Solid Waste Management Services

Clause 1. The valuation of solid waste management services must be consistent with the technology used; comply with technical procedures; environmental standards and norms, economic and technical quotas issued or announced by competent authorities, and be commensurate with the quality of the service.

Clause 2. The price of solid waste management services must accurately cover all reasonable and legitimate costs of the investment and operation of solid waste treatment facilities; be appropriate to the actual conditions of the organization providing the service; infrastructure conditions, socio-economic conditions, and local budget capacity.

Clause 3. The price of solid waste management services approved by the competent authority must ensure incentives and attract various economic sectors to invest in solid waste management.

Article 3. Methods for Valuing Solid Waste Management Services

Clause 1. The price of solid waste management services is determined according to the following formula:

GXLCTR = Z x P (1)_XLCTR : is the price of solid waste management services for one ton of solid waste excluding value-added tax (VAT). Unit: dong._TB 2. The price of wastewater services is determined according to the following formula:_TB - Z: is the total cost to process one ton of solid waste. Unit: dong

 Where:

: bid price after corrections and adjustments, minus any discount (if applicable) of the lowest bidder among those detailed financial evaluations;_XLCTR- P is the profit margin (%): not exceeding 5%.

Clause 2. The total cost to process one ton of solid waste (Z) is determined according to the following formula:_TB: is the total cost to process one ton of solid waste. Unit: dong.

: is the total reasonable and legitimate costs for implementing solid waste management services. Unit: dong.

- Q: is the total volume of solid waste transported to the processing facility for processing. Unit: tons._TBReasonable and legitimate costs for implementing solid waste management services (C

        (2)

 Where:

Clause 2. The total cost to process one ton of solid waste (Z) is determined according to the following formula:_TBvt

Ministry of Science and Technology: The Minister and Deputy Ministers, agencies and units under the Ministry;_Ta) Direct material costs (Cvt), including: costs of materials directly used in the process of solid waste management, calculated by multiplying the quantity of each type of material by its corresponding unit price, where:

The quantity of each type of material is determined based on the standards, norms, and material consumption rates for solid waste management works issued or announced by competent state agencies. In cases where there are no material consumption rates issued or announced by competent state agencies, the entity preparing the pricing plan shall organize the determination of reasonable material consumption rates as the basis for determining material costs when preparing the pricing plan for solid waste management services.

Material prices are those delivered to the solid waste processing facility, consistent with market prices as published or stated on invoices in accordance with the law at the time of preparing the pricing plan. Specifically:_T)

- For products subject to value-added tax under the deduction method, material prices do not include value-added tax._T)

(tonnes CO

b) Direct labor costs (C

), including: monetary expenses that solid waste processing facilities must pay to direct workers such as wages, salaries, and allowances with wage characteristics; social insurance, health insurance, unemployment insurance, trade union fees, and other expenses prescribed for direct workers handling solid waste, including:

Labor costs are determined by multiplying the number of working days according to the labor consumption rate for direct workers in solid waste management work issued or announced by competent authorities by the corresponding daily wage rate. The daily wage rate for direct workers performing solid waste management services is determined according to the regulations of competent state agencies (Ministry of Labor, Invalids and Social Affairs; Provincial People's Committees). In cases where there are no labor consumption rates issued or announced by competent state agencies, the entity preparing the pricing plan shall organize the determination of reasonable labor consumption rates as the basis for determining labor costs when preparing the pricing plan for solid waste management services.

Social insurance, health insurance, unemployment insurance, trade union fees, and other expenses for direct workers handling solid waste are governed by current laws (including amounts paid by employees and those paid by enterprises).

c) Direct machinery and equipment costs (C

), determined based on costs related to the price of machinery and equipment, management and usage systems, and depreciation of machinery and equipment as prescribed by the Ministry of Finance; methods for determining machine shift prices and equipment prices guided by the Ministry of Construction, and other relevant provisions. When determining direct machinery and equipment costs, attention should be paid to the depreciation period of machinery and equipment suitable for the working conditions of direct machinery and equipment used in solid waste management._NCd) Common production costs (C

The labor cost and wages are determined by multiplying the number of working days according to the direct manpower consumption quota for solid waste management tasks, as issued or announced by the competent authority, by the corresponding daily wage rate. The daily wage rate for workers directly performing solid waste management services is set in accordance with the regulations of the competent state agencies (Ministry of Labor, Invalids and Social Affairs; Provincial People's Committees). In cases where there is no manpower consumption quota issued or announced by the competent state agency, the unit shall develop a pricing plan to reasonably determine the manpower consumption costs as the basis for calculating labor costs when formulating the pricing plan for solid waste management services.

The social insurance, health insurance, unemployment insurance, trade union fees, and other expenses of workers directly performing solid waste management services are in accordance with current laws (including amounts that employees must pay and those paid by the enterprise).

c) Direct machine and equipment costs (C_{Briefly describe technical improvements, production processes, raw materials, designs; new technology applications such as automation, digitalization, clean technology; management, marketing, distribution solutions; products winning awards or certifications related to innovation…):…}) are determined based on costs related to the price of machines and equipment, management and usage systems, and depreciation of machines and equipment in accordance with the regulations of the Ministry of Finance; the method for determining the machine shift price is guided by the Ministry of Construction, and other relevant provisions. When determining direct machine and equipment costs, it is necessary to consider the depreciation period of machines and equipment suitable for the working conditions of machines and equipment directly involved in solid waste management.

d) Common production costs (C_SXC), including indirect production costs (excluding direct material costs; direct labor costs; direct machine and equipment costs) incurred at the solid waste treatment facility, including: maintenance and repair of direct machines and equipment; depreciation and repair of fixed assets (excluding direct machines and equipment); material, tool, and workshop equipment costs; wages and allowances with wage characteristics; social insurance, health insurance, unemployment insurance, and trade union fees for workshop staff (including both amounts paid by employees and those paid by the enterprise); environmental testing and monitoring costs; production site rental costs (if applicable); external service costs and other monetary costs included in the cost of production as prescribed by law.

Material costs and labor costs in common production costs are determined in the same manner as direct material and labor costs under Clause a, b of this Article.

Depreciation and repair costs of fixed assets in common production costs are determined in accordance with the regulations of the Ministry of Finance on management, use, and depreciation of fixed assets.

d) Business management costs (Cq), including all expenses allocated to the business management and operation system, general expenses of the entire enterprise such as: depreciation and repair costs of fixed assets serving the business management and operation system within the enterprise; wage, salary, and allowances with wage characteristics; social insurance, health insurance; unemployment insurance, and trade union fees for the business management staff (including both amounts paid by employees and those paid by the enterprise); office material and supply costs, taxes, fees, and charges, external service costs belonging to the enterprise's office; other general expenses for the entire enterprise such as: interest payments, inventory reserve write-downs, bad debt reserves, hospitality and transaction costs, scientific research and technological innovation costs; initiative, improvement, and environmental protection costs; education, training, and healthcare costs for enterprise employees, costs for female workers, and other management costs according to current regulations.

Material costs and labor costs in business management costs are determined in the same manner as direct material and labor costs under Clause a, b of this Article.

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

Business management costs are detailed according to each expense item mentioned above but not exceeding 5% of total production costs (Cp).

Article 4. Organization of Implementation

1. The responsibility for establishing, reviewing, and approving the price of solid waste treatment services shall be carried out in accordance with the provisions of Clause 2, Article 26 of Decree No. 38/2015/NĐ-CP dated April 24, 2015 of the Government on waste and waste product management.

2. People's Committees of provinces and centrally governed cities shall be responsible for:

- State management over solid waste treatment activities, approval of solid waste treatment service prices within its jurisdiction

- Sending standard rates, unit prices, and published prices to the Ministry of Construction for monitoring and management.

3. The price of solid waste treatment services determined in accordance with the guidelines of this Circular serves as the basis for signing and settling contracts for the implementation of solid waste treatment services. In cases where the price of solid waste treatment services is higher than the processing cost of solid waste announced by the Ministry of Construction, the People's Committee of provinces and centrally-administered cities must reach an agreement with the Ministry of Construction before approving it.

4. Any agreement to adjust the price of solid waste treatment services in contracts signed between the owner of the solid waste treatment facility and the managing authority according to their level of administration must comply with relevant legal provisions.

5. For existing solid waste treatment service contracts, the parties involved should consider supplementing and adjusting the contract contents to align with the provisions of this Circular.

6. The entity responsible for formulating pricing plans, and the owner of the solid waste treatment facility may hire organizations or individuals with sufficient capacity and experience to assist in formulating or auditing the pricing plan for solid waste treatment services as a basis for reviewing and approving the service price.

7. The Ministry of Construction announces the processing cost of solid waste; takes the lead, guides, and supervises the formulation of pricing plans and the implementation of regulations on the management of solid waste treatment service prices in localities.

Article 5. Effective Date

1. This Circular takes effect from July 1, 2017.

2. During the implementation period, if there are any difficulties, agencies and units are requested to report them to the Ministry of Construction for consideration and resolution./.