Joint Circular No. 160/2007/TTLT/BTC-BQP-BCT guiding the transfer, receipt, and repayment of investment capital for military power grids from military units to the Vietnam Electricity Corporation for management

JOINT CIRCULAR

Guidelines for transferring, receiving, and returning investment capital for military power grid to be managed by the electricity sector

from military units to the electricity sector

To implement the Prime Minister's directive at document number 373/TTg-CN dated March 27, 2007 regarding the transfer of military power grids under the Ministry of Defense to Vietnam Electricity Corporation (EVN), the Ministries of Finance, National Defense, and Industry and Trade provide guidelines for the transfer, receipt, and return of investment capital for military power grids to be managed by the electricity sector as follows:

I. SCOPE, PRINCIPLES, AND RESPONSIBILITIES FOR TRANSFERRING AND RECEIVING MILITARY POWER GRID ASSETS

1. Scope of Transfer and Receipt

The military power grid to be transferred to the electricity sector for management includes medium and high voltage power grids with voltages from 6 to 35 KV and substations from 6 to 35/0.4 KV supplying electricity to military camps, warehouses, shooting ranges, military bases, etc., serving living, training, combat readiness, national defense production, economic needs, currently managed by military units, will be transferred to EVN for management.

2. Principles of Transfer and Receipt

2.1. The Ministry of National Defense transfers the entire property in its current state, including the medium and high voltage power grid system and substations managed by military units, to the electricity sector for management and operation.

2.2. For land for power lines and substations that are not defense lands:

a) In cases where the area of land for power lines and substations does not have defense works, safety zones, and protected areas of defense works, military units are responsible for transferring the land area to the electricity sector for management;

b) In cases where the area of land for power lines and substations has defense works, safety zones, and protected areas of defense works, military units do not transfer the land area with defense works, safety zones, and protected areas of defense works.

2.3. In cases where power lines and substations are located within military camps on defense land, only the power lines and substations are transferred, not the land. If it is possible to move the power lines and substations close to the fence, both parties will negotiate separately after the electricity sector has taken over. In this case, when transferring, there must be an agreement between the transferring party and the receiving party regarding the safety regulations for the power grid corridor as stipulated in Decree No. 106/2005/NĐ-CP dated August 17, 2005 of the Government detailing and guiding the implementation of certain provisions of the Electricity Law on protecting high-voltage power grid facilities. The transferring party creates favorable conditions for electricity sector staff to manage, inspect, maintain, and repair according to plans.

3. Responsibilities of the Transferring Party and the Receiving Party

3.1. TransferorThe transferring party is the military units directly managing the power grid authorized by the Ministry of National Defense.

The transferring party is responsible for preparing complete files and certificates as prescribed in Clause 1, Section II of this Circular, jointly with the receiving party to inventory and determine the actual remaining value of the transferred power grid assets; determine the structure of investment capital for the transferred power grid; carry out the transfer of the power grid and related files, creating favorable conditions for the receiving party to take over, manage, and operate.

After the transfer, accounting entries reducing assets and capital according to the book records for the transferred assets shall be made.

3.2. TransfereeThe receiving party is the Electricity Companies and Provincial Electricity Companies authorized by EVN.

The receiving party is responsible for jointly with the transferring party to inventory and determine the actual remaining value of the transferred power grid assets; determine the structure of investment capital for the transferred power grid; carry out the receipt and management of the power grid and related files.

After receipt, accounting entries increasing assets and capital shall be made, organizing management, operation, and renovation of the power grid in accordance with State regulations. The return of capital shall be carried out in accordance with Section III of this Circular after the decision of the Ministry of Finance.

3.3. Both the transferring and receiving parties must prepare an inventory record confirming the actual remaining value and determining the structure of investment capital for the transferred power grid. This record must be confirmed by the head of the unit under the Ministry of National Defense and Vietnam Electricity Corporation.

II. FILES FOR TRANSFER AND RECEIPT AND DETERMINATION OF THE VALUE OF POWER GRID ASSETS IN TRANSFER AND RECEIPT

1. Files for Transfer and Receipt

The files for transferring the military power grid include original files as prescribed or substitute files for original files and files prepared at the time of transfer and receipt, specifically as follows:

1.1. Original files as prescribed include:

a) Investment decisions, technical design, and approved estimates, acceptance records;

b) Agreements on routes, land transfer documents;

c) Accounting records related to determining the original cost and remaining value of power grid assets, investment capital structure, approved settlement reports;

d) Loan contracts with banks and other economic organizations (including loans from construction units); other payment proof documents of the unit; reconciliation statements of debts with confirmation from the bank or lender; settlement documents (related to the transferred power grid) with confirmation of paid amounts and outstanding balances at the time of transfer (if any).

These files must absolutely not be recreated, altered, or erased.

1.2. Substitute files for original files in cases where original files are incomplete:

The transferring party cooperates with the receiving party to perform the following tasks:

a) Prepare an evaluation record of the current condition and determine the actual remaining value of power grid assets as prescribed in Clause 2, Section II of this Circular;

b) Prepare files on the right-of-way for power lines and substation site plans with confirmation from the People's Committee of the province or centrally governed city (hereinafter referred to as the provincial-level People's Committee).

c) For power grid projects and substations located outside military camps, at the time of handover, if they have not yet been granted land for construction by the competent authority, both parties shall establish a document on the current status of the power line right-of-way and substation site according to the provisions of Decree No. 106/2005/NĐ-CP dated August 17, 2005 of the Government. The file must be submitted by the transferring party to the provincial People's Committee for confirmation as a legal basis for future land allocation. After receiving it, the receiving party is responsible for managing the power line right-of-way and substation site, and preparing the necessary documents to request the competent authority to issue a decision on land allocation and transfer.

d) Documents determining the structure of capital sources already invested in the power grid as stipulated in Clause 3, Section II of this Circular.

1.3 Documents are established at the time of handover:

 a) A map of the current layout of the power grid;

 b) A map of the actual connection diagram (single line) of the power grid;

 c) An inventory record and determination of the remaining actual value of the power grid being handed over according to the model prescribed in this Circular (Annex 1);

d) A handover record of the military power grid according to the model prescribed in this Circular (Annex 2).

2. Method for Determining the Remaining Value of Assets Handled Over

Based on the quantity of fixed assets (Tangible Fixed Assets - TSCĐ) being handed over, the remaining actual value of the power grid assets being handed over is determined as follows:

2.1 In the case of medium voltage power lines and substations: the remaining value based on the book value that has not yet been fully depreciated is calculated as follows:

Where:

- The actual quantity of TSCĐ is determined based on the actual inventory data of the power grid being handed over.

- The unit price of each TSCĐ of the military power grid is calculated according to the actual unit price of the same type of asset at the time of handover as specified in Decision No. 84/1999/QĐ-BCN dated December 16, 1999 of the Minister of Industry (now the Ministry of Industry and Trade) promulgating the Construction Cost Index for Rural Medium Voltage Power Grids. New assets constructed or purchased from 2003 onwards are valued based on the final settlement value or the actual cost incurred for construction or purchase of the asset.

- The remaining quality percentage of each TSCĐ (%) is determined by both the handing-over and receiving parties based on the depreciation rate consistent with the provisions of Decision No. 206/2003/QĐ-BTC dated December 12, 2003 of the Minister of Finance regarding the management, use, and depreciation of tangible fixed assets.

2.2 In the case where medium voltage power lines and substations have been fully depreciated, the remaining quality is determined by both parties based on the actual percentage, but the minimum remaining value ratio shall not be less than 10%.

3. Determination of the Structure of Capital Sources for Construction Projects

Based on the power grid documents (investment decisions, technical designs, approved total budgets, acceptance certificates, approved final accounts, etc.) and accounting records to determine the total investment capital and classify each source of capital as a basis for handling capital and assets when handing over as follows:

3.1 Capital originating from the State budget, defense budget, and untraceable sources.

3.2 Borrowed capital and other payable amounts of military units.

For joint investment projects where the military power grid is only a component of the project, it is necessary to clearly determine the portion of the military power grid investment within the entire project before determining the investment capital by source.

4. Approval of the Remaining Value of the Military Power Grid

After conducting an inventory and determining the actual remaining value of the military power grid being handed over in accordance with state regulations and the guidance provided in this Circular, the military units and electricity companies shall submit the complete handover documents to the Ministry of Defense and Vietnam Electricity Corporation for review and confirmation. The Ministry of Defense will coordinate with Vietnam Electricity Corporation to compile all handover documents and submit them to the Ministry of Finance for decisions on increasing, decreasing, or refunding capital for the military power grid that has been handed over.

5. Costs for Activities Related to Handing Over Power Grid Assets

For costs related to activities associated with the handover process (travel expenses, accommodation, working expenses, etc.), the agencies sending personnel to participate in these activities are responsible for settling them according to the prescribed regulations. The receiving party is responsible for paying printing costs, meeting costs, etc.

III. REFUND OF CAPITAL AND SOURCES OF REFUNDED CAPITAL IN HANDING OVER MILITARY POWER GRIDS

1. Principles for Handling Assets and Refunding Capital

Part I ||| The value of military power grid projects to be transferred shall be determined by mutual agreement between the transferring and receiving parties as follows:

1.1. In cases where the power grid being transferred has been invested with funds from state budget sources, defense budget funds, and untraceable origin funds when transferring,: the receiving party shall increase its assets and state budget capital according to the actual remaining value, while the transferring party shall decrease its assets and capital according to the book value. Upon receipt of the formal approval decision of the Ministry of Finance, both parties shall adjust their accounting records (if there is any discrepancy). the receiving party shall increase assets and capital from state budget sources at the remaining actual value, while the transferring party shall decrease assets and capital at the book value. Upon receipt of the formal approval decision of the Ministry of Finance, both parties shall adjust their accounting records (if there is any discrepancy).

1.2 In cases where the power grid being transferred has been invested with borrowed funds or other payable amounts from military units investing in the power grid,: if there are sufficient documents as stipulated at Point d, Clause 1.1, Section II and has been evaluated and approved according to the provisions at Clause 4, Section II of this Circular, the receiving party shall repay the transferring party the outstanding loan amount to the bank or other entities (the maximum amount not exceeding the remaining asset value after revaluation), and simultaneously record an increase in business capital from the state budget for the difference between the actual received asset value (after revaluation) and the repayment amount to the transferring party (if any).

2. Source of Repayment Capital

The receiving party shall use the basic depreciation fund extracted from the military power grid assets to repay the transferring party. In cases where the aforementioned basic depreciation fund is insufficient to repay the loan of the transferred power grid, electricity units may extract an increased depreciation rate compared to the prescribed regulations for the transferred assets to ensure sufficient funds for debt repayment within two years. Each year, electricity units shall register the increased depreciation with the local tax authority to implement it.

3. Method of Repayment

The receiving party shall directly repay the transferring party, specifically, Electricity Companies, Provincial and City Electricity Units under EVN shall directly repay capital to the military units directly transferring the power grid.

IV. ORGANIZATION OF TRANSFER AND MANAGEMENT OF MILITARY POWER GRID CAPITAL REPAYMENT

1. Transfer and Management Operation of Power Grid and Capital Repayment

The transfer and management operation of power grid and capital repayment include two stages:

1.1. Transfer and Management Operation Stage: After preparing all relevant documents and completing the remaining value determination documentation, the transferring and receiving parties shall agree on the time to organize the handover meeting. The handover meeting participants include:

a) Representatives of the transferring and receiving parties;

b) Members of related agencies of both sides;

c) Representatives of the witnessing agencies of both sides (Military side is the General Logistics Department, Electricity side is EVN);

d) In cases where the power grid handover involves land for constructing the power system, representatives of local authorities and land administration agencies shall also be present.

After completing the handover, the receiving party becomes the owner managing the power system that has been received.

1.2. Capital Repayment Stage: the receiving party shall repay capital to the transferring party after receiving the decision of the Ministry of Finance.

2. Procedure for Handover and Capital Repayment

2.1. Electricity Companies, Provincial and City Electricity Units, and military units with power grids to be transferred shall unify plans and organize the implementation of the handover; report the results of the handover to the Ministry of National Defense and EVN.

2.2. After all units have completed the handover of military power grids according to the specified deadline, the Ministry of National Defense shall lead and coordinate with EVN to review and compile all handover documents, submit them to the Ministry of Finance for decisions on increasing or decreasing capital for the receiving and transferring parties, and approve the repayment of capital for the transferred military power grids.

V. IMPLEMENTATION

1. The Ministry of National Defense shall instruct military units; Vietnam Electricity Corporation shall instruct Electricity Companies, Provincial and City Electricity Units to organize the handover and management of military power grids during the period from 2007 to December 31, 2008 (for power grid projects invested before August 1, 2007).

2. For military power grid projects invested from August 1, 2007 onwards, the Ministry of National Defense shall instruct subordinate units to inform and unify investment construction plans with electricity units in the area to implement the handover and management of projects after completion of investment.

3. This Circular shall take effect fifteen days after its publication in the Official Gazette. During implementation, if any issues arise, the transferring and receiving parties shall report to the Ministry of Finance, the Ministry of National Defense, and the Ministry of Industry and Trade for timely coordination and resolution.