Decision No. 1855/QD-TTg Approves the National Energy Development Strategy to 2020, with Vision to 2050

Pursuant to …;

Approving the National Energy Development Strategy of Vietnam until 2020, with a vision to 2050

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PRIME MINISTER

Pursuant to the Law on Organization of the Government dated December 25, 2001;

Pursuant to Resolution No. 18-NQ/TW dated October 25, 2007 of the Politburo on the orientation of the National Energy Development Strategy of Vietnam until 2020, with a vision to 2050;

Considering the proposal of the Ministry of Industry and Trade (document No. 4167/BCT-NLDK dated December 19, 2007),

DECISION:

Article 1. Approves the National Energy Development Strategy of Vietnam until 2020, with a vision to 2050, with the following main contents:

1. Development Orientation

a) Energy development must be closely linked to the national economic and social development strategy, ensuring a high-speed, sustainable, synchronized advance, and prioritizing the diversification of energy sources and energy-saving technologies as the core tasks throughout the period of industrialization and modernization of the country.

b) National energy development should align with international integration trends, effectively utilizing domestic resources while reasonably exploiting and using foreign resources, establishing national energy security under open conditions, efficiently linking within the region and globally, and maintaining national security and developing an independent and self-reliant economy.

c) Gradually forming an energy market, diversifying ownership and business models, aiming to best satisfy consumer interests. Rapidly eliminating subsidies, monopolies, and completely phasing out social policy implementation through energy prices.

d) Developing a synchronized and rational energy system: electricity, oil and gas, coal, new and renewable energy, with particular attention to clean energy development, prioritizing new and renewable energy. Reasonably distributing the energy system by region and territory; balancing from exploration, exploitation, processing stages; developing a synchronized service and recycling system.

đ) Applying achievements of knowledge-based economics to enhance business efficiency in the energy sector. Emphasizing investment in energy conservation, reducing loss rates.

e) Integrating energy development closely with environmental protection to ensure sustainable energy development.

2. Development Goals

a) General Objective To contribute to achieving the goals set forth in the national economic and social development strategy of the Party, the general objective of the National Energy Development Strategy until 2020, with a vision to 2050 is: ensuring national energy security, contributing to maintaining national security and defense, and developing an independent and self-reliant economy; providing sufficient high-quality energy for economic and social development; rationally and effectively utilizing domestic energy resources; diversifying investment and business methods in the energy sector, forming and developing a competitive energy market; promoting the development of new and renewable energy, bioenergy, nuclear power to meet economic and social development needs, especially in remote, border, and island areas; developing the energy industry rapidly, efficiently, and sustainably while protecting the environment.

b) Specific Objectives

- Striving to ensure adequate energy supply for economic and social development needs: primary energy consumption in 2010 is approximately 47.5 to 49.5 million TOE (million tons of oil equivalent), reaching about 100 to 110 million TOE by 2020, about 110 to 120 million TOE by 2025, and about 310 to 320 million TOE by 2050.

- Improving the accuracy in assessing reserves of primary energy sources (coal, oil and gas, hydropower, and uranium). Expanding cooperation with countries in the region and worldwide in searching, exploring, and exploiting coal, oil and gas, and other forms of energy abroad to supplement domestic shortages.

- Developing power sources and grids to ensure sufficient electricity supply for economic and social development, with a reliability rate of power supply of 99.7% by 2010; grid meeting the n-1 standard.

- Developing oil refineries, gradually meeting domestic demand for oil products, increasing the total crude oil refining capacity to about 25 to 30 million tons by 2020.

- Ensuring the strategic petroleum reserve level reaches 45 days of average consumption by 2010, 60 days by 2020, and 90 days by 2025.

- Striving to increase the proportion of new and renewable energy sources to about 3% of total commercial primary energy by 2010; about 5% by 2020, and about 11% by 2050.

- Completing the rural and mountainous area energy program. Increasing the percentage of rural households using commercial energy for cooking to 50% by 2010 and 80% by 2020. Achieving 95% electrification of rural households by 2010 and almost full electrification by 2020.

- Establishing long-term environmental targets and standards aligned with regional and global standards, suitable for the country's economic conditions. Controlling and mitigating environmental pollution in energy activities; by 2015, all energy projects must meet environmental standards.

- Vigorously transitioning the electricity, coal, and oil and gas industries to operate under a competitive market mechanism regulated by the State. Forming a retail electricity competitive market after 2022; forming a coal and oil and gas trading market from now until 2015.

- Actively preparing necessary and synchronized conditions to put the first nuclear power unit into operation in 2020, then rapidly increasing the share of nuclear power in the national energy structure. By 2050, nuclear energy will account for about 15 to 20% of total national commercial energy consumption.

- Strengthening international cooperation in the energy sector. Striving to implement regional power grid interconnection (up to 500 kV) from 2010 to 2015, and regional natural gas system interconnection from 2015 to 2020.

3. Development Orientation

a) Orientation for the Electricity Sector

- Ensure adequate power supply for national economic and social development. Prioritize the reasonable construction of hydroelectric power plants, while developing thermal power plants using coal and natural gas. Encourage the development of power sources using new and renewable energy.

- Orient the power industry towards diversification of ownership. The Vietnam Electricity Group (EVN) is responsible for the development of power sources and the transmission system of the country. Publicly announce a list of investment projects to encourage domestic and foreign economic sectors to participate in power generation and distribution.

- Diversify forms of investment in power source and distribution network development.

- Continue to pilot and gradually expand the shareholding reform of power plants and electricity distribution units.

- Separate public service activities from business production activities. Provide subsidies for electricity activities in remote areas.

- Expand international cooperation and integration.

- Gradually form and develop the electricity market in Vietnam.

- Study and develop nuclear power plants. Ensure sustainable development and minimize negative impacts on the environment.

b) Orientation for the development of the coal industry

- Strengthen exploration and assessment of coal reserves below -300m, and search for deeper reserves from -400 to -1100 meters in the Quang Ninh coalfield.

- Encourage localities with coal deposits to invest in exploration to exploit coal for local needs.

- Utilize various sources of capital to explore and assess coal reserves and study the feasibility of exploiting the Red River Delta coalfield.

- Develop the coal industry steadily and sustainably, meeting the national economy's coal demand; ensure a stable domestic coal consumption market, allocate a reasonable portion for export.

- Coal industry development must be closely linked to economic and social development, tourism, national defense, security, and ecological environmental protection.

- Encourage all economic sectors to participate in coal exploitation, processing, and distribution. Establish a roadmap for the shareholding reform of coal production companies, aiming to form a coal market.

c) Orientation for the development of the oil and gas industry

- Clearly define the functions of state management and business production management within oil and gas management agencies and production and business enterprises. Concentrate state management functions related to oil and gas under one authority.

- Establish a legal framework for oil and gas industry activities, particularly focusing on midstream and downstream operations, including important tasks such as managing economics and technology in the natural gas sector like transportation and distribution permits, price approval, transportation and distribution fees, technical standards...

- Encourage and accelerate oil and gas exploration work; establish a clear and effective organizational system to monitor contracts and award exploration blocks; periodically review and adjust financial terms to make oil and gas exploration and development in Vietnam competitive with other countries.

- Prioritize the development, exploitation, and utilization of natural gas. Encourage and provide incentives for investors exploring and exploiting gas fields, especially those with limited reserves. Diversify investment forms, promote joint ventures to build gas-fired power plants to sell electricity to the national grid.

- Implement policies to encourage foreign investors to use advanced technology to exploit oil and gas fields with limited reserves.

- Policies in the field of oil and gas processing:

+ Encourage foreign investors to participate in joint ventures to build oil refineries and petrochemical plants, allowing them to enter the product distribution market with a certain market share.

+ Attract oil and gas product trading companies to participate in joint ventures to develop oil refineries to link production with consumption, balancing profits between production and trade.

- The State encourages and protects Vietnamese enterprises' activities in searching for, exploring, and exploiting oil and gas abroad.

d) Orientation for the development of new and renewable energy

- Regarding investigation and planning: new and renewable energy types have not been fully evaluated, therefore, appropriate plans and investments should be made to supplement data, leading to zoning and planning these energy types for rational investment and exploitation. Establish specialized organizations belonging to different economic sectors to conduct investigations, plan, and implement. Carry out propaganda, organize research, trial production, and widespread implementation across the territory.

- Strengthen propaganda on the use of new and renewable energy sources to supply remote, border, and island areas. Establish management mechanisms to maintain and develop power sources in these areas.

- Integrate the use of new and renewable energy into energy-saving programs and other national target programs such as rural electrification, afforestation, poverty reduction, clean water, and integrated agriculture-aquaculture-fishery (VAC).

- Encourage businesses to build suitable facilities to produce, assemble, and repair new energy equipment such as solar water heaters, small hydropower plants, wind motors, biogas pits... in places with suitable conditions. Cooperate with developed countries to purchase high-tech equipment such as solar panels, wind power... gradually adapt and aim at domestic assembly and manufacturing.

- Support investment in programs for investigating, researching, trial manufacturing, and building typical sites for new and renewable energy use; provide tax incentives for importing new equipment and technology, production, and circulation of equipment; protect copyright for valuable technological inventions and improvements.

- Allow individuals and economic organizations both domestically and internationally to cooperate in investing in the exploitation of new and renewable energy sources based on mutual benefit.

4. Policies

a) National energy security policy

Prioritize implementing policies to ensure national energy security in the direction of developing a comprehensive range of energy sources; exploiting and using domestic energy resources efficiently; reducing dependence on imported oil products; reasonably importing and exporting coal (temporarily reducing annual coal exports); linking the energy system within the region; expanding fuel reserves; combining energy security with ensuring national defense and security.

b) Energy pricing policy

The energy pricing policy is considered one of the breakthrough policies; quickly eliminating monopolies and subsidies in both production and consumption of energy. Energy prices need to be determined in accordance with market mechanisms; the State regulates energy prices through tax policies and other management tools.

c) Investment policy for the development of new and renewable energy sources, bioenergy, and nuclear power.

Prioritize the development of new energy, renewable energy, bioenergy, and nuclear power. Encourage foreign investment to seek energy sources; have policies ensuring equality among economic sectors participating in energy development.

d) Energy conservation and efficiency policy

The policy encouraging the efficient and economical use of energy needs to specify specific requirements for energy conservation in energy-intensive industries; encourage the application of new energy-saving equipment and technology.

đ) Environmental protection policy

The environmental protection policy aims to ensure that energy exploitation and utilization are managed properly; applying advanced and reasonable environmental standards.

5. Implementation measures

a) Investment development solutions

- Improving the organization and management of Groups: Vietnam Electricity, Vietnam Coal and Mineral Industries, Vietnam Oil and Gas Group towards industrial-commercial-financial conglomerates operating in multiple industries domestically and internationally, playing a leading role in energy investment and development.

- Considering expanding primary energy exploration and exploitation in distant islands and overlapping sea areas between Vietnam and some countries in the region.

- Further intensifying international cooperation in the energy sector; prioritizing cooperation with neighboring countries (Laos, Cambodia, China); effectively utilizing energy resources from abroad.

- Publicizing the list of investment projects; encouraging domestic and foreign economic sectors to participate in energy investment.

b) Financial mechanism solutions

- Increasing state budget investment in rural, mountainous, and island energy projects to contribute to economic development and poverty reduction in these areas; considering establishing an energy development fund to support investment in new and renewable energy, and implement public welfare projects.

- Prioritizing preferential credit allocation from the support fund, ODA funds, and other bilateral loans from foreign countries for energy projects such as: searching for and exploring new renewable energy, bioenergy,...

c) Human resource development solutions

- Concentrating on training and improving the professional expertise of management, technical, and skilled staff; supplementing and anticipating training for underdeveloped and weak sectors, especially new and renewable energy, bioenergy, refining and petrochemicals, nuclear power.

- Promoting scientific research and the application of new technology, particularly in the field of oil and gas exploration and mining; reorganizing scientific research and training institutions towards concentration and specialization; developing a comprehensive scientific and technological potential, applying and improving foreign technology, moving towards innovation in the energy sector of Vietnam.

- Intensifying the implementation of energy conservation solutions; strengthening coordination between the government and the United Front and mass organizations in mobilizing the masses to thoroughly conserve and use energy resources efficiently and protect the environment.

d) Organizational mechanism solutions

- Implementing restructuring in the energy sector to gradually form a competitive and healthy energy market based on political and social stability.

- Issuing new regulations alongside amending, supplementing, and perfecting existing legal documents to enable energy enterprises to operate under market mechanisms; eliminating business monopolies.

Article 2. Tasks of Ministries, Sectors, and Related Units

1. Ministry of Industry and Trade:

- Responsible for managing and directing the implementation of the National Energy Development Strategy of Vietnam until 2020, with a vision to 2050.

- Directing the development of planning for the energy industry and its sub-sectors: electricity, coal, oil and gas according to each economic and social development cycle.

- Directing the assessment and updating of energy demand to develop appropriate capacity programs, meeting the country's energy needs. In case of significant fluctuations in energy demand and supply capacity, timely adjustments should be proposed.

- Studying and proposing mechanisms and policies to implement the National Energy Development Strategy of Vietnam until 2020, with a vision to 2050, in accordance with the Government's authority.

2. The Ministry of Natural Resources and Environment:

Directing the coordination with relevant ministries and sectors to organize surveys, exploration, and evaluation of energy resource reserves.

3. Ministry of Finance, Ministry of Planning and Investment, State Bank of Vietnam:

Cooperating, continuing to study, improve, and issue effective capital mobilization and utilization mechanisms for energy industry development.

4. The Ministry of Science and Technology:

Coordinating with the Ministry of Industry and Trade to direct the implementation of programs to promote scientific and technological activities in the energy sector towards encouraging the adoption and application of advanced and energy-saving technologies globally.

5. Ministry of Education and Training:

Chair and coordinate with the Ministry of Industry and Trade, the Ministry of Labor, Invalids and Social Affairs to direct the establishment of training programs and organize the training of technical staff, management cadres, skilled workers, especially for the nuclear power field, to meet the human resource needs for the development of the energy sector.

6. Ministries, sectors, localities, enterprises, organizations, and individuals related to their functions and tasks shall organize and implement well the contents stipulated in the Strategy.

Article 3. This Decision takes effect fifteen days after its publication in the Official Gazette.

Article 4. Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of provincial People's Committees under central cities, and relevant units and individuals are responsible for implementing this Decision./.