Decision No. 31/2014/QD-TTg On Mechanism for Supporting the Development of Power Generation Projects Using Solid Waste in Vietnam

Pursuant to …;

Regulations on the mechanism to support the development of power generation projects using solid waste in Vietnamelectricity generation using solid waste in Vietnam

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

Pursuant to the Electricity Law dated December 3, 2004; and the Law Amending and Supplementing Certain Provisions of the Electricity Law dated November 20, 2012;

The Prime Minister issues this Decision amending and supplementing certain provisions of the Regulation on Response Activities to Oil Spill Incidents issued together with Decision No. 02/2013/QĐ-TTg dated January 14, 2013 of the Prime Minister.

Based on the Investment Law dated November 29, 2005;

Pursuant to the Construction Law dated November 26, 2003; the Law Amending and Supplementing Certain Provisions of Laws Related to Basic Investment Construction dated June 19, 2009, No. 38/2009/QH12;

At the proposal of the Minister of Industry and Trade,

The Prime Minister issues this Decision on the mechanism to support the development of power generation projects using solid waste in Vietnam.

PART I
GENERAL PROVISIONS

Article 1. Scope of Regulation and Applicability

1. This Decision stipulates the mechanism to support the development of power generation projects using solid waste in Vietnam.

2. The objects subject to this Decision include organizations and individuals participating in electricity-related activities related to the development of power generation projects using solid waste in Vietnam.

Article 2. Interpretation of Terms

In this Decision, the following terms shall be understood as follows:

1. Electricity buyer means the Vietnam Electricity Corporation or its authorized units.

2. The electricity seller is an organization or individual holding a license for electricity operation in the field of power generation from solid waste power plants.

3. The project investor for power generation projects using solid waste is an organization or individual implementing investment activities for power generation projects using solid waste in accordance with Vietnamese laws.

4. Solid waste used for power generation is solid waste discharged from production, business, service, daily life, or other activities, excluding hazardous waste.

5. Power generation projects using solid waste are power plant projects generating primary energy from solid waste, burned directly or gas collected from solid waste landfills to produce electricity, supplying part or all of the generated power to the national grid.

6. Connection point means the location where the power line of the electricity seller connects to the electricity grid of the electricity buyer.

7. The point of electricity delivery and receipt is the location of the metering equipment agreed upon in the power purchase and sale contract to determine the amount of electricity sold by the electricity seller.

8. The model power purchase and sale contract for power generation projects using solid waste is the power purchase and sale contract issued by the Ministry of Industry and Trade serving as a basis for application in transactions of electricity produced from power generation projects using solid waste between the electricity seller and the electricity buyer.

Chapter II
PLANNING AND DEVELOPMENT OF SOLID WASTE POWER SOURCES SOURCES OF ELECTRICITY USING SOLID WASTE

Article 3. Planning for the Development of Solid Waste Power Sources

1. Planning for the development of solid waste power sources is a specialized electricity planning established nationwide as a basis for investment activities in developing solid waste power sources, adjusted appropriately based on research and assessment of solid waste potential in each period.

2. Planning for the development of solid waste power sources must be consistent with the national socio-economic development strategy, regional construction planning, solid waste management planning approved by competent authorities, land use planning, and other relevant plans.

3. Planning for the development of solid waste power sources is established once for the period up to 2020, with a vision to 2030, and is adjusted and supplemented when necessary. From subsequent planning periods, planning for the development of solid waste power sources is integrated into provincial power development planning, national power development planning, and adjusted and supplemented in line with current research and assessment of solid waste potential for electricity production.

Article 4. Establishment, review, approval, publication, and adjustment of the Plan for Development of Power Sources Using Solid Waste

1. The Ministry of Industry and Trade shall organize the establishment and review of the Plan for Development of Power Sources Using Solid Waste, submit it to the Prime Minister for approval; publish and guide, monitor, and inspect the implementation of the approved Plan for Development of Power Sources Using Solid Waste.

2. Publication and adjustment of the plan shall be carried out in accordance with current regulations.

Article 5. Funding for the work of establishing, reviewing, approving, and publishing the Plan for Development of Power Sources Using Solid Waste

1. The state budget shall allocate funds to carry out tasks related to the establishment, review, publication, and adjustment of the Plan for Development of Power Sources Using Solid Waste.

2. Encouragement is given to mobilize other legitimate sources of funding for the work of establishing the Plan for Development of Power Sources Using Solid Waste.

Article 6. Investment in construction of projects generating electricity using solid waste

1. Investment in constructing projects generating electricity using solid waste must comply with the Plan for Development of Power Sources Using Solid Waste and the power development plan approved by competent authorities.

2. For projects generating electricity using solid waste that are not included in the list of the Plan for Development of Power Sources Using Solid Waste and the national power development plan, the investor shall be responsible for preparing the application for supplementary planning, submitting it to the Ministry of Industry and Trade for review, and presenting it to the Prime Minister for consideration and decision.

3. While the Plan for Development of Power Sources Using Solid Waste has not been approved, investment in projects generating electricity using solid waste requires the consent of the Prime Minister.

4. Investment in constructing projects generating electricity using solid waste shall be carried out in accordance with laws on construction, fire prevention and fighting, environmental protection, and other relevant regulations.

Article 7. Connection of projects generating electricity using solid waste to the power grid, dispatching operation of solid waste power plants

1. Connecting projects generating electricity using solid waste to the national power grid must comply with the approved power development plan. The connection point shall be agreed upon between the seller and buyer of electricity based on the principle that the seller is responsible for investing in transmission lines to the nearest existing connection point in the provincial power development plan. In cases where the connection point is not included in the power development plan, the investor needs to agree on the connection point with the distribution or transmission company as the basis for supplementing the provincial power development plan according to current regulations. If agreement cannot be reached, the seller shall be responsible for submitting to the Ministry of Industry and Trade for consideration and decision.

2. The investor of the project generating electricity using solid waste shall be responsible for investing in, operating, and maintaining the transmission lines and step-up substations (if any) from the seller's power plant to the connection point agreed upon with the buyer of electricity.

3. Depending on the voltage level of the connection, the distribution or transmission company shall be responsible for investing in transmission lines from the connection point to the national power grid according to the approved power development plan and signing the connection agreement with investors of projects generating electricity using solid waste.

4. After completion of investment and acceptance for commercial operation, the system dispatcher and market operator shall be responsible for mobilizing the solid waste power generation plant according to the principle of prioritizing full utilization of capacity and electricity generation matching the fuel supply capability of solid waste in the plant area.

Article 8. Conditions for Commencing Construction of Power Generation Projects Using Solid Waste

The investor is only permitted to commence construction of power generation projects using solid waste, in addition to the conditions stipulated in Article 72 of the Construction Law and related regulatory documents, if they have: Investment Certificate, approval document for electricity purchase from the Purchaser; agreement on grid connection with the Distribution Unit or Transmission Unit; design opinion from the competent state agency according to the law on investment project management.

Article 9. Termination of Project Implementation

Within twelve months from the date of issuance of the Investment Certificate, if the investor does not commence construction of the main components of the project or within twenty-four months from the date of operation commitment stated in the Investment Certificate, if the power generation project using solid waste has not been put into operation, the provincial People's Committee shall be responsible for considering the revocation of the Investment Certificate in accordance with regulations, and report to the competent state agency to transfer the project to another investor for implementation, except in cases where there are valid reasons and the authority accepts the temporary suspension or extension of the project implementation schedule.

Article 10. Reporting System for Project Implementation

1. Within five working days from the date of issuance of the Investment Certificate, the investor is responsible for sending a certified copy of the Investment Certificate to the Ministry of Industry and Trade for monitoring and management.

2. During the construction period of the power generation project using solid waste, before the 15th day of the first month of each quarter, the investor must submit a report on the progress of implementing the project in the previous quarter, and the plan for the next quarter. Annually, before January 15, the investor must submit a report on the progress of implementing the project in the previous year, and the plan for the next year to the provincial People's Committee, the Ministry of Industry and Trade for management, consolidation, and tracking of implementation, and to the Purchaser for coordination.

Chapter III
SUPPORT MECHANISMS FOR PROJECT DEVELOPMENT POWER GENERATION USING SOLID WASTE

Article 11. Obligation to Purchase Electricity from Power Generation Projects Using Solid Waste

1. The Purchaser is responsible for purchasing all electricity produced from power plants using solid waste within their jurisdiction.

2. The purchase and sale of electricity shall be carried out through a power purchase agreement established according to the model power purchase agreement applicable to power generation projects using solid waste issued by the Ministry of Industry and Trade.

3. Within six months from the date the investor of the solid waste power project submits a request to sell electricity, the Purchaser must enter into a power purchase agreement with the Seller in accordance with the regulations.

4. The term of the power purchase agreement for solid waste power generation projects is twenty years from the date of commercial operation. After twenty years, both parties may extend the contract term or sign a new contract in accordance with current laws.

Article 12. Investment Capital Incentives and Tax Exemptions

1. Mobilization of Investment Capital

a) Investors are allowed to mobilize capital from organizations and individuals both domestically and internationally to implement investment in power generation projects using solid waste in accordance with current laws.

b) Power generation projects using solid waste are entitled to preferential credit for investment and export credit according to current laws on investment credit and export credit by the State.

2. Import Tax: Power generation projects using solid waste are exempted from import tax on goods imported to form fixed assets for the project; goods imported as raw materials, materials, semi-finished products that are not yet produced domestically for the project's production purposes according to current laws on export tax and import tax.

3. Corporate Income Tax: The exemption and reduction of corporate income tax for power generation projects using solid waste are implemented in the same manner as for investment projects in priority sectors according to current laws on taxation.

Article 13. Land Preferential Treatment

1. Projects for power generation using solid waste and transmission lines and substations to connect with the national grid shall be exempted or granted reductions on land use fees and land lease fees according to the current laws applicable to investment projects in preferential sectors.

2. Based on the approved planning scheme, the People's Committee of the province shall be responsible for allocating sufficient land funds for investors to implement power generation projects using solid waste. Compensation and support for land clearance shall be carried out in accordance with the current laws on land.

Article 14. Electricity Price Support for Power Generation Projects Using Solid Waste

1. The electricity purchaser shall be responsible for purchasing the entire electricity output from power generation projects using solid waste at the following purchase prices at the point of delivery (excluding VAT):

- For direct incineration power generation projects using solid waste, the price is 2,114 VND/kWh (equivalent to 10.05 US cents/kWh).

- For power generation projects using gas recovered from solid waste landfill sites, the price is 1,532 VND/kWh (equivalent to 7.28 US cents/kWh).

2. Power generation projects using solid waste applying the electricity selling price as stipulated in Clause 1 of this Article shall not be eligible for the existing electricity price support mechanisms for project output; the electricity purchase price shall be adjusted based on fluctuations in the exchange rate of VND/USD.

3. The cost of purchasing electricity for power generation projects using solid waste shall be calculated and fully included in the input parameters in the annual electricity selling price plan of Vietnam Electricity Corporation approved by the competent authority.

4. The Ministry of Industry and Trade shall monitor and propose adjustments to the electricity purchase price as stipulated in Clause 1 of this Article, report to the Prime Minister for consideration and decision.

Chapter IV
IMPLEMENTATION

Article 15. Responsibilities of Ministries, Sectors, and Localities for Developing Power Generation Projects Using Solid Waste

1. The Ministry of Industry and Trade shall be responsible for:

a) Guide the content, procedures, and formalities for establishing, reviewing, approving, adjusting, and announcing the Planning Scheme for Developing Power Sources Using Solid Waste.

b) Organize, guide, and coordinate with the People's Committee of the province to inspect and supervise the implementation of this Decision.

c) Issue model Power Purchase Agreements for power generation projects using solid waste.

d) Develop and issue or submit to the competent authority for issuance national technical standards on power generation technology using solid waste.

2. The People's Committee of the province shall be responsible for

a) Coordinating and supporting investors in compensation, land clearance, infrastructure, human resources for investment, implementation, and development of power generation projects using solid waste within their jurisdiction.

b) Chairing and coordinating with relevant agencies to establish unit prices for waste collection, transportation, and treatment services generated within the province to be paid to investors of power generation projects using solid waste.

c) Implementing state management functions at the local level for power generation projects using solid waste in accordance with current laws.

Article 16. Effective Date

1. This Decision shall take effect from June 20, 2014.

2. Ministers, Heads of Ministries equivalent to Ministries, Heads of government agencies, Chairmen of provincial People's Committees, and Heads of agencies, units, and organizations related to the development of power generation projects using solid waste in Vietnam shall be responsible for implementing this Decision./.