Circular No. 41/2010/TT-BCT stipulates the method for determining power generation prices; the procedures and formalities for establishing, promulgating the annual power generation price framework, and approving power purchase contracts.

CIRCULAR

Specifies the method for determining the power generation price; the sequence and procedures for establishing,

issuing the power generation price framework and approving power purchase and sale contracts

____________________________

Pursuant to Decree No. 189/2007/ND-CP dated December 27, 2007, issued by the Government, detailing the functions, tasks, powers, and organizational structure of the Ministry of Industry and Trade;

Pursuant to the Electricity Law dated December 3, 2004;

Pursuant to Decree No. 105/2005/NĐ-CP dated August 17, 2005 of the Government detailing and guiding the implementation of certain provisions of the Electricity Law;

Based on Decision No. 26/2006/QĐ-TTg dated January 26, 2006 of the Prime Minister approving the roadmap, conditions for forming and developing electricity market levels in Vietnam;

Considering the proposal of the Director of the Electricity Regulatory Authority,

The Ministry of Industry and Trade specifies the method for determining the power generation price; the sequence and procedures for establishing and issuing the annual power generation price framework for new power plants and approving power purchase and sale contracts as follows:

PART I

GENERAL PROVISIONS

Article 1. Scope of regulation and applicable subjects

1. This Circular stipulates on:

a) Method for determining the power generation price;

b) Sequence and procedures for establishing and issuing the annual power generation price framework for new power plants;

c) Model power purchase and sale contract;

d) Sequence and procedures for reviewing and approving power purchase and sale contracts.

2. This Circular applies to the following entities:

a) Power generation units owning power plants with total installed capacity exceeding 30MW connected to the national power grid, except strategic multi-purpose hydropower plants, power plants providing technical auxiliary services, independent power plants invested under the Build-Operate-Transfer (BOT) model, and power plants using renewable energy (wind, geothermal, tidal, and biomass);

b) Vietnam Electricity Corporation and related organizations and individuals.

Article 2. Interpretation of Terms

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

1. Seller is a power generation unit licensed to operate in the power generation sector.

2. Buyer is Vietnam Electricity Corporation.

3. Investor is an organization or individual holding capital, or representing the owner or borrower, and directly managing and using capital to implement investment activities for power plant projects.

4. Refined Capacity is the installed capacity converted to the metering point for settlement of power purchase and sale between the Seller and the Buyer.

5. Power Delivery is the total power delivered by the Seller to the Buyer at the metering points for settlement of power purchase and sale between the Seller and the Buyer.

6. Power Generation Unit is a unit owning one or more power plants.

7. System Operation and National Electricity Market Unit is the unit commanding and controlling the power generation, transmission, and distribution processes within the national power system, managing electricity market transactions.

8. Base Year is the year when the power purchase and sale contract is signed.

9. Standard Power Plant is a new thermal power plant with typical capacity of units as determined in the National Power Development Plan, including 300MW, 600MW, 1000MW for coal-fired thermal power plants, 3x150MW and 3x250MW for combined cycle gas turbine plants, representing a type of thermal power plant with the same power generation technology, configuration, fuel type, operating in base load mode of the power system, used for calculating the power generation price framework for that type of power plant.

10. New Power Plant is a power plant that has not been constructed, or is currently under construction but has not yet signed a power purchase and sale contract.

11. Official Operation Date of the Competitive Power Generation Market is the date when the Competitive Power Generation Market begins operations according to the decision of the competent authority.

12. Both Parties are the Seller and Buyer in the power purchase and sale contract.

13. Model Power Purchase and Sale Contract is the standard contract applicable to the power purchase and sale of each power plant specified in Appendix 2 of this Circular.

14. Refined Fuel Consumption Rate is the amount of fuel consumed to produce one kWh of power delivery (kg/kWh).

15. Refined Heat Consumption Rate is the amount of heat consumed to produce one kWh of power delivery (BTU/kWh).

16. Competitive Power Generation Market is the level 1 electricity market as stipulated in Clause 2, Article 1 of Decision No. 26/2006/QĐ-TTg dated January 26, 2006 of the Prime Minister approving the roadmap, conditions for forming and developing electricity market levels in Vietnam.

Chapter II

METHOD FOR BUILDING THE POWER GENERATION PRICE

Mục 1. METHODS FOR BUILDING THE GENERATION PRICE FRAMEWORK

Article 3. Principles for Building the Generation Price Framework

1. The generation price framework is a range of values from zero (0) to the ceiling price of each type of power plant, established and issued annually, for use in negotiating the base-year generation price in electricity purchase and sale contracts signed that year.

2. For thermal power plants: The generation price framework is constructed for the technology component of the standard power plant specified in Article 4 of the Circular (hereinafter referred to as the technology generation price framework), corresponding to the input parameters to determine the full technology ceiling price including: capacity scale, investment cost for constructing the standard power plant, financial discount rate, type and source of fuel supply.

The full technology generation price of the standard power plant at the year of applying the price framework is equal to the total fixed price with discount of the standard technology component and the variable price of the standard power plant at the pricing year, as follows:

a) The average fixed price with discount (hereinafter referred to as the average fixed price) is a component to recover the investment costs and other fixed costs annually for the technology component of the standard power plant and does not depend on the amount of generated electricity.

b) The technology variable price of the year applying the price framework is a component to recover the fuel costs and other variable costs of the standard power plant with the number of hours of maximum capacity operation annually during the economic life of the project as stipulated in Appendix 1 of this Circular.

3. For hydropower plants: The ceiling of the generation price framework is the average annual avoided cost base determined according to the Avoided Cost Tariff Table issued annually pursuant to Decision No. 18/2008/QD-BCT dated July 18, 2008 of the Minister of Industry and Trade promulgating regulations on the tariff table of avoided costs for small renewable energy power plants.

Article 4. Standard Power Plants

Standard power plants are defined as follows:

Article 5. Method for building the technology generation price framework for standard power plants

1. The technology generation price framework is a range of values from zero (0) to the full technology ceiling price of the standard power plant.

2. The full technology ceiling price of the standard power plant is determined according to the following formula:

g_CN = FC_CN + VC_CN

Where:

FC_CNFC: the average fixed technology price of the standard power plant determined according to the method prescribed in Article 6 of this Circular (VND/kWh);

VC: the technology variable price of the year applying the price framework of the standard power plant determined according to the method prescribed in Article 7 of this Circular (VND/kWh)._CNArticle 6. Method for Building the Average Fixed Technology Price of Standard Power Plants

The average fixed technology price of the standard power plant is determined according to the following formula:

1.      FC: the average fixed technology price (VND/kWh); VĐT,CN: the construction investment cost of the standard power plant (excluding VAT) converted evenly annually (VND);

Where:

FC_CNCVC: the fixed operation and maintenance cost of the standard power plant determined as a percentage of the total installation and equipment costs of the standard power plant (VND);

C_{CTQ: the total rated capacity calculated on average throughout the economic life of the standard power plant as stipulated in Section 4 of this Circular (kW);}TTHCN: the time of maximum capacity operation annually averaged over many years throughout the economic life of the standard power plant as stipulated in Section 1 of Appendix 1 of this Circular (hours).

C_FOM2. The annual even conversion of the technology investment cost of the standard power plant (CĐT,CN) is determined according to the following formula:

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_{organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular.}SĐT: the technology investment cost per unit capacity of the standard power plant (VND/kW) determined according to Clause 4 of this Article; Article 4 CTQ: the total rated capacity calculated on average throughout the economic life of the standard power plant as stipulated in Article 4 of this Circular (kW);

T_maxn: the economic life of the standard power plant as stipulated in Section 1 of Appendix 1 of this Circular;

i: the financial discount rate of the standard power plant (%) which is the weighted average cost of capital before tax (WACC) determined according to Clause 5 of this Article. 3. The annual fixed operation and maintenance cost (CVC) of the standard power plant is determined according to the following formula:_{CTQ: the total rated capacity calculated on average throughout the economic life of the standard power plant as stipulated in Section 4 of this Circular (kW);}CVC = SĐT x k x OMC

Where:

k: the proportion of installation and equipment costs in the technology investment cost of the standard power plant (%);

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_{organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular.}OMC: the fixed operation and maintenance coefficient (%) of the standard power plant as stipulated in Section 1 of Appendix 1 of this Circular.

4. The technology investment cost is the investment cost for one (01) kW of the average rated capacity of the standard power plant including items of cost within the power plant fence and costs for shared facilities in cases where there are multiple power plants belonging to different owners.

Components of the technology investment cost include:

a) Construction costs including costs for constructing buildings and structures, demolition and removal of old materials, land leveling for construction, temporary construction works, auxiliary works for construction, temporary housing at the site for living and construction management;_FOMb) Equipment costs including costs for purchasing and installing technological equipment, operator training, testing, calibration, transportation, insurance, taxes, and related fees;

C_FOM c) Project management costs including costs for organizing and implementing project management work from project initiation to completion and handover for operation; ´ "5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_{organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular.} ´ k ´ k_FOM

Where:

d) Construction consulting costs including costs for surveying, design, construction supervision, review consulting, and other construction investment consulting costs;

k_FOMđ) Other costs including working capital during the trial operation period, interest costs, and other borrowing costs during the construction period of the power plant, and other necessary costs;

e) Contingency costs including costs for unexpected work volumes and contingency for inflation factors during the construction period.

The components of the investment cost for technology include:

a) Construction costs including costs for constructing projects and project components; demolition and dismantling of old architectural materials; land leveling for construction; temporary construction works; auxiliary works to serve construction; temporary housing at the site for living and construction management;

b) Equipment costs including costs for purchasing technological equipment, training plant operation; installation, testing, calibration; transportation, insurance, taxes, and other related fees;

c) Project management costs including costs for organizing and implementing project management work from project initiation to completion and acceptance for operation;

d) Construction consulting costs including costs for survey, design, construction supervision, review consultation, and other investment construction consulting costs;

đ) Other costs including working capital during the trial operation period, interest costs, and other loan costs during the power plant construction period;

e) Contingency costs including costs for unexpected work volumes and contingency for inflation factors during the construction period of the project;

5. Financial discount rate i (%): Apply the weighted average cost of capital (WACC) before tax determined according to the following formula:

Where:

D: the ratio of debt capital in total investment as specified in Section 1 of Appendix 1 of this Circular;

E: the ratio of equity capital in total investment as specified in Section 1 of Appendix 1 of this Circular;

F_{For coal-fired thermal power plants where the enterprise holds 100% of the registered capital and uses 100% of its own capital to invest in the project approved by the competent authority, E is determined as 100%;}r: interest rate on debt capital (%) as prescribed in point a of this clause;

F_{Average loan repayment period is 10 years;}r': return on equity capital before tax as prescribed in point b of this clause.

a) Interest rate on debt capital r_{For coal-fired thermal power plants where the enterprise holds 100% of the registered capital and uses 100% of its own capital to invest in the project approved by the competent authority, E is determined as 100%;} shall be calculated as the weighted average interest rate of domestic and foreign currency debt capital according to the following formula:

F_{For coal-fired thermal power plants where the enterprise holds 100% of the registered capital and uses 100% of its own capital to invest in the project approved by the competent authority, E is determined as 100%;} Proportion of domestic currency (Vietnamese Dong) loan capital in total loan capital as specified in the Appendix attached to this Circular (%);_F ´ F_d,F + D_D ´ F_d,D

Where:

D_FDf: the average ratio of foreign currency debt capital in total debt capital is set at 80%;

D_DDv: the ratio of domestic currency debt capital in total debt capital is set at 20%;

F_d,Frf: the interest rate on foreign currency debt capital is determined by adding 2.5% to the average value of the ten-year US Dollar swap rate for the first nine months of the year when the pricing framework is established on the London Interbank Offered Rate (LIBOR) market;[1]rv: the interest rate on domestic currency debt capital is determined by adding the average annual service fee rate of banks not exceeding 3.5% to the average interest rate on domestic currency deposits with a term of 12 months payable at maturity for corporate customers of four commercial banks (Vietnam Joint Stock Commercial Bank for Foreign Trade, Vietnam Joint Stock Commercial Bank for Industry and Trade, Vietnam Joint Stock Commercial Bank for Investment and Development, Vietnam Joint Stock Commercial Bank for Agriculture and Rural Development or their legitimate successors) as of September 30 each year.

F_d,Db) Return on equity capital before tax r'

shall be determined according to the following formula:_{Average loan repayment period is 10 years;} : the return on equity capital after tax is determined by the weighted average return of various sources of equity capital. In which, the return on state-owned equity capital after tax

Where:

F_e,ptis set at 10%; the return on private equity capital is determined by adding 3% to the average yield of five-year government bonds issued in the last five years;[2] t: the average corporate income tax rate in the economic life of the standard power plant (%) as prescribed by current regulations.

Article 7. Method for determining the technology adjustment price of the standard power plant for the year of application of the pricing framework

1. The technology adjustment price of the standard power plant for the year of application of the pricing framework (VC

= HR_CNVL

VC: the technology variable price of the year applying the price framework of the standard power plant determined according to the method prescribed in Article 7 of this Circular (VND/kWh)._CN (1+f) ´ "5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_F ´ : the technology adjustment price of the standard power plant (VND/kWh);

Where:

VC: the technology variable price of the year applying the price framework of the standard power plant determined according to the method prescribed in Article 7 of this Circular (VND/kWh)._CNHR: fuel consumption rate at full load for coal-fired thermal power plants (kg/kWh) or heat consumption rate at full load for gas-fired thermal power plants (BTU/kWh);

f: the percentage of total start-up costs, fuel and material costs, and other costs for electricity generation compared to the main fuel cost as specified in Section 1 of Appendix 1 of this Circular;

P: the main fuel price for electricity generation in the year of application of the pricing framework excluding transportation fees, calculated in VND/kg for coal or VND/BTU for gas.

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_F2. The main fuel price for electricity generation (P

) in the year of application of the pricing framework shall be calculated based on the fuel prices in the electricity tariff adjustment plan for that year, including:_Fa) Domestic coal price is the price of coal type 5 with a calorific value of 5,500 kcal/kg determined at the loading point (port/wharf) of the coal supplier (VND/kg);

b) Imported coal price is determined at the coal import port (VND/kg);

c) Gas price is determined at the gas supply field (VND/BTU).

3. The Vietnam Electricity Corporation is responsible for establishing calculation parameters for the electricity generation price of standard power plants according to each type of technology and the origin of major equipment

based on the results of bidding to select investors for new power projects and actual data from power plants that have negotiated power purchase contracts, including:[3] a) Technology investment cost of standard power plants (VND/kW);

b) Fuel consumption rate at full load for standard coal-fired power plants (kg/kWh) or heat consumption rate at full load for standard gas-fired power plants (BTU/kWh).

b) Fuel consumption rate at full load for a standard coal-fired power plant (kg/kWh) or heat consumption rate at full load for a standard gas-fired power plant (BTU/kWh).

Article 8. Method for establishing the price range for power generation at hydropower plants

The ceiling of the price range for power generation at hydropower plants (G_TĐ) for the year applying the price range shall be determined according to the following formula:

Where:

ACT_bq,j: Gthe average avoidable cost of the three regions North, Central, South determined according to the avoidable cost tariff table issued annually by the Electricity Regulatory Authority in accordance with the provisions set forth in Decision No. 18/2008/QD-BCT dated July 18, 2008 of the Minister of Industry and Trade promulgating regulations on the avoidable cost tariff for small power plants using renewable energy.

organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular._{9. Travel distance is the distance traveled without using mechanical means (cars, motorcycles, motorboats) to reach locations for implementing technical forest management measures and patrolling to protect forests.}: The ratio of electricity production during peak and off-peak hours in a year (%) is defined as follows:

Section 2. METHOD FOR DETERMINING THE NEGOTIATED PRICE OF POWER PURCHASE AND SALE CONTRACTS FOR NEW POWER PLANTS

Article 9. Principles for determining the negotiated price of power purchase and sale contracts

1. The negotiated price of power purchase and sale contracts for new thermal power plants is the full price calculated in VND/kWh, consisting of two components:

a) Technology price not exceeding the technology price range for the standard power plant approved by the Ministry of Industry and Trade, including the average fixed technology price and the base year variable technology price determined according to the method prescribed in Article 10 of this Circular;

b) Specific price agreed upon by both parties during the negotiation process of the power purchase and sale contract, including the average fixed specific price and the base year variable specific price determined according to the method prescribed in Article 10 of this Circular.

2. The negotiated price of power purchase and sale contracts for new hydropower plants is the average fixed price determined according to the method prescribed in Article 11, calculated in VND/kWh corresponding to the parameters for pricing agreed upon by both parties and not exceeding the power generation price range for hydropower plants approved by the Ministry of Industry and Trade.

Article 10. Method for determining the negotiated price of power purchase and sale contracts for thermal power plants

1. The negotiated price of power purchase and sale contracts for thermal power plants (G_CPVL

g_CP = G_CN + G_DT

Where:

g_CN: the technology price of the plant determined according to the method prescribed in point a of this clause (VND/kWh);

g_DT: the specific price of the plant determined according to the method prescribed in point b of this clause (VND/kWh).

a) The technology price (G_CN) agreed upon by both parties but not exceeding the technology price range approved by the Ministry of Industry and Trade and determined according to the following formula:

g_CN = FC_CN + VC_CN,0

Where:

FC_CN: the average fixed technology price of the plant determined according to Clause 2 of this Article (VND/kWh);

VC: the technology variable price of the year applying the price framework of the standard power plant determined according to the method prescribed in Article 7 of this Circular (VND/kWh)._CN,0: the variable technology price of the plant in the base year determined according to Clause 3 of this Article (VND/kWh).

In case the average net capacity of the thermal power plant differs from the average net capacity of the standard power plant, the negotiated technology price of this power plant does not exceed the price range of the standard power plant with the same number of units and the total net capacity closest to it. For thermal power plants with a total net capacity of 200 MW or less, the power generation prices of these plants are determined for each specific case according to the method prescribed in this Chapter corresponding to the parameters for determining the power generation price range of the standard power plant specified in Appendix 1 of the Circular.

b) The specific price (G_DT) agreed upon for each specific project and determined according to the following formula:

g_DT = FC_DT + VC_DT,0

Where:

FC_DT: the average fixed specific price of the plant determined according to the method prescribed in Clause 4 of this Article (VND/kWh);

VC: the technology variable price of the year applying the price framework of the standard power plant determined according to the method prescribed in Article 7 of this Circular (VND/kWh)._DT,0: the variable specific price of the plant in the base year determined according to the method prescribed in Clause 5 of this Article (VND/kWh).

2. The average fixed technology price of the plant (FC TMĐT_CNVL

Where:

FC_CNCVC: the fixed operation and maintenance cost of the standard power plant determined as a percentage of the total installation and equipment costs of the standard power plant (VND);

: the total investment cost for the technology part of the power plant in the base year (excluding VAT) as stipulated in point a of this clause, determined based on the approved project investment cost and must comply with current state regulations on construction cost management and construction cost norms (VND);_CN: the fixed operation and maintenance cost of the power plant as stipulated in point b of this clause (VND);

C_FOM: the total net capacity of the power plant determined according to the approved basic design (kW);

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_{organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular.}: the average capacity reduction factor agreed upon by both parties throughout the economic life of the power plant (%);

k_CS: : the annual maximum capacity operating time averaged throughout the economic life of the power plant as stipulated in Section 1 of Appendix 1 of the Circular (hours);

T_maxn: the economic life of the power plant as stipulated in Section 1 of Appendix 1 of the Circular;

i: the financial discount rate determined according to Clause 5 of Article 6 of the Circular, where the interest rate on borrowed capital is calculated as the weighted average interest rate on borrowed funds from various sources of the power plant.

a) The total investment cost for the technology part of the power plant in the base year includes the following cost items:

- Construction costs including costs for constructing buildings and structures, demolition and removal of old building materials, land leveling, temporary construction works, auxiliary construction works serving construction, temporary housing at the construction site for living and construction management;

- Equipment costs including costs for purchasing and installing technological equipment (including non-standard technological equipment requiring production and processing), training costs for plant operation, installation, testing, calibration costs, transportation, insurance, taxes, and related fees;

- Project management costs including costs for organizing and implementing project management work from project initiation to completion and handover for operation;

- Construction consulting costs including costs for surveying, designing, supervising construction, reviewing consulting, and other construction investment consulting costs;

- Other costs including working capital during the trial operation period, interest payment costs, and other loan costs during the construction period of the power plant, and other necessary costs;

- Contingency costs including costs for unforeseen work volume when initiating the project and contingency costs for inflation factors during the construction period of the project.

b) The annual fixed operation and maintenance cost of the plant (C

O&M FM)_FOMshall be converted annually according to the following formula:

Where:

Economic life of the power plant as specified in the Appendix attached to this Circular (years)._FOM: the present value of total fixed operation and maintenance costs throughout the entire economic life of the power plant (in dong);

n: the economic life of the power plant as specified in Appendix 1 of this Circular;

i: the annual inflation rate for machinery, equipment, and labor costs for fixed operation and maintenance of the power plant, averaged at 2.5%;

c) The present value of total fixed operation and maintenance costs of the power plant throughout its entire economic life shall be determined according to the following formula:

Economic life of the power plant as specified in the Appendix attached to this Circular (years)._FOM = TC_MN + n ´ (C_NC ĐMT_BTK ĐMT_ảo)

Where:

Economic life of the power plant as specified in the Appendix attached to this Circular (years)._MN: the present value of total periodic major repair costs of the entire power plant throughout its entire economic life;

C_NC : total labor costs at the base year, including wages, social insurance, health insurance, trade union fees, and other allowances as stipulated by current regulations;

C_BTK : total external service costs at the base year, including costs paid to organizations and individuals outside the unit for services provided upon request such as water, telephone, books and newspapers; consulting and auditing fees; rental of assets; asset insurance; and other services under contracts for the provision of services to support management and operation of the power plant;

C_ảo: other monetary costs at the base year, including office supplies expenses; depreciation of office equipment; various taxes and fees; training; scientific research; meal allowances; civilian defense, security, typhoon and flood prevention, fire protection; labor protection; work uniforms; occupational safety and hygiene; environmental sanitation; night shift, hazardous substance, and other allowances;

n: the economic life of the power plant as specified in Appendix 1 of this Circular.

3. Variable cost technology of the power plant at the base year (VC_CN,0VL

Where:

HR_bq: the average fuel consumption rate for coal-fired thermal power plants (kg/kWh) or the average heat consumption rate for gas-fired thermal power plants (BTU/kWh);

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_F,0: the price of primary fuel for electricity generation in the applicable pricing framework excluding transportation costs, calculated in dong/kg for coal-fired thermal power plants or dong/BTU for gas-fired thermal power plants;

C_vlp: the total annual auxiliary material costs of the power plant determined based on the quantity and unit price of auxiliary materials used for electricity generation at the base year (in dong);

C_kd: the total permitted start-up costs (including cold and hot start-ups) based on the maximum number of starts in one year (in dong);

C_k: the total annual minor maintenance and repair costs (in dong);

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_{organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular.}­: the precise capacity of the power plant determined based on approved design (in kW);

k_CS: : the annual maximum capacity operating time averaged throughout the economic life of the power plant as stipulated in Section 1 of Appendix 1 of the Circular (hours);

T_max: the average annual operating time at full capacity of the power plant over many years during its entire project life (in hours) as specified in Appendix 1 of this Circular.

a) The average specific fuel consumption (HR_bq) for coal-fired thermal power plants or the average specific heat consumption for gas-fired thermal power plants is determined according to the following formula: :      the average specific fuel consumption for coal-fired thermal power plants (kg/kWh) or the average specific heat consumption for gas-fired thermal power plants (BTU/kWh)

Where:

HR_{ANNEX I.A[31]}corresponding to load level i as specified in Appendix 1 of this Circular (kJ/kWh); : the number of hours operated at load level i in a year as specified in Appendix 1 of this Circular (hours). The base year fuel price (P

T_{ANNEX I.A[31]}) is defined as follows:

b) - For domestic coal: The coal price is the price on the carrier at the loading point of the coal supplier (dong/ton);_F,0- For imported coal: The coal price is the price at the import port (dong/ton);

- For gas: The gas price is the price at the gas field (dong/BTU).

The total permitted start-up costs in a year are determined according to the following formula:

total permitted start-up

c) costs

Where:

C_kd: in a year; : the maximum number of starts of the power plant's units in a year in state k; k: start-up state (hot, cold);

t,_k: the amount of fuel consumed (kg/kWh) for coal and oil or the amount of heat consumed (BTU/kWh) for gas for one start of the unit in state k;

: the unit price of fuel for a cold start in the base year, calculated in dong/ton for coal and oil and in dong/BTU for gas;

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…):…_{ANNEX I.A[31]}m: the number of types of fuel used for a cold start of the unit;

D_{ANNEX I.A[31]}t: the number of units in the power plant.

4. Average specific fixed cost of the power plant (FC

: average specific fixed cost (in dong

/kWh : Total special costs for constructing the power plant agreed upon by both parties based on the total investment for these items in the approved project investment plan and adjusted after completion of construction to match the actual special costs incurred, including land compensation and resettlement costs as decided by competent state authorities and foundation reinforcement costs that have been audited;_DTVL

Where:

FC_DT: the precise capacity of the power plant determined based on approved design(in kW););

Economic life of the power plant as specified in the Appendix attached to this Circular (years)._DT: the average annual operating time at full capacity of the power plant over many years during its entire project life (in hours) as specified in Appendix 1 of this Circular;

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_{organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular.}5. Specific variable cost of the power plant at the base year (VC v/c,0 : the average specific fuel consumption for coal-fired thermal power plants (kg/kWh) (kJ/kWh) or the average specific heat consumption for gas-fired thermal power plants (BTU/kWh) as specified in point a, Clause 3 of this Article;

k_CS: : the annual maximum capacity operating time averaged throughout the economic life of the power plant as stipulated in Section 1 of Appendix 1 of the Circular (hours);

T_max: transportation costs for fuel for electricity generation in the base year (including all costs related to the transportation process from the fuel supply point to the power plant, including the supplier's insurance fee), calculated in dong/kg for coal or in dong/BTU for gas.

n: the economic life of the power plant as specified in Appendix 1 of this Circular;

a) The total investment cost for the technology part of the power plant in the base year includes the following cost items:

5. Specific price change factor of the power plant at the base year (VC_DT,0VL

VC: the technology variable price of the year applying the price framework of the standard power plant determined according to the method prescribed in Article 7 of this Circular (VND/kWh)._DT,0 (1+f)_bq ´ "5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_v/c,0

Where:

HR_bq: refined fuel consumption rate for coal-fired power plants (kg/kWh) (kJ/kWh) or refined heat consumption rate for gas-fired power plants (BTU/kWh) determined according to point a, Clause 3 of this Article;

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_v/c,0: transportation fee for fuel for power generation at the base year (including all costs related to the process of transporting fuel to the power plant's fuel delivery point, including insurance fees of the fuel supplier), calculated in VND/kg for coal or in VND/BTU for gas;

Article 11. Method for constructing the negotiation price of hydropower plants

1. THE PRICE the negotiation price of hydropower plants (hereinafter referred to as_TĐ) is a fixed average price determined according to the following formula: TMĐT: total investment cost for building the power plant at the base year (excluding value-added tax)

Where:

determined based on the total investment amount of the approved investment project and must comply with current state regulations on construction investment cost management and construction cost norms (in dong);OM: annualized operation and maintenance costs of the plant converted annually according to the method prescribed in Clause 3 of this Article (in dong);) : average annual electricity generation capacity at the generator end corresponding to the long-term average water inflow rate of the power plant as determined by the approved basic design (in kWh); : self-consumption ratio determined according to the approved basic design of the hydropower plant (%) but not exceeding the ceiling level specified in Section 2 of Appendix 1 of this Circular; n: economic life of the power plant as stipulated in Section 2 of Appendix 1 of this Circular (in years); i: financial discount rate determined according to the provisions of Clause 5, Article 6 of this Circular, where the interest rate on borrowed capital is calculated as the weighted average borrowing interest rate from various sources of borrowed capital of the power plant. 2. Operation and maintenance costs of the power plant converted annually (C

C_{) according to the following formula:}: total annualized operation and maintenance costs of the hydropower plant (in dong);

A_{"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:}: present value of total annualized operation and maintenance costs of hydropower (in dong);

organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular._tdn: economic life of the power plant as stipulated in Appendix 1 of this Circular (in years);

3. Present value of total fixed operation and maintenance costs of the hydropower plant throughout its economic life (TC

VLP: present value of total major repair costs according to the cycles of major repairs throughout the economic life of the plant in accordance with industry standards;

total annual spare parts costs of the plant determined based on the quantity and unit prices of various spare parts used for power generation; total labor costs at the base year including total salary costs, social insurance costs, medical insurance costs, trade union fees, and accompanying allowances;_{) according to the following formula:}: total external service costs at the base year including: costs paid to organizations and individuals outside the unit for services provided upon request such as water, telephone, books and newspapers; audit consulting fees; asset rental fees; asset insurance costs; and other service costs incurred under contracts for service provision to support the management and operation of the power plant; TMĐT: total investment cost for building the power plant at the base year (excluding value-added tax)

Where:

C_{) according to the following formula:}: total other monetary costs at the base year including: office supply costs; depreciation costs of office equipment; various taxes and fees

Economic life of the power plant as specified in the Appendix attached to this Circular (years)._{) according to the following formula:}; training costs; scientific research costs, meal allowance costs; civil defense, security, typhoon and flood prevention, fire protection costs; labor protection costs, work attire, safety and industrial hygiene and environmental costs; night shift, hazardous substance, and other supplementary costs; throughout the entire economic life of the power plant n: economic life of the power plant as stipulated in Appendix 1 of this Circular (in years).

Section 3. METHOD FOR DETERMINING THE GENERATION PRICE OF EACH YEAR IN THE ELECTRICITY PURCHASE AND SALE CONTRACT

i: the annual inflation rate for machinery, equipment, and labor costs for fixed operation and maintenance of the power plant, averaged at 2.5%;

3. Present value of total fixed operation and maintenance costs of hydropower plants throughout their economic life (TC_{) according to the following formula:}VL

Economic life of the power plant as specified in the Appendix attached to this Circular (years)._{) according to the following formula:} = TC_MN + n ´ (C_VLP ĐMT_NC ĐMT_BTK ĐMT_ảo)

Where:

Economic life of the power plant as specified in the Appendix attached to this Circular (years)._MN:  present value of total major repair costs according to major repair cycles throughout the economic life of the plant in accordance with industry standards;

C_VLP: annual spare parts costs of the plant are determined based on the volume and unit prices of various spare parts used for power generation;

C_NC: total labor costs at the base year including total wage costs, social insurance costs, health insurance costs, trade union fees, and accompanying allowances;

C_BTK: total external service costs at the base year including: costs paid to organizations and individuals outside the unit for services provided upon request such as water, telephone, books, newspapers; audit consultancy fees; asset rental fees; asset insurance fees, and other service costs under contracts providing services for power plant management and operation;

C_ảo: other monetary costs at the base year including: office supply costs; depreciation costs of office equipment, various taxes and fees[4]; training costs; scientific research costs, meal allowance; civil defense, security, flood prevention, fire protection costs; labor protection costs, work attire, occupational safety, industrial hygiene, and environmental costs; night shift, hazardous substance, and other supplementary costs;

n: the economic life of the power plant is defined in Appendix 1 of this Circular (years);

Section 3. METHODS FOR DETERMINING THE GENERATION PRICE ACCORDING TO EACH YEAR OF THE ELECTRICITY PURCHASE AND SALE CONTRACT

Article 12. Principles for Determining the Generation Price Annually under Power Purchase Agreements

1. The two parties have the right to apply the agreed average fixed price for all years within the term of the agreement.

In case both parties agree to convert the agreed average fixed price into annual prices during the term of the agreement, the determination of these prices must comply with the principles stipulated in Clauses 2 and 3 of this Article.

2. For new power plants, based on actual borrowing conditions and the financial capacity of the project, the average fixed price of thermal power plants and hydropower plants shall be converted into annual prices in the power purchase agreement according to the following principles:

a) Ensuring that the investor can fulfill the obligations to repay loans for constructing the power plant within the loan repayment period of ten (10) years from the date of commercial operation of the power plant.

b) The highest fixed price in the year following the first unit's commercial operation shall not exceed one point zero eight (1.08) times the agreed average fixed price for projects with one hundred percent (100%) private capital contribution or one point two (1.2) times for projects with one hundred percent (100%) state capital contribution.

c) The rate of return on the owner's equity investment in the project shall maintain a minimum level during the loan repayment period and gradually increase thereafter to ensure that the average fixed price over the economic life of the power plant does not change compared to the agreed price.

3. In cases where the term of the power purchase agreement for existing power plants has expired, the annual price in the renewed power purchase agreement shall be determined as follows:

a) Except for the plants specified in Point b of this Clause, existing power plants with a fixed price defined in the agreement as the average price during the economic life of the plant, the annual price in the renewed power purchase agreement shall remain unchanged from the current agreement price.

b) For Vietnam Electricity Corporation power plants that have been equitized, the annual fixed price in the agreement shall be determined as follows:

(i) If the power plant no longer has the obligation to repay investment construction loans, the annual fixed price remains unchanged from the current agreement price.

(ii) If the power plant still has the obligation to repay investment construction loans, the annual fixed price in the renewed power purchase agreement shall be determined according to the following principles:

- Ensuring that the investor can fulfill the obligations to repay investment construction loans according to the signed credit agreement.

- Ensuring the pre-tax rate of return on equity at the level determined in the equitization plan.

Article 13. Principles for Adjusting the Annual Generation Price in Power Purchase Agreements

1. The fixed price shall be adjusted annually based on the actual exchange rate at the time of payment published by a commercial bank agreed upon by both parties to ensure that the investor has the ability to pay the principal value of foreign currency loans and interest on foreign currency loans due in that year.

2. The variable price of thermal power plants shall be adjusted annually based on fluctuations in fuel prices for power generation at the time of payment. In cases where fuel prices are denominated in foreign currency, the variable price shall be adjusted based on the actual exchange rate at the time of payment published by a commercial bank agreed upon by both parties.

Article 14. Method for Determining the Power Generation Price of Thermal Power Plants Annually under Electricity Purchase and Sale Contracts

1. The power generation price of thermal power plants annually shall include two components as agreed upon by both parties:_CP) includes two components:

a) The average fixed price (FC) is calculated according to the following formula:

FC = FC_CN + FC_DT

Where:

FC_CN: where the average fixed technological price is determined according to the method prescribed in Clause 2 of Article 10 of this Circular;

FC_DT:  and the average special fixed price is determined according to the method prescribed in Clause 4 of Article 10 of this Circular.

b) The base year variable price (VC₀) shall be calculated according to the following formula:

VC: the technology variable price of the year applying the price framework of the standard power plant determined according to the method prescribed in Article 7 of this Circular (VND/kWh).₀ = VC_CN,0 + VC_DT,0

Where:

VC: the technology variable price of the year applying the price framework of the standard power plant determined according to the method prescribed in Article 7 of this Circular (VND/kWh)._CN,0: where the base year technological variable price is determined according to the method prescribed in Clause 3 of Article 10 of this Circular;

VC: the technology variable price of the year applying the price framework of the standard power plant determined according to the method prescribed in Article 7 of this Circular (VND/kWh)._DT,0: and the base year special variable price is determined according to the method prescribed in Clause 5 of Article 10 of this Circular.

2. After being converted into the annual fixed price of the electricity purchase and sale contract (FC_{9. Travel distance is the distance traveled without using mechanical means (cars, motorcycles, motorboats) to reach locations for implementing technical forest management measures and patrolling to protect forests.}) according to the principle stipulated in Article 12 of this Circular, the average fixed price of thermal power plants (FC) will be adjusted according to exchange rate fluctuations as follows:

a) During the period before the Official Operation Date of the Competitive Power Generation Market:

 

Where:

FC_j,T: the fixed price at the time of payment for the jth year, measured in dong/(kW.month);

FC_{9. Travel distance is the distance traveled without using mechanical means (cars, motorcycles, motorboats) to reach locations for implementing technical forest management measures and patrolling to protect forests.}: the fixed price for the jth year (dong/kWh);

α_F,j: the percentage adjustment of the fixed price according to the exchange rate of the jth year (%) as determined according to point c of this clause;

λ_j,T: the exchange rate between the Vietnamese Dong and the US Dollar at the time of payment for the jth year (VND/USD);

λ₀: the exchange rate between the Vietnamese Dong and the US Dollar in the base year (VND/USD).

b) During the Competitive Power Generation Market period:

Where:

FC_j,TT: the fixed price at the time of payment for the jth year (dong/kWh);

FC_{9. Travel distance is the distance traveled without using mechanical means (cars, motorcycles, motorboats) to reach locations for implementing technical forest management measures and patrolling to protect forests.}: the fixed price for the jth year (dong/kWh);

α_F,j: the percentage adjustment of the fixed price according to the exchange rate of the jth year (%) as determined according to point c of this clause;

λ_j,T: the exchange rate between the Vietnamese Dong and the US Dollar at the time of payment for the jth year (VND/USD);

λ₀: the exchange rate between the Vietnamese Dong and the US Dollar in the base year (VND/USD).

c) The percentage adjustment of the fixed price according to the exchange rate of the jth year (α_F,jVL

Where:

FC_{9. Travel distance is the distance traveled without using mechanical means (cars, motorcycles, motorboats) to reach locations for implementing technical forest management measures and patrolling to protect forests.}: the fixed price for the jth year (dong/kWh);

D_F,j: the total value of the principal and interest on foreign currency loans due for repayment in year j, determined according to the exchange rate in the base year based on the the credit agreement for financing the construction of the plant including costs of mobilizing customer-owned backup power sources to supplement national grid supply in emergency situations threatening serious disruption of power supply;

A_bq: the average multi-year power generation capacity at the delivery point of the plant (kWh).

3. The variable price of thermal power plants will be adjusted according to fuel prices as follows:

Where:

VC: the technology variable price of the year applying the price framework of the standard power plant determined according to the method prescribed in Article 7 of this Circular (VND/kWh)._j,TT: the variable price at the time of payment for the jth year (dong/kWh);

VC: the technology variable price of the year applying the price framework of the standard power plant determined according to the method prescribed in Article 7 of this Circular (VND/kWh).₀: the base year variable price determined according to point b of Clause 1 of this Article (dong/kWh);

k_HS,j: the efficiency reduction factor for the jth year agreed upon by both parties (%)

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_F,0: the fuel price for power generation in the base year, measured in dong/ton for coal or dong/BTU for gas;

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_F,j: the fuel price for power generation at the time of payment in the jth year, measured in dong/ton for coal or dong/BTU for gas.

Article 15. Method for Determining the Power Generation Price of New Hydroelectric Power Plants Annually under Electricity Purchase and Sale Contracts

1. The average price of hydroelectric power plants (g_TĐ) determined according to the method prescribed in Article 11 of this Circular, after being agreed upon by both parties, will be converted into the annual price of the electricity purchase and sale contract (g_{9. Travel distance is the distance traveled without using mechanical means (cars, motorcycles, motorboats) to reach locations for implementing technical forest management measures and patrolling to protect forests.}) according to the principle stipulated in Article 12 of this Circular.

2. The price of hydroelectric power plants annually under electricity purchase and sale contracts will be adjusted according to actual exchange rate fluctuations at the time of payment using the following formula:

+ T_{9. Travel distance is the distance traveled without using mechanical means (cars, motorcycles, motorboats) to reach locations for implementing technical forest management measures and patrolling to protect forests.}

Where:

g_j,TT: the price at the time of payment for the jth year (dong/kWh);

g_{9. Travel distance is the distance traveled without using mechanical means (cars, motorcycles, motorboats) to reach locations for implementing technical forest management measures and patrolling to protect forests.}: the price of hydroelectric power plants in the jth year (dong/kWh);

D_F,j: the total value of the principal and interest on foreign currency loans due for repayment in year j, determined according to the exchange rate in the base year based on the the credit agreement for financing the construction of the plant including costs of mobilizing customer-owned backup power sources to supplement national grid supply in emergency situations threatening serious disruption of power supply;

A_bq: the average multi-year power generation capacity at the delivery point of the plant (kWh);

λ_j,T: the exchange rate between the Vietnamese Dong and the US Dollar at the time of payment for the jth year (VND/USD);

λ₀: the exchange rate between the Vietnamese Dong and the US Dollar in the base year (VND/USD);

T_{9. Travel distance is the distance traveled without using mechanical means (cars, motorcycles, motorboats) to reach locations for implementing technical forest management measures and patrolling to protect forests.}: Forest environmental fees and water resource taxes in year j (dong/kWh).

Article 16. Method for converting the full generation cost price of existing thermal power plants to apply for electricity purchase and sale contracts in the competitive power generation market

1. During the period of the competitive power generation market, the converted full generation cost price applicable for settlement under the difference contract shall be determined according to the following formula:

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_C,j = FC_{9. Travel distance is the distance traveled without using mechanical means (cars, motorcycles, motorboats) to reach locations for implementing technical forest management measures and patrolling to protect forests.} + VC_{9. Travel distance is the distance traveled without using mechanical means (cars, motorcycles, motorboats) to reach locations for implementing technical forest management measures and patrolling to protect forests.}

Where:

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_C,j: the converted full generation cost price at the time of settlement in year j (VND/kWh);

FC_{9. Travel distance is the distance traveled without using mechanical means (cars, motorcycles, motorboats) to reach locations for implementing technical forest management measures and patrolling to protect forests.}: the fixed price at the time of payment for the jth year (dong/kWh);

VC: the technology variable price of the year applying the price framework of the standard power plant determined according to the method prescribed in Article 7 of this Circular (VND/kWh)._{9. Travel distance is the distance traveled without using mechanical means (cars, motorcycles, motorboats) to reach locations for implementing technical forest management measures and patrolling to protect forests.}: the variable cost of the thermal power plant at the time of settlement in year j (VND/kWh).

2. For existing power plants with current contract prices being single-component full generation costs priced in VND/kWh, the full generation cost price of the difference contract will be converted into a two-component price. The fixed price each year will be based on the fixed price determined by the current contract, while the variable price will be adjusted annually according to fuel price fluctuations.

3. For power plants with generation prices being two-component prices with a fixed price calculated in VND/(kW.month) and a variable price calculated in VND/kWh, the converted full generation cost price of the difference contract each year shall be determined according to the following formula:

Where:

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_C,j: ASSET the difference electricity purchase and sale contract of the power plant in year j (VND/kWh);

FC_{9. Travel distance is the distance traveled without using mechanical means (cars, motorcycles, motorboats) to reach locations for implementing technical forest management measures and patrolling to protect forests.}: the fixed price year j according to the current electricity purchase and sale contract of the power plant (VND/(kW.month));

T_max: average maximum capacity operation time in a year over many years throughout the power plant's project lifetime (hours) as stipulated in Appendix 1 of this Circular. : the variable price of the power plant at the time of signing the difference electricity purchase and sale contract (VND/kWh);

VC: the technology variable price of the year applying the price framework of the standard power plant determined according to the method prescribed in Article 7 of this Circular (VND/kWh).₀: the efficiency reduction factor year j (%) agreed upon by both parties in the current contract (if any)

k_HS,j: the fuel price for power generation at the time of signing the difference electricity purchase and sale contract

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_F,0, calculated in VND/ton for coal or VND/BTU for gas; : the fuel price for power generation at the time of settlement in year j, calculated in VND/ton for coal or VND/BTU for gas.4. For existing power plants with contract prices already including capacity charges, fixed operation and maintenance charges, and other price components, the converted full generation cost price of the difference electricity purchase and sale contract each year shall be determined according to the following formula:

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_F,jfull generation cost

converted

Where:

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_C,j: of the difference electricity purchase and sale contract of the power plant in year j FCC capacity year j according to the current contract .month (VND/kWh);

FCOM_{9. Travel distance is the distance traveled without using mechanical means (cars, motorcycles, motorboats) to reach locations for implementing technical forest management measures and patrolling to protect forests.}: ASSET : the fixed operation and maintenance charge year j according to the current contract of the power plant (VND/(kW.month)) (VND/(kWthroughout the power plant's project lifetime (hours) as stipulated in Appendix 1 of this Circular));

: the variable price of the power plant at the time of signing the difference electricity purchase and sale contract determined according to the method prescribed in Clause 3, Article 10 of this Circular (VND/kWh);_{9. Travel distance is the distance traveled without using mechanical means (cars, motorcycles, motorboats) to reach locations for implementing technical forest management measures and patrolling to protect forests.}: the efficiency reduction factor year j (%) agreed upon by both parties in the current contract (if any).;

T_max: average maximum capacity operation time in a year over many years throughout the power plant's project lifetime (hours) as stipulated in Appendix 1 of this Circular. PROCEDURE FOR BUILDING AND ISSUING THE GENERATION PRICE FRAMEWORK;

VC: the technology variable price of the year applying the price framework of the standard power plant determined according to the method prescribed in Article 7 of this Circular (VND/kWh).₀Article 17. Procedure for building and issuing the generation price framework

k_HS,j1. Before October 1st each year, Vietnam Electricity Corporation shall be responsible for updating data and calculating the generation price framework to be applied for the next year, to submit to the Electricity Regulatory Authority for review.

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_F,0, calculated in VND/ton for coal or VND/BTU for gas; : the fuel price for power generation at the time of settlement in year j, calculated in VND/ton for coal or VND/BTU for gas.4. For existing power plants with contract prices already including capacity charges, fixed operation and maintenance charges, and other price components, the converted full generation cost price of the difference electricity purchase and sale contract each year shall be determined according to the following formula:

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_F,jfull generation cost

Chapter III

2. Within five (5) working days from the date of receiving the submitted generation price framework approval dossier, the Electricity Regulatory Authority shall be responsible for checking the validity of the dossier and issuing a document requesting Vietnam Electricity Corporation to supplement or amend contents in the dossier if it finds that the dossier does not meet the conditions for review.

3. At the latest twenty (20) working days from the date of receiving a valid dossier, the Electricity Regulatory Authority shall be responsible for organizing the review, soliciting opinions from related power units, and submitting to the Ministry of Industry and Trade for issuance.

4. Before December 15th each year, the Electricity Regulatory Authority shall be responsible for announcing the generation price framework for the upcoming year on its electronic information website. In cases where the technology generation price framework for the standard power plant of the next year has not been announced, it allows the temporary application of the technology generation price framework of the previous year.

2. Within five (05) working days from the date of receiving the application dossier for the electricity generation price framework, the Electricity Regulatory Authority shall be responsible for checking the validity of the application dossier and issuing a document requesting the Vietnam Electricity Corporation to supplement or amend the contents in the dossier if it finds that the dossier does not meet the conditions for assessment.

3. At the latest twenty (20) working days from the date of receiving a valid dossier, the Electricity Regulatory Authority shall be responsible for organizing the assessment, soliciting opinions from relevant power units, and submitting to the Ministry of Industry and Trade for issuance.

4. Before December 15 each year, the Electricity Regulatory Authority shall be responsible for announcing the electricity generation price framework for the following year on its electronic information website. In case the technology-based generation price framework for the standard power plant of the next year has not been announced, it is permissible to temporarily apply the technology-based generation price framework of the immediately preceding year.

Article 18. Documents for requesting approval of the electricity generation price framework

The documents for requesting approval of the electricity generation price framework include:

1. The proposal for approving the electricity generation price framework by the Vietnam Electricity Corporation.

2. Five (05) sets of explanatory documents and a CD containing calculation tables of the electricity generation price framework, including the following main contents:

a) Explanatory documents and calculation tables of the technology price framework for thermal power plants, including fixed technology prices and variable technology prices for standard power plants for the year the price framework applies.

b) Explanatory documents and calculation tables for hydropower plants.

3. Supporting documents include data and sources of data, specifically as follows:

a) Investment costs of standard power plants and components of investment costs, including construction costs, equipment costs, project management costs, construction consulting costs, other costs, and contingency costs;

b) Loan interest rates and equity return rates for private capital contributions;

c) Raw heat rate and refined heat rate of standard power plants;

d) Prices of primary fuels for electricity generation for the year the price framework applies;

đ) Expected exchange rate between Vietnamese Dong and US Dollar for the year the price framework applies;

e) Schedule of avoidable cost prices expected to be applied for the next year.

Chapter IV

PROCEDURE FOR NEGOTIATING AND APPROVING ELECTRICITY PURCHASE AND SALE CONTRACTS

Article 19. Application of Model Electricity Purchase and Sale Contracts

1. The model electricity purchase and sale contracts issued together with this Circular shall be applied for electricity transactions between power plants and the Vietnam Electricity Corporation.

2. For newly constructed power plants, the model electricity purchase and sale contract stipulated in Appendix 2 of this Circular must be compulsorily applied after the Circular takes effect.

3. The deadline for converting existing electricity purchase and sale contracts according to the model stipulated in Appendix 2 of this Circular is one of the two dates whichever comes first:

a) The date when the competitive electricity generation market officially operates as announced by the competent authority; or:

b) Nine (09) months from the date this Circular takes effect.

Article 20. Procedure for Negotiating Electricity Purchase and Sale Contracts

1. The project investor has the responsibility to prepare the negotiation request documents for electricity purchase and sale contracts to send to the buyer for negotiation and to complete the procedures for examination and approval to sign the electricity purchase and sale contracts before commencing the project.

2. Within fifteen (15) working days from the date of receipt of valid negotiation request documents for electricity purchase and sale contracts from the investor, the buyer has the responsibility to organize negotiations on electricity purchase and sale contracts with the investor. At the end of the negotiation process, both parties must sign off on the draft electricity purchase and sale contract.

3. Within five (05) working days from the date the draft electricity purchase and sale contract is signed off, the buyer has the responsibility to prepare the contract approval dossier to submit to the Electricity Regulatory Authority for examination and approval.

4. If the two parties have not reached a final agreement within six (06) months from the date the buyer receives valid negotiation request documents for electricity purchase and sale contracts, the buyer has the responsibility to prepare a report on unresolved issues to submit to the Electricity Regulatory Authority for consideration and resolution. For issues beyond the authority's jurisdiction, the Electricity Regulatory Authority has the responsibility to report to the Minister of Industry and Trade.

Article 21. Documents for Requesting Negotiation of Power Purchase Contracts

1. The documents for requesting negotiation of power purchase contracts for new power plants include the following:

a) A letter requesting negotiation of the power purchase contract;

b) A draft power purchase contract according to the model prescribed in Appendix 2 of this Circular;

c) The investment decision for construction projects along with the project description and basic design;

d) The decision approving the total investment amount of the project including the total technological investment and total costs for special project components;

đ) An agreement on connecting the power plant to the national power grid along with the connection plan of the power plant;

e) An independent consultant's report on the project investment and accompanying documents;

g) A fuel supply contract for the power plant specifying clearly the fuel price for power generation, transportation fees, and additional charges, the fuel delivery point, and the fuel supply period;

h) Documentation calculating power loss and energy loss of transformers and transmission lines from the power plant to the connection point with the national power grid and documentation calculating self-consumption electricity within the power plant;

i) Documentation calculating fuel consumption rate for coal-fired power plants or heat consumption rate for gas-fired power plants;

k) Pricing scheme determined according to the methods stipulated in Sections 2 and 3 of Chapter II of this Circular.

2. The documents for requesting negotiation of power purchase contracts for existing power plants include the following:

a) A letter requesting negotiation of the power purchase contract;

b) A draft power purchase contract according to the model prescribed in Appendix 2 of this Circular;

c) Existing power purchase contract documents;

d) Technical documents of the power plant up to the current time;

đ) A fuel supply contract for the power plant;

e) Pricing scheme of the power plant determined according to the provisions at Section 2 and Section 3 of Chapter II of this Circular;

g) The most recent audited financial report of the power plant up to the time of negotiating the power purchase contract.

Article 22. Documents for Approval of Power Purchase Contracts

1. The documents for approval of power purchase contracts include:

a) A proposal requesting approval of the power purchase contract;

b) A draft power purchase contract signed by both parties;

c) Explanation of the calculation of the contract price according to the provisions of Clause 2 of this Article;

d) Explanation of the amendments and additions agreed upon by both parties that differ from the standard power purchase contract template included in the contract content.

2. The content of the explanation of the calculation of the contract price includes:

a) Technical specifications of the power plant as defined in the approved investment project for constructing the power plant including installed capacity, available capacity, self-use electricity ratio, technical specifications of primary and secondary fuels for power generation, maximum capacity operation time calculated over multiple years of the power plant, maintenance cycles of equipment during the economic life of the power plant;

b) Financial-economic data of the power plant agreed upon by both parties for calculating the contract price including the total investment cost for constructing the power plant (including technological investment costs and special project component costs), capital structure and financing plan, project implementation milestones (project start date, commercial operation date of each unit), primary and secondary fuel prices and materials for power generation, transportation costs;

c) Cost standards used for calculating operating and maintenance costs and related parameters;

d) Documents used as basis for determining the rationality and validity when establishing investment item costs and operating and maintenance costs of the project;

đ) An Excel-based pricing calculation table including the results of the contract price calculation and sensitivity analysis of pricing schemes when input parameters change;

e) Accompanying documents for the explanation include:

- A copy of the decision approving the power plant investment project along with the project description and basic design of the approved power plant construction project;

- A copy of the fuel supply contract between the investor and the domestic and/or foreign fuel supplier;

- A copy of the contract between the investor and the service provider for power plant operation and maintenance (if any);

- A copy of documents related to project financing arrangements;

- Copies of negotiation minutes between the seller and buyer.

Article 23. Procedure for Approval of Power Purchase Contracts

1. After concluding negotiations on the power purchase contract, the Buyer shall be responsible for preparing the application file for approval of the power purchase contract in accordance with Article 22 of this Circular to submit to the Electricity Regulatory Authority for examination and approval.

2. Within five (05) working days from the date of receipt of the application file for approval of the power purchase contract, the Electricity Regulatory Authority shall be responsible for checking the validity of the application file and issuing a document requesting the Buyer and Seller to supplement or amend the contents in the application file if it finds that the application file for approval of the power purchase contract is not valid.

3. Within thirty (30) working days from the date of receipt of the valid application file for approval of the power purchase contract, the Electricity Regulatory Authority shall be responsible for examining and approving the power purchase contract.

4. Within fifteen (15) working days from the date of issuance of the decision to approve the power purchase contract, both parties shall be responsible for signing the formal power purchase contract. In case the Electricity Regulatory Authority has not issued the decision to approve the power purchase contract within the time limit specified in Clause 3 of this Article, both parties are permitted to sign the formal power purchase contract according to the agreed contents. The Buyer shall be responsible for sending one (01) copy of the signed power purchase contract to the Electricity Regulatory Authority for retention and monitoring.

5. In cases where the contents of the power purchase contract are amended or supplemented, relevant units must follow the procedures stipulated in this Article.

6. The power purchase contract is approved when meeting the following requirements:

a) The technology price of thermal power plants or the price of hydropower plants falls within the electricity generation price range issued by the Ministry of Industry and Trade.

b) The annual prices in the contract are determined in accordance with the principles prescribed at Article 12 this Circular.

c) The contents of the power purchase contract are consistent with the contents of the model power purchase contract issued by the Ministry of Industry and Trade.

d) Fully explain any amendments or supplements to the contents other than those prescribed in the model power purchase contract.

7. In cases where hydropower plants have negotiated prices exceeding the electricity generation price range issued by the Ministry of Industry and Trade, the power generation unit shall be responsible for explaining in detail to the Electricity Regulatory Authority the cost items that have been agreed upon with the Buyer during the negotiation process.

Chapter V

IMPLEMENTATION

Article 24. Responsibilities of the Electricity Regulatory Authority

1. Examine and submit to the Ministry of Industry and Trade for issuance of the annual electricity generation price range.

2. Examine and approve power purchase contracts and any amendments or supplements to such contracts of power plants.

3. Guide and resolve any issues arising during the negotiation of power purchase contracts between the parties.

4. Resolve disputes arising during the implementation of power purchase contracts in cases where both parties agree to have the disputes resolved at the Electricity Regulatory Authority.

Article 25. Responsibilities of the Vietnam Electricity Corporation

1. Develop the electricity generation price range to submit to the Electricity Regulatory Authority for examination.

2. Submit to the Electricity Regulatory Authority for examination and approval of the power purchase contract.

3. Annually report to the Ministry of Industry and Trade and the Electricity Regulatory Authority on the impact of new power plant electricity prices on the average electricity generation price and overall average electricity price.

Article 26. Responsibilities of the Project Owner or Power Generation Unit

1. The Project Owners of new power plants shall be responsible for:

a) Negotiating and signing electricity purchase and sale contracts in accordance with this Circular;

b) Providing all necessary information and data to relevant units and agencies during the negotiation and review process of electricity purchase and sale contracts.

2. For existing power plants participating in the Competitive Power Generation Market, the Power Generation Units shall be responsible for implementing the contract conversion as stipulated in Clause 3, Article 19 of this Circular.

Article 27. Implementation Provisions

1. This Circular takes effect from January 28, 2011.

2. During implementation, if any difficulties arise, organizations and individuals shall report them to the Ministry of Industry and Trade for supplementation and amendment as appropriate./.