Circular No. 43/2016/TT-BCT on commitments for project development and mechanisms to handle power plant projects not meeting committed deadlines

CIRCULAR

Provisions on project development commitments and mechanisms for handling power plant projects that fail to meet committed timelines

Based on the Investment Law No. 67/2014/QHQ13 dated November 26, 2014;

Pursuant to the Electricity Law on December 3, 2004 and the Law Amending and Supplementing Certain Provisions of the Electricity Law on November 20, 2012; đcontents and procedures for implementing programs to adjust electricity demand

Pursuant to the Construction Law No. 50/2014/QH13 dated June 18, 2014;

The Government issues this Decree on management and development of industrial clusters.

Pursuant to Decree No. 137/2013/ND-CP dated October 21, 2013 of the Government detailing the implementation of certain provisions of the Electricity Law and the Law Amending and Supplementing Certain Provisions of the Electricity Law; Decree No. 177/2013/ND-CP dated November 14, 2013 of the Government detailing and guiding the implementation of certain provisions of the Price Law, Decree No. 149/2016/ND-CP dated November 11, 2016 of the Government amending and supplementing certain provisions of Decree No.

Based on Decree No. 43/2014/NĐ-CP dated May 15, 2012 of the Government detailing implementation of certain provisions of the Land Law;

Pursuant to Decree No. 118/2015/NĐ-CP dated November 12, 2015 of the Government detailing and guiding the implementation of certain provisions of the Investment Law;

Pursuant to Circular No. 07/2012/TT-BNV dated November 22, 2012 of the Ministry of Home Affairs guiding the management of documents, file establishment, and submission of files and documents to the archives;

Pursuant to Decree No. 15/2015/NĐ-CP dated February 14, 2015 of the Government on public-private partnership investment;

Pursuant to Decree No. 95/2012/NĐ-CP dated November 12, 2012, of the Government, detailing the functions, tasks, powers, and organizational structure of the Ministry of Industry and Trade;

Implementing the Prime Minister's directive as stated in Official Letter No. 385/TB-VPCP dated November 23, 2015 of the Government Office regarding the conclusions of Deputy Prime Minister Hoang Trung Hai at a meeting on the draft Decision of the Prime Minister concerning project development commitments and mechanisms for handling power plant projects invested under the Build-Own-Operate (BOO) model and Power Purchase Agreement (PPA) model that fail to meet committed timelines;

At the proposal of the Director General of the Energy Administration,

The Minister of Industry and Trade issues this Circular stipulating project development commitments and mechanisms for handling power plant projects that fail to meet committed timelines.

PART I. GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular stipulates the content of project development commitments for power plant projects with a capacity of 30 MW or more invested under the Public-Private Partnership (PPP) model and power plant projects with a capacity of 30 MW or more invested not under the PPP model implemented by domestic investors, foreign investors, or economic organizations with foreign investment capital; mechanisms for handling power plant projects that fail to meet committed timelines.

Article 2. Applicability

This Circular applies to:

1. Investors of power plant projects with a capacity of 30 MW or more invested within the territory of Vietnam.

2. Relevant agencies and organizations involved in investment and construction activities of power plants invested within the territory of Vietnam.

Article 3. Explanation of Terms

1.  Power plant project invested under the Power Purchase Agreement (PPA) model (hereinafter referred to as the power plant PPP project) is a power plant project carried out by investors under the public-private partnership (PPP) model,hereinafter hereinafter referred to as PPP,) as stipulated in Decree No. 15/2015/NĐ-CP dated February 14, 2015 of the Government on investment under the public-private partnership model;

2.  Project developer of the power plant PPP project is the investor (in cases where only one investor implements the project) or the Investor Consortium (in cases where multiple investors participate in a joint venture to implement the project) granted the right to develop the power plant project under the PPP model;

3.  Project developer of the power plant project not invested under the PPP model is the investor (in cases where only one investor implements the project) or the Investor Consortium (in cases where multiple investors participate in a joint venture to implement the project) granted the right to develop the project not under the PPP model;

4.  Right to develop the project is the right of the Investor to implement the project development according to regulations and laws of Vietnam after being assigned by the competent state authority;

5.  Project documentation includes documents used in power plant projects invested under the PPP model, including: power purchase agreement (PPA), land lease agreement (LLA), fuel supply contracts (if applicable), other contracts (if applicable);

6.  PPP Contract is the contract signed between the competent state authority and the investor to implement the project development under the public-private partnership models specified in Decree No. 15/2015/NĐ-CP dated February 14, 2015 of the Government on investment under the public-private partnership model;

7.  Force Majeure Event is an unforeseeable and unavoidable risk event occurring during the implementation of power plant investment and construction activities despite the application of all necessary measures within the permitted scope;

8.  MOU is Memorandum of Understanding for developing power plant projects invested under the PPP model;

9.  Project development commitment is a document committing the project developer of power plant projects not invested under the PPP model to milestones for project development progress to ensure compliance with the approved planned operational timeline;

10. Project development milestone is a series of time points associated with critical tasks affecting the project's progress and completion;

11. Document granting the right to develop the project is a document or decision of the Prime Minister or a competent authority announcing the assignment of the right to develop the project to the Investor or the Investor Consortium;

12. FS is an abbreviation for Feasibility Study Report;

13. PPA is an abbreviation for Power Purchase Agreement;

14. LLA is an abbreviation for Land Lease Agreement.

CHAPTER II. PROVISIONS ON PPP POWER PLANT PROJECTS

Article 4. Time Limit for Signing the Memorandum of Understanding (MOU)

Within ninety working days from the date of being granted the right to develop the PPP power plant project, the investor of the PPP power plant project and the Ministry of Industry and Trade shall sign the MOU.

Article 5. Contents of the Memorandum of Understanding

In addition to the contents on developing the PPP power plant project as prescribed, the MOU must also include the following contents:

1. Provisions on the rights and obligations of the investor of the PPP power plant project and the Ministry of Industry and Trade during the implementation of the investment project to ensure compliance with the planned schedule approved by the competent authority.

2. Implementation plan of the project including at least the following milestones of project development:

a) Schedule for preparing and approving the Site Master Plan (if applicable), including: Date of submission; date of approval;

b) Schedule for preparing and approving the Final Study (FS), including: Date of submission; date of approval;

c) Plan for negotiating the PPP Contract and related documents;

d) Negotiation schedule for related documents: Power Purchase Agreement (PPA), Long-Term Agreement (LLA), Engineering, Procurement, and Construction (EPC) contract, and fuel supply contracts (if applicable); other contracts (if applicable);

đ) Schedule for signing off on project documents;

e) Date of submitting the application for Investment Registration Certificate; date of officially signing project documents and the PPP Contract;

g) Financial closure schedule;

h) Construction commencement and completion schedule, including: Project commencement date; commercial operation date of each unit; commercial operation date of the entire plant.

Article 6. Adjustment of Project Development Milestones for PPP Power Plant Projects

In case the project risks falling behind the development milestones committed in the MOU, the investor of the PPP power plant project must take responsibility to find solutions to resolve issues to ensure the completion of assigned milestones. The Ministry of Industry and Trade and the investor of the PPP power plant project may only adjust the development milestones set out in points a, b, c, d, đ Clause 2 Article 5 of this Circular under the following circumstances:

1. Delay due to force majeure events: Within fifteen working days from the occurrence of the force majeure event, the investor of the PPP power plant project must notify the Ministry of Industry and Trade in writing and request adjustment of the development milestones. Within five working days from receiving the notification, the Ministry of Industry and Trade will issue a written opinion to the investor regarding the force majeure event to serve as the basis for inviting the investor to jointly sign the adjustment of the development milestones in the MOU.

2. Failure to achieve the committed milestone due to actions of the competent state management agency for the work item at that milestone:

a) At the latest within fifteen working days after falling behind the committed milestone, the investor of the PPP power plant project must send a written request to the Ministry of Industry and Trade for adjustment of the development milestones and explain the reasons for the delay caused by the actions of the competent state management agency for the work item at that milestone. Within ten working days from receiving the document, the Ministry of Industry and Trade will issue a written opinion to the investor regarding the reasons for the delay not attributable to the investor to serve as the basis for inviting the investor to jointly sign the adjustment of the development milestones in the MOU.

b) Within ten working days from sending the document to the investor of the PPP power plant project, if it is determined that the competent state management agency for the work item at that milestone has caused the delay, the Ministry of Industry and Trade will issue a written reminder or handle according to regulations against agencies and units under its management, or send a document to relevant ministries or report to the Prime Minister for agencies and units not under its management.

3. Delay due to actions of a third party directly related to the work items at the development milestone:

a) At the latest within fifteen working days after falling behind the committed milestone, the investor of the PPP power plant project must send a written request to the Ministry of Industry and Trade for adjustment of the development milestones and explain the reasons for the delay caused by the actions of the third party directly related to the work items at the development milestone. Within ten working days from receiving the document from the investor, the Ministry of Industry and Trade will request the third party directly related to the work items at that milestone to provide a written opinion on the delay in the development milestone based on the investor's report within fifteen working days. Within ten working days from receiving the document from the third party directly related to the work items at that milestone, the Ministry of Industry and Trade will issue a written opinion to the investor regarding the reasons for the delay not attributable to the investor to serve as the basis for inviting the investor to jointly sign the adjustment of the development milestones in the MOU.

b) Within ten working days from sending the document to the investor of the PPP power plant project, if it is determined that the third party directly related to the work items at that milestone has caused the delay, the Ministry of Industry and Trade will issue a written reminder or handle according to regulations against units under its management, or send a document to relevant ministries or report to the Prime Minister for units not under its management.

4. For the milestones "Financial Closure" and "Construction Commencement", the adjustment of the schedule will be based on project documents or the signed PPP Contract.

5. The written opinion of the Ministry of Industry and Trade on the reasons for the delay in the development milestones not attributable to the investor can only be used as the basis for adjusting the development milestones in the MOU and not for other purposes.

6. In cases where adjusting the milestones for the project's development progress changes the official signing timeline of the project documents and PPP Contract from twelve months or more compared to the committed timeline, the Ministry of Industry and Trade shall issue a document requesting the Prime Minister's approval to adjust the project's operational timeline before implementing the adjustment of the project development milestones in the MOU.

Article 7. Mechanism for Handling PPP Power Plant Projects that Do Not Meet the Committed Timelines

The mechanism for handling PPP power plant projects that do not meet the committed timelines shall be applied from the time the competent authority grants the right to develop the project until the time of officially signing the project documents and PPP Contract. The mechanism for handling PPP power plant projects that do not meet the committed timelines shall be implemented in the following manner:

1. For each delay exceeding thirty working days compared to each milestone committed in the MOU, the Ministry of Industry and Trade shall issue a notice reminding the PPP Power Plant Project Investor to promptly complete the delayed work item and ensure it does not affect subsequent milestones. After thirty working days from the date of the first reminder notice, if the PPP Power Plant Project Investor has still not completed the previously delayed milestone, the Ministry of Industry and Trade shall issue a second reminder notice. The total number of reminders for each milestone shall not exceed two times.

2. Within one year from the date the Ministry of Industry and Trade issues the first notice regarding the delay in milestones, if the Investor fails to complete the delayed milestone and the overall project timeline is delayed cumulatively up to twelve months compared to the committed timeline in the MOU, the Ministry of Industry and Trade shall issue a document requesting the competent authority to consider issuing a document terminating the Investor's right to develop the project to consider transferring it to another investor.

3. In cases where the PPP Power Plant Project Investor is terminated by the competent authority from their right to develop the project and their investment certificate is revoked, all costs incurred or arising from activities prior to the termination of the right to develop the project will be borne by the PPP Power Plant Project Investor and will not be reimbursed.

4. For milestones calculated from the date after the official signing of the project documents and PPP Contract, the mechanism for handling delays shall be applied according to the provisions stipulated in the PPP Contract.

Chapter III. PROVISIONS FOR POWER PLANT INVESTMENT PROJECTS NOT UNDER THE PPP FORM

Article 8. Deadline for Establishing and Submitting the Project Development Commitment

1. Within ninety working days from the date of being granted the right to develop the project, the Investor of the non-PPP Power Plant Investment Project shall be responsible for establishing and submitting the Project Development Commitment to the Ministry of Industry and Trade for monitoring, tracking, managing, and urging the progress of the project.

2. After one hundred five working days from the date of being granted the right to develop the project, if the Ministry of Industry and Trade has not received the Project Development Commitment, the Ministry of Industry and Trade shall issue the first reminder notice, requesting the non-PPP Power Plant Investment Project Investor to promptly complete and submit the Project Development Commitment. After fifteen working days from the date of the first reminder notice, if the Ministry of Industry and Trade still has not received the Project Development Commitment, the Ministry of Industry and Trade shall issue a second reminder notice to the Investor. The total number of reminders shall not exceed two times.

3. After one hundred eighty working days from the date of being granted the right to develop the project, if the Ministry of Industry and Trade still has not received the Project Development Commitment, the Ministry of Industry and Trade shall issue a document requesting the competent authority to consider issuing a document terminating the Investor's right to develop the project to consider transferring it to another investor.

Article 9. Contents of the Project Development Commitment

The Project Development Commitment includes the following main contents:

1. The commitment of the Project Investor for the non-PPP power plant investment project regarding key milestones for the development of the power plant project to ensure compliance with the approved schedule for operation commencement.

2. Implementation plan of the project including at least the following milestones of project development:

a) Schedule for preparing and approving the Site Master Plan (if applicable), including: Date of submission; date of approval;

b) Schedule for preparing and approving the Final Study (FS), including: Date of submission; date of approval;

c) Schedule for preparation and approval of construction design (technical design, construction drawings, and construction budget estimate);

d) Schedule for submission and issuance of Investment Registration Certificate and Construction Permit, including: Submission date; Approval date;

đ) Schedule for depositing Performance Guarantee for the investment project;

e) Schedule for negotiation and signing of the main contracts of the project, including: Land lease contract; Loan contract; Power purchase agreement; Construction contract; Equipment supply contract; EPC contract;

g) Schedule for commencement of work and construction, including: Official project commencement date; Commercial operation date of each unit; Commercial operation date of the entire plant.

Article 10. Adjustment of Key Milestones for Project Development

In case the project has a risk of delay compared to the key milestones for project development committed in the Project Development Commitment, the Project Investor for the non-PPP power plant investment project must take responsibility to find solutions to resolve issues to ensure completion of the committed milestones. The key milestones for project development specified in points a, b, c, d, đ Clause 2 Article 9 of this Circular can only be adjusted in the following cases:

1. Delay caused by Force Majeure events: Within 15 working days from the occurrence of the force majeure event, the Project Investor for the non-PPP power plant investment project must notify the Ministry of Industry and Trade in writing and request adjustment of the key milestones for project development. Within 5 working days from receiving the notification, the Ministry of Industry and Trade shall issue a written opinion to the Project Investor on the force majeure event to serve as the basis for adjusting the key milestones for project development in the Project Development Commitment.

2. Failure to achieve the committed milestone due to actions of the competent state management agency for the work item at that milestone:

a) Within 15 working days from the delay of the committed milestone, the Project Investor for the non-PPP power plant investment project must submit a written request to the Ministry of Industry and Trade for adjustment of the key milestones for project development and provide explanations for reasons causing the delay due to actions of the competent state management agency at that milestone. Within 10 working days from receiving the document, the Ministry of Industry and Trade shall issue a written opinion to the Project Investor on reasons for delays not attributable to the Project Investor to serve as the basis for adjusting the key milestones for project development in the Project Development Commitment.

b) Within 10 working days from issuing the document to the Project Investor for the non-PPP power plant investment project, if it is determined that the competent state management agency at that milestone has caused the delay, the Ministry of Industry and Trade shall issue a reminder or handle according to regulations against agencies under its management or send a letter to relevant ministries or report to the Prime Minister for agencies not under its management.

3. Delay due to actions of a third party directly related to the work items at the development milestone:

a) Within 15 working days from the delay of the committed milestone, the Project Investor for the non-PPP power plant investment project must submit a written request to the Ministry of Industry and Trade for adjustment of the key milestones for project development and provide explanations for reasons causing the delay due to actions of third parties directly related to the works at that milestone. Within 10 working days from receiving the document from the Project Investor, the Ministry of Industry and Trade shall request the directly related third party to provide a written opinion on the delay within 15 working days based on the Project Investor's report. Within 10 working days from receiving the document from the directly related third party, the Ministry of Industry and Trade shall issue a written opinion to the Project Investor for the non-PPP power plant investment project on reasons for delays not attributable to the Project Investor to serve as the basis for adjusting the key milestones for project development in the Project Development Commitment.

b) Within 10 working days from issuing the document to the Project Investor for the non-PPP power plant investment project, if it is determined that the directly related third party caused the delay, the Ministry of Industry and Trade shall issue a reminder or handle according to regulations against units under its management or send a letter to relevant ministries or report to the Prime Minister for units not under its management.

4. The written opinion of the Ministry of Industry and Trade on reasons for delays not attributable to the Project Investor can only be used as a basis for adjusting the key milestones for project development in the Project Development Commitment and not for other purposes.

5. In case the adjustment of the key milestones for project development changes the overall project schedule by 12 months or more compared to the committed schedule, the Ministry of Industry and Trade shall submit a request to the Prime Minister for approval to adjust the schedule for project operation before implementing the adjustment of the key milestones for project development in the Project Development Commitment.

Article 11. Mechanism for handling power plant projects not invested under the PPP model that fail to meet committed deadlines

The mechanism for handling power plant projects not invested under the PPP model that fail to meet committed deadlines shall be applied from the time the competent authority issues the document granting project development rights until the time the Project Implementation Guarantee is issued in accordance with Article 42 of the Investment Law No. 67/2014/QH13 and Article 27 of Decree No. 118/2015/NĐ-CP dated November 12, 2015 of the Government detailing and guiding the implementation of certain provisions of the Investment Law. The mechanism for handling power plant projects not invested under the PPP model that fail to meet committed deadlines shall be implemented in the following manner:

1. Termination of Project Development Rights:

a) For each instance where the progress milestone is delayed by more than 30 working days compared to the committed milestones in the Project Development Commitment, the Ministry of Industry and Trade shall issue a reminder letter, requesting the Investor of the power plant project not invested under the PPP model to urgently complete the delayed work item and ensure it does not affect subsequent progress milestones. Within 30 working days from the date of the first reminder letter, if the Investor of the power plant project not invested under the PPP model has still not completed the previously delayed progress milestone, the Ministry of Industry and Trade shall issue a second reminder letter. The total number of reminders for each progress milestone shall not exceed two times.

b) Within one year from the date the Ministry of Industry and Trade issues the first notification letter regarding the delay of the progress milestone, if the Investor fails to complete the delayed progress milestone and the overall project progress is delayed cumulatively up to 12 months compared to the committed progress milestones in the Project Development Commitment, the Ministry of Industry and Trade shall issue a letter requesting the competent authority to consider issuing a document terminating the project development rights of the Investor to consider transferring the project to another investor.

2. Revocation of Land Use Right Certificate, Investment Decision, and Investment Registration Certificate: Within 10 working days from the date the competent authority issues the document terminating the project development rights of the Investor, the Ministry of Industry and Trade shall issue a notification letter to the competent authorities to carry out the procedures for revoking the Land Use Right Certificate and Investment Registration Certificate issued to the project in accordance with the provisions of the Land Law and the Investment Law.

3. In cases where the Investor of a power plant project not invested under the PPP model is terminated by the competent authority and their investment certificate is revoked, all costs incurred or arising before the termination of the project development rights and revocation of the investment certificate for developing the project shall be borne by the Investor and will not be compensated.

Chapter IV. IMPLEMENTATION PROVISIONS

Article 12. Implementation Organization

1. The Energy General Department shall be responsible for disseminating, guiding, and inspecting the implementation of this Circular.

2. The Investor of the power plant project shall be responsible for:

a) Signing supplementary Memorandums of Understanding or submitting supplementary Project Development Commitments in accordance with the provisions of this Circular.

b) Regularly sending reports to the Energy General Department and the People's Committee of the province where the project is being carried out about the progress of implementing project work items according to the committed project development schedule before the end of the last working week of each month.

Article 13. Transitional Provisions

1. For power plant projects invested under the PPP model that have been granted project development rights and signed MOUs prior to the effective date of this Circular but have not yet officially signed the PPP documents and contracts, within 90 working days from the effective date of this Circular, the Ministry of Industry and Trade and the Investor shall sign supplementary MOUs including only the remaining project development milestones and apply the violation handling mechanism stipulated in Chapter II of this Circular.

2. For power plant projects invested under the PPP model that have been granted project development rights prior to the effective date of this Circular but have not signed MOUs, the entire provisions of Chapter II of this Circular shall be implemented.

3. For power plant projects not invested under the PPP model that have been granted project development rights prior to the effective date of this Circular but do not have a Project Implementation Guarantee, within 90 working days from the effective date of this Circular, the Investor shall prepare and submit supplementary Project Development Commitments to the Ministry of Industry and Trade. The contents of the supplementary Project Development Commitments shall only include the remaining project development milestones until the issuance of the Project Implementation Guarantee, and subsequent steps of the project shall apply the violation handling mechanism stipulated in Chapter III of this Circular.

Article 14. Effective Date

1. This Circular shall take effect from February 15, 2017.

2. During the implementation of this Circular, if there are any issues or difficulties, relevant units shall directly reflect them to the Ministry of Industry and Trade for consideration and resolution.

3. Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairmen of provincial People's Committees, Chairmen of the Vietnam Electricity Corporation Board of Directors, and related organizations and individuals are responsible for implementing this Circular./.