DRAFT DECREE ON INVESTOR SELECTION FOR POWER PROJECTS

Recently, the Government has issued a Draft Decree regulating the process to select investor for power projects, including power generation and power grid projects. Power generation projects are power projects that generate power to the national grid system and have Power Purchase Agreement (PPA) with the Buyer, including hydro power, thermal power, solar power, wind power, biomass power, geothermal power and use other new energy sources to produce power. Power grid projects are divided into transmission and distribution grids, including transmission lines, transformers and ancillary equipment for power transmission.

This Decree does not apply to powers projects invested in form of public-private partnership (PPP) or power projects using public investment capital, official development assistance (ODA) and concessional loans from foreign sponsors…

The bidding process shall comply with the following procedure:

Step 1. Prepare and appraise the pre-feasibility study report, decide on investment policy, announce the project.

Step 2. Select investors.

Step 3. Sign the project contract.

Step 4. Prepare and appraise the feasibility study report and approve the project.

Step 5. Negotiate and sign the PPA.

Step 6. Implement the project.

For investor selection in step 2, based on investor interest survey results, the competent authority shall apply one of the following four methods of investor selection:

1. Open bidding.

2. Competitive negotiation.

3. Direct investor appointment.

4. Investor selection in special cases.

This Decree stipulates a relatively strict investor selection process with strict technical, experience, and financial conditions to identify qualified investors as well as help EVN buy the most competitive power generation/grid price.

In addition, another point to note in this Decree is the electricity price. According to Article 21 and Article 61 of this Decree, the Government shall stipulate a price bracket for power generation (VND/kWh) and the investor's proposed electricity selling price shall not exceed over this frame. The proposed electricity selling price of the selected investor will be the ceiling price and will be the basis for negotiating the PPA with the Buyer in the future.

Below is the detailed Draft Decree:

/uploads/files/draft-decree.pdf