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Power Purchase Agreement (PPA)
Under Circular No.57/2020/TT-BCT issued by MOIT regulations on the method for determining electricity generation prices and power purchase agreement.
Procedures for negotiating power purchase agreements:
– For new power plants, power purchase agreements between parties must be signed before the construction commencement date.
– The Seller is responsible for preparing request for power purchase agreement negotiation and sending to the Buyer for negotiation and adoption of procedures for signing power purchase agreements.
– Within 15 working days from the date on which adequate written request from project developers is received, the Buyer is responsible for organizing power purchase agreement negotiation with the Seller. At the end of negotiation process, both parties must initial the draft power purchase agreements.
– After draft power purchase agreements have been initialed, the Buyer and the Seller shall agree and be responsible for reporting to Electricity Regulatory Authority of Vietnam.
Request for power purchase agreement negotiation:
1. Request for power purchase agreement negotiation applied to new power plants includes but are not limited to:
– Official Dispatch requesting power purchase agreement negotiation;
– Draft power purchase agreements using form under Annex 3 of Circular No.57/2020/TT-BCT and revisions depending on practical conditions of power plants (if any);
– Approval of investment guidelines or Decision on investment guidelines or investment registration certificate of projects;
– Decision on investing in construction, explanation and reports on appraisal of power plant investment projects of independent consultants, attached documents;
– Decision on approving total investment for the first time or revised total investment of projects valid at the time of negotiating electricity price and primary contents in fundamental design of investment projects relating to power purchase agreement negotiation, appraisal reports on fundamental design;
– Agreements on connecting power plants to national grids together with connection solutions; agreements on SCADA/EMS and regulating information systems; agreements on protective and automatic relay systems;
– Loan agreements or documents between project developers and creditors, plans or facts of disbursement of loans;
– Fuel supply contracts for power plants, specifying fuel prices for electricity generation, fuel transportation costs, LNG storage, regasification and distribution costs and additional costs, fuel delivery points and deadline for fuel supply;
– Documents on calculating capacity and electricity loss of transformers and power lines from step-up transformers to connection points with national electrical grids and documents on electricity used in power plants;
– Documents on calculating net heat loss rates for thermal power plants;
– Electricity solutions determined according to Section 1 and Section 3 Chapter II Circular No.57/2020/TT-BCT;
– Other relevant documents.
2. Request for power purchase agreement negotiation of power plants entering commercial operation includes but are not limited to:
– Official Dispatch requesting power purchase agreement negotiation;
– Draft power purchase agreements using form under Annex 3;
– Available documents on power purchase agreements;
– Technical dossiers of power plants, technical specifications of SCADA/EMS systems, protective and automatic relays, machine P-Q operational characteristics;
– Fuel supply contracts for power plants;
– Electricity solutions of power plants determined according to Section 1, Section 2, and Section 3 Chapter II Circular No.57/2020/TT-BCT;
– Audited financial statements of power plants of the nearest year from the date of negotiating power purchase agreements.
Procedures for inspecting power purchase agreements:
– After negotiating power purchase agreements, both parties shall agree and be responsible for submitting reports on inspection of power purchase agreement and documents under Article 18 of Circular No.57/2020/TT-BCT to Electricity Regulatory Authority of Vietnam.
– Within 5 working days from the date on which applications for inspection of power purchase agreements are received, Electricity Regulatory Authority of Vietnam is responsible for examining legitimacy of the applications and requesting both parties to submit additional documents, if necessary, as per the law.
– Within 30 working days from the date on which adequate applications for inspection of power purchase agreements are received, Electricity Regulatory Authority of Vietnam is responsible for examining and providing feedback on power purchase agreements.
– Within 30 working days from the date on which feedback on power purchase agreement is provided, both parties are responsible for officially signing the power purchase agreements. In case Electricity Regulatory Authority of Vietnam fails to provide feedback on power purchase agreements before the deadline under Clause 3 of Circular No.57/2020/TT-BCT, both parties may officially sign the power purchase agreements based on clauses agreed upon. The Buyer is responsible for sending 1 copy of signed power purchase agreements to Electricity Regulatory Authority of Vietnam for storage and implementation monitor.
– In case electricity of according to recommendations of the Seller exceeds price range for electricity generation publicized by Minister of Industry and Trade, both parties are responsible for reporting, explaining and proposing solutions to enable Electricity Regulatory Authority of Vietnam to consider and report to Minister of Industry and Trade.