VIETNAM – SOLAR POWER – KEY POLICY NEWS – What you must know:

After Prime Minister Nguyen Xuan Phuc’s notification No. 402/TB-VPCP on 22 November 2019 on FiT 2 and auction scheme, we would like to update some key policy progress as belows:

1. Most recent draft of MOIT on FiT 2
The draft only allows only a tiny proportion of already-approved solar projects may qualify for FiT following MOIT document dated 22 November suggested that FiT 2 will only be available for projects with signed PPAs that are “under construction” and provided they reach COD by end of 2020. The MOIT document seeks to define what “under construction” means for this purpose. It takes a narrow view, referring to Article 6.1.b of Decree 59/2015/ND-CP dated 18 June 2015 re management of construction projects to suggest that for a project to be considered “under construction” the project must have completed appraisal of detailed / technical construction designs prior to 22 November 2019. According to the MOIT’s data contained in the draft, it appears that only 4 out of 23 projects having already-signed PPAs but not yet reached COD would meet this criteria (some sources indicate there may be in excess of 30 such projects).

2. Document no.9608/BCT-DL on suspension of the approvals for solar power projects

Vietnam’s Ministry of Industry and Trade has issued OL 9608/BCT-DL, in which it urges provinces and directly under the Central Government and the Electricity of Vietnam, on stopping proposals and agreements for solar power projects (SPPs) under Feed in Tariff (FIT) mechanism. The ministry said that only projects with signed FIT contracts that are scheduled for completion scheduled by the end of this year will be able to secure subsidies, while all of the remaining projects will have to compete again in future auctions. The Ministry of Industry and Trade is now working with ministries and agencies to complete the draft of a new auction mechanism.

3. Respond from EVN to MOIT
EVN has sent letter no. 6774/EVN-TTD dated 12/12/2019 to MOIT to suggested FiT 2 to be applied to the projects which have construction contracts before 22/11/2019 (of any part of the project) and have evidence on the implementation of the project. In addition, EVN suggested that to the grid-connected projects under COD before 1/7/2019, the remaining part which has not put under COD is entitled to FiT2.

4. Temporary accounting of FIT price for COD projects after 30/6/2019.
EVN has issued letter no.6909/EVN-TCKT, which instructs businesses to temporarily account FIT price of 1.916 VND/kWh (VAT excluded), unless any other guidance is issued.

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Please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.com if you have any questions or want to know more details on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.