Vietnam – Power – Direct Contracting with off-takers other than EVN and Nuclear Power – Interview Dr Oliver Massmann with Energy impact center

Question#1: Can power producers contract directly with off-takers?

Answer#1:

Yes, they can contract directly with authorized off-takers. Please kindly note that at this stage, EVN and its subsidiaries are still main and key authorized wholesale off-takers.

However, there is an exception for authorized off-takers in term of Rooftop Solar System (which refers to solar system in which solar panels are installed on the roof of the construction with no more than 1 MW in power and directly or indirectly connected to power grid with up to 35kV of the off-takers). In brief, authorized off-takers in this case may be other qualified enterprises (i.e., not EVN and its subsidiaries) which purchasing power directly from the Rooftop Solar System producers.

According to the roadmap provided under Decision No. 63/2013/QD-TTg of the Prime Minister dated 8 November 2013, the Vietnam electricity market would be liberalized as follows:

(i) Phase 1: Competitive power generation market (end of the year 2014);

(ii) Phase 2: Pilot competitive power wholesale market (2015-2016) and fully competitive power wholesale market (2017-2021); and

(iii) Phase 3: Pilot competitive retail market (2021-2023) and fully competitive power retail market (after 2023).

In order to implement fully the competitive retail market, other enterprises (in addition to EVN and its subsidiaries) would be allowed to become authorized wholesale off-takers for resale.

Question#2: Can an Independent Power Producer operate a nuclear facility?

Answer#2: Yes, in theory it is possible.

However, please kindly note that a nuclear facility project is a national important level project pursuant to Vietnamese law, which is subject to in principle approval from the National Assembly of Vietnam (“NA”). In addition, considering the investment scale and social-economic impact of a nuclear facility, to our best knowledge, EVN should be the only investor acceptable to the NA. However, frankly, we strongly believe that a Public Private Partnership form (such as BOT IPP) should be considered by Vietnam as an alternative, feasible and practical mechanism suited for running/ owning nuclear power plants in Vietnam. In fact, EVN’s financial capability and nuclear power experience are limited considering EVN and its subsidiaries’ equity and financial sources are not very likely sufficient for many other required and planned power/ grid projects in Vietnam.

FYI, two nuclear power plants in Ninh Thuan (capacity of 4,600 MW) had been approved by the NA on 25 November 2009. EVN was planned to be the sole investor of these two nuclear projects at that time. However, this in principle approval was abolished on 22 November 2016 under Resolution No. 31/2016/QH14 of the NA due to concerns over security, experience, financial capability and environment impact.

On 22 February 2021, the Ministry of Industry and Trade (“MOIT”) has made available to the public the long-awaited draft Power Development Planning VIII (“PDPVIII”). According to the draft PDPVIII, nuclear power projects would only be considered by Vietnam after 2030 until 2045.

Question#3: Can an Independent Power Producer own a nuclear facility?

Answer#3: Yes, in theory it is possible.

Please see our answer#2.

If you have any questions, please kindly let us know.

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For more information on the above, please do not hesitate to contact the author Dr. Oliver Massmann under omassmann@duanemorris.com. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC, Member to the Supervisory Board of PetroVietnam Insurance JSC and the only foreign lawyer presenting in Vietnamese language to members of the NATIONAL ASSEMBLY OF VIETNAM.