VIETNAM – MOIT IS REVIEWING NEW FEED IN TARIFFS (FiTs) FOR WIND POWER PROJECTS

Recently, the Government Office has received proposals from several provincial People’s Committees on extending the current wind FiTs because many projects are being delayed due to the Covid-19 pandemic, especially the forth wave of Covid-19 since May 2021 that resulted in (almost) nationwide lockdown. Under Decision 39/2018/QD-TTg of the Prime Minister regarding development of wind power projects in Vietnam, the current wind FiTs end on 1 November 2021.

The current FiTs are as follows:

With regard to onshore wind power projects: The purchase price at the delivery point is VND 1,928 per kWh, excluding VAT and equivalent to 8.5 UScents/kWh according to the USD/VND exchange rate quoted by the State Bank of Vietnam on 30 August 2018 – USD 1 = VND 22,683. The electricity purchase price shall be adjusted according to the VND/USD exchange rate.

With regard to offshore wind power projects: The purchase price at the delivery point is VND 2,223 per kWh, excluding VAT and equivalent to 9.8 UScents/kWh according to the USD/VND exchange rate quoted by the State Bank of Vietnam on 30 August 2018 – USD 1 = VND 22,683. The purchase price shall be adjusted according to the VND/USD exchange rate.

Upon the provincial People’s Committees’ proposals, the Government Office has instructed the Ministry of Industry and Trade (MOIT) to review these proposals and report back by 30 September 2021.

Since 2020, MOIT has proposed to extend the current FiT deadline to 31 December 2023. After 2023, MOIT proposes wind energy projects to apply auction, bidding methods. MOIT also proposed to assume the responsibility of calculating new FiT rate for wind power projects, applicable from 1 November 2021 to 31 December 2023 in case the Prime Minister doesn’t agree to extend the current FiT rate.

The need to extend the deadline for current FiT rates is essential because the projects waiting to be included in the PDP VIII is unlikely to have commercial operation date before November 2021, because the construction of wind power projects takes a long time – For feasibility study reports, investors must carry out wind measurement for at least 12 months. Moreover, wind turbines are mostly imported from abroad, which costs investor extra time, especially when there has been unexpected delay of equipment delivery due to the global pandemic.

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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.