Recently, the Government has released the draft decree on the bidding process to select investors for power projects (“Draft Decree”). Under this Draft Decree, the “power projects” consist of “power grid projects” and “power generation projects” whereby (i) power grid projects mean the construction and development projects of power transmission lines, transformers and auxiliary equipment for power transmission while (ii) power generation projects mean the projects for wind power, hydroelectricity, thermal power, solar power, biomass, geothermal, and the other new energy sources. As for the scope of application, it is also important to note that power projects being funded by public-private partnerships (PPPs), official development assistance (ODA), and concessional loans from foreign sponsors are not covered by this Draft Decree. Other notable points of the Draft Decree are as follows:
Regarding the bidding process, under the Draft Decree, the process of bidding will be implemented by the following steps (i) assessment of pre-feasibility study, issuance of in-principle investment decision and announcement of project; (ii) investors’ selection; (iii) execution of project contracts between the bid winning investor and the competent authority; (iv) assessment of feasibility study; (v) negotiation, finalization and execution of PPA between the bid winning investor and EVN: (vi) implementation of project. According to the Draft Decree, there will be a total of four (4) forms of selection process being (i) open bid; (ii) competitive bid; (iii) direct appointment; and (iv) selection in specified cases.
It is worth noting that the Draft Decree established a rather strict process to select investors implementing the projects in terms of technical experiences and financial ability. The selected investors are also aimed to support EVN in purchasing the most affordable energy generated/power grid from the investors.
As for the ceiling price for electricity in the bidding process, the proposed electricity selling price of the selected investor must be within the price bracket for electricity generation at the issuance date of the bidding documents as specified in Vietnamese dongs (VND/kWh), and the investor’s bid price will not be higher than the ceiling price under this price bracket. In the further process of negotiating the PPA with EVN, the electricity selling price will not exceed the price of the winning bid.
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Please do not hesitate to contact Dr. Oliver Massmann at omassmann@duanemorris.com in case you need more analysis on the Draft Decree. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.