Understanding the implementation of new amendments to electricity law

Published on BTimes, November 15th, 2013

The Government issued Decree 137/2013/ND-CP implementing the Law on Electricity on 21 October 2013.

The Decree provides a master plan for investment in electricity development, electricity purchase and sale, electricity prices, electricity operating licences and State administration of electricity activities and electricity use.

Master plan on electricity development

The master plan on electricity development is amended every five years or in shorter cycles to meet the requirements of socio-economic development.

The Ministry of Industry and Trade (MoIT) carries out the preparation and approval of a proposal and cost estimate to amend the national master plan on electricity development.

The Provincial People’s Committee (PPC) carries out the preparation and approval of a proposal and cost estimate to amend the provincial master plan on electricity development.

MoIT exercises State administration of the master plan on electricity development, guides preparation of an annual plan on investment in electricity development based on the approved master plan, announces the approved national master plan on electricity and amendments, while also performing other duties.

The PPC announces the approved provincial master plan on electricity development and amendments, arranges land to be used for electricity projects in the national master plan and the provincial master plan, closely co-ordinates with investors in electricity projects for site clearance, compensation payments, relocation and resettlement assistance, while also performing other duties.

Investors in electricity projects must promptly provide adequate funding for site clearance, compensation payment, plus relocation and resettlement assistance as a result of their electricity projects, submit to the PPC relevant dossiers such as site clearance, safety corridors, housing for staff, etc… and co-ordinate with the units assigned by the competent State authority to conduct site clearance, compensation payments, plus relocation and resettlement assistance.

Securing performance of electricity purchase and sale contract (“Contract”)

The purchaser using an average 1,000,000 kWh or more a month, must carry out security measures for the Contract performance.

The security value for Contract performance is agreed by the parties and does not exceed fifteen days’ electricity energy calculated on the basis of the registered average monthly electricity in the Contract and the applicable normal hourly price of electrical energy.

The seller may cease electricity supply to the purchaser if the purchaser fails to carry out the security measures or fails to maintain them.

Offshore electricity purchase and sale

The Prime Minister approves the policy in principle for offshore electricity purchase and sale via the national power grid involving voltages of 220kV or more. The MoIT approves in principle the electricity entity’s proposal of offshore electricity purchase and sale via the national power grid involving voltages of below 220kV.

The PPC guides, manages, supervises and inspects electricity purchases from foreign countries in border areas only.

Electricity prices and fees

The MoIT regulates the methods and procedures for preparation and evaluation of frameworks for electricity generation prices, electricity wholesale prices, electricity transmission prices, prices for providing support services to the electricity system, fees for managing the electricity system, plus fees for managing trading on the power market, after obtaining opinions from the Ministry of Finance (MoF).

The Minister of Industry and Trade approves fees for managing the electricity system and fees for managing trading on the power market after obtaining MoF opinions, also overseeing the framework of electricity generation prices and electricity wholesale prices, electricity transmission prices and prices for providing support services to the electricity system.

The two-component electricity price, comprising the output price and the electrical energy price will apply. The MoIT makes a schedule for implementing the two-component electricity price and the applicable entities, then submits it for the Prime Minister’s approval.

Conditions for issuance, amendment and supplement of electricity operating licences

To obtain an electricity operating licence or to have such licence amended or supplemented, an organisation or individual must satisfy the following general conditions:

(1) Be an organisation or individual established and operating under the laws;

(2) Have registered business scope consistent with the scope required for licence;

(3) Have eligible dossiers submitted for the electricity operating licence;

(4) Have paid fees for the electricity operating licence.

The Decree also provides specific conditions for licences of electricity generation operations, electricity transmission operations, electricity distribution operations, electricity wholesale operations, electricity retail operations, electricity import/export operations and other licences. The Decree takes effect on 10 December 2013 and replaces Government Decree 105/2005/ND-CP (17 August 2005).

 

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