Overcoming the delay situation of implementing the BOT and IPP Power Projects

Overcoming the delay situation of implementing the BOT and IPP Power Projects - 

Government Office has notified the conclusion opinion of the Deputy Prime Minister Hoang Trung Hai at a meeting to review the progress of implementation of BOT and IPP power projects.

Since 1997 Vietnam has started implementing power generation projects by the Build-operate-transfer (BOT) scheme as Phu My 3 and Phu My 2.2 Gas Turbine Combine Cycle (GTCC) Projects. These are, to say, the successful BOT projects, bringing in the interests for both the host country and the investors contributing to the cause of the power supply guarantee and the gas industry development in Vietnam.

Beside those projects, the Ministry of Industry and Trade (MoIT) is also chairing the negotiation for developing many thermal power plant projects by BOT scheme. However, the negotiation performance is going very slowly, so even there is a project that has been licensed since around 10 years ago, but up to now can not yet close the finance for staring out the project.

Deputy Prime Minister Hoang Trung Hai pointed that, the BOT PPPs expect to cover a more and more high proportion in Power System of Vietnam up to 2020 and following years, so that, the delay of these projects should affect sufficient electricity supply for for socio-economic development of the country.

Deputy Prime Minister asked the MoIT in collaboration with relevant ministries and agencies to study supplementing and modifying Document No. 1604/TTg-KTN dated Sep 12, 2011 on the some of the main contents in BOT contract and Government guarantee for BOT thermal power plant projects in order to establish the common legal frameworks, facilitating the contract negotiation with a direction that Vietnamese Government will guarantee to exchange money from VND to US$ for only 30% turnover by VND after discounting the costs. For the guarantee rate of the currency conversion, the Government only guaranteers for the conversion into USD of 30% revenue of the project by Vietnam dong after deducting of expenditure in Vietnam dong. The 70% remain exchange demand, the BOT companies will perform the conversion in accordance with the regulations of Vietnam Law on foreign exchange management. State Bank of Vietnam will guarantee the sufficient foreign currency sources for BOT companies, when they need.

It is necessary to have the common regulations for a set of BOT Contracts and Government Guarantee & Commitment (GGU); supplement the regulations on the kinds of tax according to the current Tax Law of Vietnam. Ministry of Industry and Trade to agree with Ministry of Finance on calculation for contract liquidation in case of the project early termination, with accounting expected profit Vietnam side has to compensate due to itself fault.

Besides, Mr. Hai has directed MoIT to guide Investor of the Vinh Tan 1 Thermal Power Project (TPP) in preparing necessary conditions according to the regulations, Ministry of Justice to urgently revise and provide the Law Principle Opinions for Vinh Tan 1 BOT TPP project on the basis of the contents agreed and preliminarily signed in 2012 for the project finance closing and construction starting in early May 2015, contributing to ensuring power supply for the South in 2018 - 2020 period.

Mr. Hai also asked the MoIT to promote the negotiation process for the contracts of the BOT projects, for which the negotiation is almost completed negotiations, prepare to preliminarily sign the power purchase contracts between EVN and Vung Ang 2, Vinh Tan 3 and Van Phong 1 TPP Projects.

MoIt should urgently work with investors to revise, rapidly complete and preliminarily sign the documents of the Nghi Son 2 TPP in the second quarter of 2015; direct Vinacomin and Investor of Nam Dinh 1 TPP to promptly sign the contract for coal purchase, complete the other contracts and finance closing, and start out the project construction in 2015.

MoIT has to inspect, supervise and speed up, and make a general report on the situation of implementation of Independent Power Projects (IPP) as Cong Thanh, Thang Long TPPs… with an aim to take up the difficulties and obstacles for them.

DPM Hoang Trung Hai also required MoIT to promptly complete and submit to the Prime Minister for approval the Adjustment Project of Power Master Planning VII, that will be a basis for defining progress of power generation projects in general and the BOT projects in particular, it also is a basis for signing MoU for project development projects and approving the Feasibility Study Reports of BOT Thermal Power Projects.

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