Principles for determining wholesale price and conditions for application of wholesale price in Vietnam

Specifically, according to Clause 2 Article 1 of Circular No. 25/2018/TT-BCT of the Ministry of Industry and Trade of Vietnam amending the title of Article 6 and supplementing Clause 1a to Clause 1 Article 6 of Circular No. 16/2014/TT-BCT, principles for determining wholesale electricity price are as follows:

- When adjusting the retail prices of electricity, the wholesale price of electricity sold to retailers shall be also adjusted by multiplying the decrease in the current wholesale price by the planned increase in the consumer price index (CPI) adopted by the National Assembly in the year of adjustment of retail prices.

- The Ministry of Industry and Trade shall provide guidance for determining the decrease in wholesale prices, which is not yet available, of new retailers buying wholesale electricity.

According to Circular No. 16/2014/TT-BCT, retailers in rural, collective, residential areas, commercial, service and domestic complexes and industrial parks must meet the following conditions:

- Have a license to distribute and sell electricity granted by the competent agency except the cases of exemption as defined in Point c, Clause 1, Article 34 of the Law on Electricity;

- Have an account book as regulated in which entries of electricity retail business must be separated from other businesses;

- Have a power purchase agreement (PPA) and electric meters installed to individual households as stipulated in Article 24 of the Law on Electricity and Clause 10 of Article 11 of the Law on Amendments and Supplements to a number of articles to the Law on Electricity;

- Have invoices to be issued to customers under the PPA as stipulated by the Ministry of Finance.

If any retailer who fails to meet these conditions, Vietnam Electricity or its affiliates shall be responsible for making report to the Services of Industry and Trade who then makes submission to the People’s Committee of provincial level for consideration and decision on handing over the electricity network within the management of this retailer to Vietnam Electricity or its affiliates for retailing electricity to customers.

View more amendments and supplements at: Circular No. 25/2018/TT-BCT of the Ministry of Industry and Trade of Vietnam takes effect from October 26, 2018, amending and supplementing Circular No. 16/2014/TT-BCT.

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