Vietnam: Rules on determination of contents of total cost of electric power distribution – retail

According to Article 9 of Circular No. 12/2014/TT-BCT of the Ministry of Finance of Vietnam, contents of total cost of electric power distribution – retail shall be determined according to the following rules:

- Total cost of materials in year N shall be determined according to the limits issued by the competent authorities, reasonable and lawful cost in year N-2 which are audited and published, total cost estimated in the years N-1 and N;

- Total cost of salaries in year N of the Power Corporation i including total cost of shall be determined according to relevant law provisions;

- Fixed asset depreciation in year N shall be determined according to the Law provisions for useful life and methods for depreciating fixed assets;

- Total cost of major repair of the Power Corporations in year N (without the budget for upgrading tangible fixed assets whose costs are increased) shall be determined according to the limits issued by the competent authorities, reasonable and lawful costs in year N-2 audited and published, total cost estimated in year N-1;

- Total cost of purchased services in year N shall be determined according to the limits issued by the competent authorities, reasonable and lawful costs in year N-2 audited and published, total cost estimated in year N-1 and the operation plan in year N;

- Total amount of other charges in year N shall be determined according to the limits issued by the competent authorities, reasonable and lawful costs in year N-2 audited and published, total cost estimated in the years N-1 and N;

- Total financial cost in year N including interests on loans and relevant fees which shall be paid in the year N shall be determined according to the credit contract and exchange differences estimated in year N;

- Total cost of customer development in year N shall be determined according to the limits issued by the competent authorities, reasonable and lawful cost in year N-2 audited and published, total cost estimated in the years N-1 and N;

- Total cost of Power generation from diesel fuel() shall be the cost of the electricity generation of the generation station using diesel oil owned by the Power Corporation i.

Concurrently, the Power Corporations are responsible for sending the schemes for improving the efficiency of the operation and management of the electric power distribution networks, the quality of electric power distribution and the quality of customer services which may cause the rise of electricity generation cost to Vietnam Electricity upon the request of The Ministry of Industry and Trade. The schemes must be submitted to the Electricity Regulatory Authority for assessment and then the Electricity Regulatory Authority shall submit the schemes to the Ministry of Industry and Trade for approval.

View more details at Circular No. 12/2014/TT-BCT of the Ministry of Finance of Vietnam, issued on March 31, 2014.

Le Vy

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