Method for determining the annual electricity generation cost of power plants before participating in the competitive electricity market in Vietnam

Method for determining the annual electricity generation cost of power plants before participating in the competitive electricity market in Vietnam

The method for determining the annual power generation costs of power plants before participating in the competitive electricity market for certain types of power plants, with the total power generation cost in year N (C_N) of the plant, is determined by the following formula:

C_N = C_VL + C_TL + C_KH + C_DVMN + C_SCL + C_TC + C_K + C_NL + C_GT

Where:

- C_VL: Material costs in year N (currency);

C_VL: Material costs in year N (currency), determined based on data audited by an independent auditing unit from year N-2, excluding extraordinary costs of year N-2 (if any), adjusted for inflation annually based on the average Consumer Price Index (CPI) of the last 3 years prior to the cost determination period as published by the central statistics authority, and including reasonable projected costs for year N not accounted for or fully accounted for in year N-2;

- C_TL: Wage costs in year N (currency);

C_TL: Wage costs in year N (currency) include total wage costs and wage-related expenses such as electric safety, health insurance costs, social insurance, unemployment insurance, and union fund costs, determined according to relevant legal regulations;

- C_KH: Depreciation costs of fixed assets in year N (currency);

C_KH: Depreciation costs of fixed assets in year N (currency), determined based on the current value of fixed assets and those projected to be put into use during year N, according to policies on managing, using, and depreciating fixed assets issued by the Ministry of Finance or competent authorities or organizations;

- C_DVMN: External service costs in year N (currency);

External service costs in year N, excluding electricity purchase costs, are determined based on data audited by an independent auditing unit from year N-2, excluding extraordinary costs of year N-2 (if any), adjusted for inflation annually based on the average CPI of the last 3 years before the determination of sales price as published by the central statistics authority, and including reasonable projected costs for year N not accounted for or fully accounted for in year N-2;

- C_SCL: Major repair costs in year N (currency);

C_SCL: Major repair costs in year N (currency), determined based on the cost estimates of major repair items in year N approved by competent authorities;

- C_TC: Financial costs in year N (currency);

Financial costs in year N include total loan interest expenses, bonds, financial leases, and fees for financing, payable in year N, determined according to contracts, legal documents, and projected loans serving production and business activities in year N; exchange rate differences are determined according to financial accounting regulations (if any);

- C_K: Other monetary costs in year N (currency);

Other monetary costs in year N are expenses including: land rental costs, resource taxes, forest environmental service fees, water resource exploitation rights fees, various types of taxes, fees, meal allowances according to regulations, and other monetary expenses.

Land rental costs, resource taxes, forest environmental service fees, water resource exploitation rights fees, various types of taxes, fees, meal allowances are determined according to current regulations.

Other monetary costs in year N of the plant are determined based on data audited by an independent auditing unit from year N-2, excluding extraordinary costs of year N-2 (if any), adjusted for inflation annually based on the average CPI of the last 3 years prior to the power generation cost determination as published by the central statistics authority, and including reasonable projected costs for year N not accounted for or fully accounted for in year N-2;

- C_NL: Fuel costs in year N (currency);

C_NL: Fuel costs in year N (currency), determined based on input parameters used in the planning of electricity supply and operation of the national electricity system in year N and/or fuel purchase agreements;

- C_GT: Deductibles in year N (currency).

C_GT: Deductibles from the cost of goods sold from the liquidation and sale of fixed asset materials projected for year N (currency).

More details can be found in Circular 08/2025/TT-BCT which takes effect on February 1, 2025.

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