Procedures for negotiating power purchase agreements in Vietnam from Feb 02, 2021

Nguyen Trinh

16:51, 20/02/2021

Recently, the Ministry of Industry and Trade of Vietnam issued Circular 57/2020/TT-BCT stipulating method of determination of electricity generation costs and sequence of inspection of PPA.

According to the Circular, the Ministry of Industry and Trade of Vietnam stipulates the procedures for negotiating power purchase agreements as follows:

- For new power plants, power purchase agreements between parties must be signed before the construction commencement date.

- The Seller is responsible for preparing request for power purchase agreement negotiation and sending to the Buyer for negotiation and adoption of procedures for signing power purchase agreements.

- Within 15 working days from the date on which adequate written request from project developers is received, the Buyer is responsible for organizing power purchase agreement negotiation with the Seller. At the end of negotiation process, both parties must initial the draft power purchase agreements.

- After draft power purchase agreements have been initialed, the Buyer and the Seller shall agree and be responsible for reporting to Electricity Regulatory Authority of Vietnam.

Currently, Circular 56/2014/TT-BCT stipulates that within five working days since the draft PPA is initialled, the Buyer shall be responsible for establishing the documents for approval of the PPA and making submission to Electricity Regulatory Authority for inspection.

Vietnam's Circular 57/2020/TT-BCT takes effect from February 22, 2021, replacing Vietnam's Circular 56/2014/TT-BCT and Circular 51/2015/TT-BCT.

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