The Ministry of Industry and Trade seeks opinions on the mechanism for developing power projects using natural gas and LNG

The Ministry of Industry and Trade, as the authoritative body responsible for energy policy and regulation, has meticulously crafted the draft decree regulating the mechanism for purchasing electricity from natural gas and LNG. This draft decree results from extensive research, stakeholder consultations, and a commitment to ensuring a fair and competitive electricity market.

According to the Electricity Plan VIII, a comprehensive energy strategy for the period 2021 - 2030, with a vision to 2050, approved by the Prime Minister in Decision No. 500/QĐ-TTg dated May 15, 2023, the total installed capacity of power sources by 2030 is 150,489 GW (nearly double the current total installed capacity of about 80 GW). This plan forms the basis for the regulations in this decree, which aim to support the plan's goals by attracting investment in power plant projects using natural gas and LNG. Investing in these projects not only contributes to the country's energy security but also offers significant economic benefits. Of this, the total capacity of new gas power sources to be invested in is 30.424 MW (domestic gas has ten projects with a total capacity of 7,900 MW, and LNG has 13 projects with a total capacity of 22,824 MW).

This decree is designed for organizations and individuals actively investing in power plant projects using natural gas and LNG.

1. Power generation units owning gas power plants connected to the national power system.
2. Power units include Vietnam Electricity Group (EVN) and Vietnam Oil and Gas Group (PVN), The unit that regulates the power system and operates the electricity market transactions.

Mechanism for LNG power plant projects using imported LNG.

1. For organizations and individuals participating in the investment of LNG power plant projects, your active role in implementing the projects already in the Electricity Plan according to regulations is crucial. This ensures effectiveness and underscores the unified approach that enterprises must take. You are expected to actively negotiate, sign, and take responsibility for contracts and commercial agreements, highlighting your integral role in this process.
2. The government's agreement, in principle, to the mechanism of converting gas prices to electricity prices for power plants is not just a significant step, but a testament to the stability and reliability of the regulatory framework. This agreement, which is a part of the regulations in this decree, is designed to ensure stability and reliability in the regulatory framework, instilling a sense of security in the industry and among all participants.
3. The government is committed to ensuring fair competition with other power sources in the electricity market up to 2030. This commitment is a cornerstone of the regulations in this decree, and it is designed to promote a level playing field for all participants. It stipulates that the proportion of electricity through long-term power purchase contracts must be at least 70% during the debt repayment period of the power plant project but at most 07 years to ensure feasibility in attracting investment and avoiding substantial impacts on retail prices.

Mechanism for gas power plants using domestic natural gas.

1. The government agrees, in principle, to convert gas prices to electricity prices for power plants for crucial oil and gas projects that contribute significantly to economic development, ensure national energy security and defense security, and protect Vietnam's sovereignty.
2. The Ministry of Industry and Trade guides the mechanism for consuming upstream gas production from the Blue Whale gas field, gas Lot B. The mechanism is designed to ensure the efficient and effective use of these gas resources while also promoting fair competition in the electricity market. It also includes provisions for protecting national energy security and defense security and safeguarding Vietnam's sovereignty.

The main contents of the electricity purchase contract are designed to ensure a fair and transparent process for purchasing electricity while also protecting the interests of all parties involved.

1. Power generation units sign contracts with EVN according to the form issued by the Ministry of Industry and Trade to participate in the competitive wholes, a crucial part of our energy strategy, ale electricity market and sell the power plant’s electricity to the immediate electricity market.
2. The cost of purchasing electricity from power plants using domestically exploited natural gas or imported LNG is reasonable and legitimate, and it is calculated and adjusted in the retail electricity price.
3. The contract language used is Vietnamese. The buyer and the seller may agree to supplement the contract with the language used in English; the parties may agree that English will be given priority.
4. The law regulating and resolving disputes complies with Vietnamese law. Parties may agree to apply foreign law appropriate to issues not fully controlled by Vietnamese law.
5. The electricity price in the power purchase contract is calculated in US dollars, and payment is made in Vietnamese Dong.

👉 Drafted decree.