Chương III: Biểu giá chi phí tránh được và hợp đồng mua bán điện mẫu cho các dự án điện sinh khối nối lưới

MINISTRY OF INDUSTRY AND TRADE -------	SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness ---------------
No. 44/2015/TT-BCT	Hanoi, 09 December 2015

 

CIRCULAR

PROVIDING FOR DEVELOPMENT OF AVOIDABLE COST TARIFF AND SAMPLE OF ELECTRICITY SALE CONTRACT APPLICABLE TO BIOMASS POWER PROJECTS

Pursuant to the Electricity Law No. 28/2004 / QH11 dated 03/12/ 2004; the Law amending and supplementing some articles of the Electricity Law dated 20/11/2012;

Pursuant to Decree No. 95/2012/ND-CP dated 12/11/ 2012 of the Government defining the functions, duties, power and organizational structure of the Ministry of Industry and Trade;

Pursuant to Decision No. 24/2014/QD-TTg dated 24/3/2014 of the Prime Minister on mechanism of development assistance of biomass power project in Vietnam;

At the request of the General Director of General Directorate of Energy,

The Minister of Industry and Trade issues this Circular providing for the project development, the avoidable cost tariff and the sample of electricity sale Contract applicable to biomass power projects.

Chapter 1

GENERAL PROVISIONS

Article 1. Scope of application

This Circular provides for the project development, the avoidable cost tariff applicable to biomass power projects and sample of electricity sale Contract applicable to biomass power (referred to as sample of electricity sale Contract).

Article 2. Subjects of application

This Circular applies to:

1. Investors of biomass power projects;

2. Unit managing and operating biomass power works;

3. Electricity buyer;

4. Organizations developing the biomass power projects for business;

5. Other relevant organizations and individuals;

Chapter II

DEVELOPMENT OF BIOMASS POWER PROJECTS

Article 3. Adding and adjusting the biomass power projects in the biomass energy use and development planning

1. The owners of biomass power projects shall prepare dossier to propose the biomass power projects in accordance with law on investment and construction of works and it to the People’s Committee of provinces and centrally-run cities (referred to as provincial People’s Committee) where the projects are located. Based on the proposal for projects, the provincial People’s Committee shall prepare dossier to request the addition of projects in the biomass energy use and development planning (referred to as Dossier for planning addition) in accordance with provisions in Article 4 of this Circular and send it to the Ministry of Industry and Trade.

2. Where the dossier is not complete or valid, within 05 (five) working days after receiving the dossier, the Ministry of Industry and Trade (the General Directorate of Energy) shall require the dossier addition in writing.

3. The General Directorate of Energy shall verify the Dossier for planning addition within 30 (thirty) working days after receiving valid dossier. In case of necessity, the General Directorate of Energy is permitted to hire consultants and critics serving assessment. Based on the assessment result, the General Directorate of Energy shall make a report to the Minister of Industry and Trade to consider, approve or submit it to the Prime Minister for approval.

Article 4. Dossier for addition of project in the biomass energy use and development planning

The dossier for addition of project in the biomass energy use and development planning includes:

1. The report of Chairman of People’s Committee at provincial level to request the addition of project in the biomass energy use and development planning.

2. Basic information about the investor: Documents of legal status, business registration, key personnel, experience in project implementation, financial and technical capacity particularly the list of completed projects must be declared (including electricity and engineering projects, if any).

3. Information about the proposed biomass power project

a) Type of biomass and supply capacity;

b) The necessity for investment in project development, favorable and difficult conditions, regulation on exploitation and use of national natural resources (if any);

c) Project description: location, scale and area of works construction, works items of project; contents of sector planning and construction planning of locality;

d) Brief presentation of implementation solutions: The technical and technological plan and capacity; technical infrastructure connection plan; equipment installation plan; implementation progress and form of project management; general plan about relocation compensation and technical infrastructure building assistance plan (if any) and cost plan;

dd) Assessment of environmental impact, solutions to fire prevention and fighting and requirements for security and national defense;

e) Total investment of project; capital arrangement capability, capital and financing capability based on the progress; analysis and assessment of economic, financial and social effects of projects.

4. Opinions of the regional Power Corporation or power transmission unit (if connected to the transmission power system) about the Dossier for planning addition.

Article 5. Project of investment and development of grid-connected biomass power

1. The investor only prepares the project of investment in biomass power under biomass energy use and development planning and electricity development planning. The content of biomass power investment project is made under the current regulations on management of works construction and in accordance with the provisions in Clause 3 of this Article.

2. For the biomass power projects invested under different stages, the investor shall prepare the investment project under each stage of project. Where the operational point of project has a discrepancy of over 06 (six) months compared with the progress specified in the biomass energy use and development planning, the investor shall report to the provincial-level People’s Committee and the General Directorate of Energy -Minister of Industry and Trade.

3. The content of biomass power investment project shall comply with regulation of law on management of works construction investment with the following additional main contents:

a) Assessment of effect of connection plan of biomass power project on the area power system;

b) Plan and scheme of cost and techniques for dismantlement and handling of equipment of the biomass power plant after the completion of project.

Article 6. Requirements for environmental protection

The investment and development of biomass power projects must comply with the provisions of the Law on environmental protection and other relevant legal normative documents.

Article 7. Assistance to off-grid biomass power projects

1. Principles to consider the assistance to off-grid biomass power projects

a) Economic, social and environmental efficiency assurance;

b) Project with completed investment shall be put into operation;

c) Input data mainly for calculation of electricity price and assistance unit price for the biomass power projects are considered on the following principles:

- Where the installed capacity is greater than the actual required capacity of area power grid, the actual generation power output of the previous year and the power output planned to be generated in the following years are used as a basis for identifying the assisted unit price. For other projects, the generation power output is taken by the actual generation output or estimated generation output in the approved investment projects, take the greater number;

- The total project investment is taken by the total investment in the approved investment project;

- The depreciation expense in accordance with current regulations of law.

2. Order to register the assistance of electricity price for the projects of off-grid biomass power projects.

a) The investor of off-grid biomass power projects shall prepare the Dossier for assistance to electricity price for the off-grid biomass power projects and send it directly or by post to the General Directorate of Energy. The number of dossier: 10 (ten) and 01 (one) CD/DVD/USB containing soft file of Dossier and other attached documents;

b) Within 30 (thirty) days after receiving all valid dossier, the General Directorate of Energy shall verify such dossier and report to the Minister of Industry and Trade for submission to the Prime Minister for consideration and approval. In case of necessity, the General Directorate of Energy is permitted to hire consultants and critics serving assessment.

Where the dossier is not complete or valid, within 05 (five) working days after receiving the dossier for assistance to electricity price for off-grid biomass power project, the General Directorate of Energy shall inform in writing to the investors to require the addition of dossier or re-prepare their dossier.

3. The dossier includes:

a) The written request for assistance to electricity price for the off-grid biomass power project;

b) The investment project in which there are explanations about the investor, electricity price scheme and other main contents about the necessity and assessment of efficiency of assistance scheme;

c) Operation plan and business plan;

d) Plan and scheme of cost and technique for dismantlement and handling of equipment of biomass power plant after the completion of project;

dd) Opinions of the provincial-level People’s Committee about the content of Dossier for assistance.

Chapter III

AVOIDABLE COST TARIFF AND SAMPLE OF ELECTRICITY SALE CONTRACT APPLICABLE TO GRID-CONNECTED BIOMASS POWER PROJECTS

Article 8. Order to develop, approve and announce the avoidable cost tariff applicable to biomass power projects

1. Before 31/10 of each year, the unit operating the power system and electricity market shall preside over and coordinate with the Buyer and the Seller and other power plants to update the database, calculate the avoidable costs of the national power system (avoidable costs) specified in Decision No. 24/2014/QD-TTg dated 24/3/2014 of the Prime Minister on mechanism of development assistance to the biomass power projects in Vietnam for the subsequent years by the method specified in Appendix II issued with this Circular for submission to the Electricity Regulatory Authority.

2. Before 30/11 of each year, the Electricity Regulatory Authority shall coordinate with the General Directorate of Energy to assess the input parameters and the result of calculation of annual avoidable costs prepared by the unit operating the power system and electricity market for submission to the Minister of Industry and Trade for review and approval. In case of necessity, the Electricity Regulatory Authority can consult the relevant organizations or individuals during the assessment.

3. Before 20/12 of each year, the General Directorate of Energy shall:

a) Study and submit the avoidable cost tariff to the Minister of Industry and Trade (define the coefficient k1 and k2 in Appendix 1) applicable to the biomass power projects at reasonable level to encourage the power production from biomass energy while ensuring the conformity with the social-economic condition of the country in each stage;

b) Within 02 (two) days after the tariff applicable the biomass power projects has been issued, the General Directorate of Energy shall announce it for the subsequent year on its website and of the Ministry of Industry and Trade.

5. Where the tariff applicable to the biomass power projects has not yet announced, the tariff of the previous year shall be temporarily used until the tariff applicable to the new biomass power projects is announced. The difference due to calculation under the old tariff and new tariff shall be refunded to each other by the parties in the first payment upon application of new tariff.

Article 9. Application of avoidable cost tariff to the biomass power projects

The avoidable cost tariff is applicable to the grid-connected biomass power projects except for the following cases:

1. Thermal power co-generation projects.

2. Power generation project using bagasse with back pressure for sugar plants.

Article 10. Application of sample of electricity sale Contract to the biomass power projects

1. The use of sample of electricity sale Contract to the biomass power projects applicable to the biomass power projects in electricity sale between the biomass power projects and the Buyer.

2. The content of sample of electricity sale Contract for the grid-connected biomass power projects specified in Appendix III issued with this Circular.

3. The electricity Seller and the Buyer shall receive the content of sample of electricity sale Contract to clarify their responsibility and power but are not permitted to change its basic content.

Chapter IV

IMPLEMENTATION PROVISION

Article 11. Responsibility of state management bodies

1. Responsibility of the General Directorate of Energy:

a) Disseminates, guides and inspects the compliance with this Circular;

b) Assists the electricity Seller and the Buyer to settle the problems in the sample of electricity sale Contract as required by either Party.

2. The Electricity Regulatory Authority shall direct and guide the unit operating the power system and electricity market to calculate the avoidable costs in accordance with the provisions in Appendix II issued with this Circular.

3. The provincial People’s Committee shall monitor, supervise and inspect the development of biomass power projects at localities according to the approved biomass energy use and development planning and in accordance with the provisions in this Circular.

Article 12. Responsibility of relevant organizations and individuals

1. The Vietnam Electricity shall fully calculate the costs of electricity purchase of the biomass power projects and put them into the input parameters in the electricity sale price plan of Vietnam Electricity and submit it to the competent level for approval.

2. The electricity seller (the generating unit) shall:

a) Make agreement and sign the Contract with the Buyer under the sample of electricity sale Contract and under the avoidable cost tariff;

b) Install meters in accordance with current regulations to measure the used electricity for payment of electricity bill;

c) Sell all power on busbar of plant to the Buyer upon application of avoidable cost tariff;

d) Send 01 (one) signed electricity sale Contract to the General Directorate of Energy within 30 (thirty) days from the date of signing;

dd) Comply with regulation on operation of power system, transmission power system and power distribution system issued by the Ministry of Industry and Trade.

3. The Buyer shall:

a) Make agreement and sign the Contract with the Seller under the sample of electricity sale Contract and under the avoidable cost tariff if the Seller meets the conditions specified in Article 5 of this Circular and other relevant laws;

b) Comply with regulation on operation of power system, transmission power system and power distribution system issued by the Ministry of Industry and Trade.

4. Annually, the unit operating the power system and electricity market shall calculate the avoidable costs for submission to the Electricity Regulatory Authority/

Article 13. Transitional provision

For the electricity sale Contracts signed before the effective date of this Circular, both parties shall have to reach an agreement and sign amendment addendum in accordance with the provisions of this Circular.

Article 14. Effect

1. This Circular takes effect from 25/01/2016.

2. Any difficulty or problem arising during the course of implementation should be promptly reported to the Ministry of Industry and Trade for amendment and addition accordingly./.

 

FOR THE MINISTER DEPUTY MINISTER Hoang Quoc Vuong

 

APPENDIX I

AVOIDABLE COST TARIFF APPLICABLE TO THE BIOMASS POWER PROJECTS
(Issued with Circular No. 44/2015/TT-BCT dated 09/12/2015 by the Minister of Industry and Trade)

Table 1. Avoidable cost tariff

	Price component	Cost (dong/ kWh)	(US$ Cent/ kWh) Equivalent (US$ Cent/ kWh)
A.	Avoidable power costs
A.1.	Avoidable generation power costs
A.2.	Avoidable transmission loss costs
A.2.1	Northern region
A.2.2	Central region
A.2.3	Southern region
B.	Avoidable generation capacity costs
C.	Avoidable carbon tax costs*
D.	Local employment benefits *
	Total (P)
PMB	Northern region = k1*(A.1+A.2.1)+k2*B+C+D
PMT	Central region = k1*(A.1+A.2.2)+k2*B+C+D
PMN	Southern region = k1*(A.1+A.2.3)+k2*B+C+D)

Note:

* Applicable upon regulated by law.

- k1, k2: Valuable adjustment coefficient <=1 reviewed and submitted by the General Directorate of Energy to the Ministry of Industry and Trade annually.

- The avoidable cost tariff is VAT excluded. The Buyer must make payment of this tax in accordance with the current regulations of law.

 

APPENDIX II

METHOD TO CALCULATE THE AVOIDABLE COSTS OF THE NATIONAL POWER SYSTEM
(Issued with Circular No. 44/2015/TT-BCT dated 09/12/2015 by the Minister of Industry and Trade)

1. The avoidable generation power costs and the avoidable generation capacity costs

The avoidable generation power costs and the avoidable generation capacity costs are calculated based on the method of coal power plant with assumed import. Accordingly, the electricity Buyer shall avoid building a coal power plant with assumed import by purchasing electricity from the biomass power plant. Then, the fixed costs of the assumed power plant are deemed as the avoidable capacity costs and the variable costs are deemed as the avoidable power costs.

Some main information of power plant using the assumed imported coal:

Parameter	Symbol	Unit	Value	Note
Installed capacity	P	MW	600
Project longevity	n	Year	30
Investment unit cost	SĐT IUC	USD/kW	1,700	Annually adjusted
Average number of operating hours	T	Hour/year	7,000	Annually adjusted
Costs of operation and maintenance	CO&M	%	3
Coal price	Ccoal	USD/ton	100	Annually adjusted
Low calorific value of coal	LHV	Kcal/kg	5,377	Formosa Refer to the imported coal of Formosa plant
Coal price slippage coefficient	kcoal	%	2%	Used in case the price of fuel is used to calculate the tariff based on the average price of fuel of thermal power plants using the imported coal in the system in the year when the data is taken to calculate the tariff. Because the year when the data is taken for calculation is from 01/07 of year N-2 to 30/6 of year N-1 while the avoidable cost tariff is issued to be applicable to year N, therefore it is necessary to have the price slippage coefficient of fuel to be able to estimate the fuel price for year N. Where the fuel price is taken at market price, there is no need to consider the fuel price slippage coefficient.

- The avoidable generation power costs (LCOE_V) and the avoidable generation capacity costs (LCOE_F) are defined by the converted power production costs of the thermal power plant using the imported coal (LCOE) replaced by the biomass power plant and defined by the following formula:

LCOE = LCOE_V + LCOE_F

In which:

LCOE: Converted power production costs [USD/kWh];

LCOE_V: Avoidable generation power costs [USD/kWh];

LCOE_F: Avoidable capacity costs [USD/kWh].

- The avoidable generation power costs (LCOE_V) are the variable costs of the thermal power plant using the imported coal, including the costs of fuel and the variable costs of operation and maintenance defined by the following formula:

In which:

LCOEV:	Avoidable generation power costs [USD/kWh];
At:	Total costs O&M and fuel in year t [USD] defined under item a;
Mt,el:	Power output produced in year t [MWh] defined under item b;
i:	Financial discount rate [%] defined under item e;
n:	Economic life of the power plant, n = 30 years;
t:	Year in economic life of the plant [1, 2, ... n].

- The avoidable generation capacity costs (LCOE_F) are the fixed costs of the thermal plant using the imported coal, including the total investment cost during the time of construction and costs of dismantlement in the year after the last year of life circle of the plant (n+1) defined by the following formula:

In which:

LCOEF:	Avoidable capacity costs [USD/kWh];
Io:	Total investment costs during the time of plant building (USD) defined under item c;
D:	Costs of dismantlement [USD] defined under item d;
Mt,el:	Power output produced in year t [MWh] defined under item c;
i:	Financial discount rate [%] defined under item g;
n:	Economic life of thermal power plant, n = 30 years;
t:	Year in economic life of the plant [1, 2, ... n].

The calculation parameters of costs of converted power production of power plant using the imported coal as follows:

a) A_t: Total costs O&M and fuel in year t defined by the following formula :

A_t = C_t,O&M + C_t,fuel

In which:

+ C_t,O&M: Costs of operation and maintenance of year t, the first year is calculated by 3% of costs of Engineering Procuring Construction (EPC); the additional inflation coefficient is assumed to be 80% of the total initial investment in construction (excluding insurance and loan interest during the construction period) of the plant

C_t,O&M = 3% . 80%. I. (1 + k_lp)^t-l

I:	Total initial construction investment (excluding the insurance and interest during construction) [USD] is defined under item dd;
klp:	Inflation rate klp = 7%/year
n:	Economic life of thermal power plant, n = 30 years;
t:	Year in economic life of the plant [1, 2, ... n].
+ Ct,fuel:	Fuel costs of year t is defined by the following formula

In which:

+ h_t: performance of year t of the plant. This performance is annually calculated based on the crude performance defined under Decision No. 78/2013/QD-TTg dated 25/12/2013 of the Prime Minister on issuing the List and roadmap in which the means and equipment using the energy must be removed and the generating units with low performance must not be newly built taking into account the performance under the load, increase and reduction in loss, reduction in loss due to climate change and performance reduction coefficient due to increasingly older equipment. Therefore, the performance of operation years of the plant is calculated as follows:

Operation year	1	2	3	4	5	6	7	8	9	10
Plant performance	37.8%	39.9%	40.8%	40.8%	41.8%	41.8%	41.7%	42.7%	42.7%	43.0%
Operation year	11	12	13	14	15	16	17	18	19	20
Plant performance	43.0%	43.0%	42.9%	42.9%	42.,8%	42.8%	42.7%	42.7%	42.6%	42.0%
Operational year	21	22	23	24	25	26	27	28	29	30
Plant performance	41.9%	41.9%	41.8%	41.8%	40.6%	40.6%	40.5%	39.7%	39.6%	39.6%

+ LHV: Lower heating value. LHV = 5,377kcal/kg = 6.2535kWh/kg.

+ C_coal: The price of coal of the year included for calculation [USD/ton] is define based on the average price of fuel of thermal plants using the imported coal in the system in the year preceding the year of taking the calculation data of tariff and with the adjustment according to the fuel price slippage coefficient; Where there is no power plant using the imported coal, the fuel price is referred to the market price from the websitehttp://www.coalspot.com/.

+ k_coal: Coal price slippage coefficient is 2%/ year

b) M_t,el: The power output produced in year t of coal power plant using the imported coal is defined as follows:

M_t,el = P . T

In which:

P: Capacity of coal power plant [MW], P = 600MW;

T: Average number of operating hours of the plant [hour/year]

T = 7.000 hours/year (see Item e).

c) I₀: Total investment costs during the time of construction of thermal power plant are the total accumulated investment costs by each construction year during the time of construction including the total initial construction investment, insurance and banking loan interest during the time of construction are standardized according to the following calculation order:

In which:

I:	Total initial construction investment (excluding insurance and interest during the time of construction) [USD] is defined under item dd;
I1, 2, 3, m:	Total investment costs of construction year 1, 2, 3, …, m (insurance and loan during the time of construction);
m:	Total number of construction years (year), m = 4 years;
kxd:	Interest during the time of construction [%/year], kxd = 6%/year;
kbh:	Insurance costs during the time of construction [%/year], kbh = 0,2%/year.

d) D: costs of dismantlement in the year after the last year of life circle of the plant (n+1) defined by the following formula:

In which:

Dn+1:	Costs of dismantlement in the year n+1 are defined by 1% of the total initial construction investment (I) taking into account the inflation rate; Dn+1 = 1%. I. (1+klp)n;
klp:	Inflation rate klp = 7%/year;
I:	Total works construction investment (excluding insurance and interest during the time of construction) [USD] is defined under item dd;
i:	Financial discount rate [%] defined under item g;
n:	Economic life of the power plant, n = 30 years;
t:	Year in economic life of the plant [1, 2, ... n].

dd) Total initial construction investment (excluding the insurance and interest during construction) [USD] is defined by the following formula:

I = IUC x P

In which:

P: Capacity of coal power plant [kW];

IUC: Investment unit cost of thermal power plant using the imported coal [USD/kW];

The investment unit cost of base year defines the ground for reasonable investment unit cost of thermal power plant using the imported coal.

The investment unit cost of the year of tariff formulation is calculated based on the investment unit cost of base year and equipment price index (MPV) of the base year and the year of tariff formulation. Assuming the base year is 2014 and the year of tariff formulation is 2015, the investment unit cost for the year 2015 is calculated as follows:

	Unit	Value	Note
Investment unit cost of base year, C2014	$/kW	1700
Equipment price index of base year, MUV2014		106.34	Equipment price index of base year, (MUV2014) announced by the World Bank on its website www.worldbank.org
MUV of year 2015, MUV2015		106.65
Investment unit cost adjusted for year 2015, C2015	$/kW	1705	C2015 = C2014 [MUV2015/MUV2014]

e) T: The average annual number of operating hours for the life of project is defined based on the average number of operating hour of thermal power plants using the imported coal in the year in which the data is taken for calculation of tariff; the average number of operating hours shall be taken under the current regulations;

T = 7000 hours/year

g) i(%): Financial discount rate: Application of weighted average cost of capital (WACC) defined under the current regulations and by the following formula:

In which:

W: Proportion (loan w_debt is 70%; owner’s equity w_equity is 30%);

k: Interest

 In which:

+ Interest of loan k_debt  is calculated by the following formula:

k_deb = Insurance of loan + Interest of Government bond of 10 years

       = 3.70% + 6/17% = 9/87%

Insurance of loan	3.70%	http://data.worldbank.org/indicator/FR.INR.RISK
Interest of Government bond (10 years)	6.17%	http://asianbondsonline.adb.org/vietnam.php

+ Interest of owner’s equity k_equity is calculated by the following formula:

k_equity = Interest of loan + Insurance of market risk (owner’s equity)

 = 9,87% + 8,80% = 18,67%

Interest of loan	9.87%
Insurance of market risk (owner’s equity)	8.80%	IESE Business School, Navarra, Spain; http://www.iese.edu/research/pdfs/DI-0920-E.pdf

Tax: business income tax (Tax = 22%) and is changed when the law on business income tax is amended.

h) US dollar exchange rate of the year in which the tariff calculation data is taken is averaged by day and by the close US dollar sold exchange rate of the Head office of Joint Stock Commercial Bank for Foreign Trade of Vietnam.

2. The avoidable transmission loss costs

The formula to calculate the average avoidable power transmission loss costs of three northern, central and southern regions is as follows:

In which:

TB,Avg, TT.Avg, TN,Avg	:	The average avoidable power transmission loss costs of three northern, central and southern regions
TB,j, TT,j, TN,j	:	The price of average avoidable power transmission loss costs of three northern, central and southern regions by each hour, season defined according to the components of avoidable power transmission loss costs of the avoidable cost tariff for small scale hydropower plants annually calculated by the national power system dispatching Center in accordance with the provisions in Circular No. 32/2014/TT-BCT dated9/10/2014 or the replacing documents.
tj	:	The proportion of power produced by season and hour in year (%) in accordance with the provisions in Circular No. 57/2014/TT-BCT dated 19/12/2014 of the Minister of Industry and Trade defining the method, order of formulation and issue of power generation price framework or the replacing documents.

3. The avoidable carbon tax costs

To be applicable upon regulations of law.

4. Employment benefits at locality.

To be applicable upon regulations of law.

 

APPENDIX III

SAMPLE OF ELECTRICITY SALE CONTRACT APPLICABLE TO BIOMASS POWER PROJECTS
(Issued with Circular No. 44/2015/TT-BCT dated 09/12/2015 by the Minister of Industry and Trade)

TABLE OF CONTENTS

Article 1. Definition

Article 2. Electricity delivery, sale and operation

Article 3. Connection, metering and operation of power plant

Article 4. Invoice making and payment

Article 5. Coordinated handling in case of force majeure

Article 6. Contract duration

Article 7. Contract breach, damage compensation and suspension of Contract implementation

Article 8. Dispute resolution

Article 9. Entrustment, assignment and restructuring

Article 10. Other agreements

Article 11. Commitment to implementation

Appendix A: Technical parameters of plant

Appendix B: Requirements for system connection

Appendix C: Data collection and metering system

Appendix D: Payment of electricity bill

 

SAMPLE OF ELECTRICITY SALE CONTRACT APPLICABLE TO BIOMASS POWER PROJECTS

 

 

BETWEEN

 

THE SELLER
(Specify name)

 

AND

 

THE BUYER
(Specify name)

 

(Issued with Circular No. 44/2015/TT-BCT dated 09/12/2015 by the Minister of Industry and Trade)

 

Socialist Republic of Vietnam

Independence - Freedom - Happiness

……  

 

ELECTRICITY SALE CONTRACT

 

Pursuant to the Electricity Law dated 03/12/ 2004; the Law amending and adding some Articles of the Electricity Law dated 20/11/2012;

Pursuant to the Commercial Law dated 14/6/2005;

Pursuant to the Decision No. 24/2014/QD-TTg dated 24/3/2014 of the Prime Minister issuing the Decision on mechanism of assistance to development of biomass power projects in Vietnam;

Pursuant to the Circular No. 44/2015/TT-BCT dated 09/12/2015 of the Minister of Industry and Trade providing for project development, avoidable cost tariff and sample of electricity sale Contract applicable to biomass power projects;

Based on the need for electricity sale and purchase of both parties,

Today, on date…….month………..year, at………………

We consist of:

The Seller: ______________________________________________________________

Address: ________________________________________________________________

Tel: _____________________________ Fax: ______________________________

Tax code: _______________________________________________________________

Account: _____________________________ Bank _________________________

Representative: ___________________________________________________________

Position: _______________ (Authorized by ____ Under the authorization document No._____, date _____ month ____ year_____)

The Buyer: ______________________________________________________________

Address: ________________________________________________________________

Tel: _____________________________ Fax: ______________________________

Tax code: _______________________________________________________________

Account: _____________________________ Bank _________________________

Representative: __________________________________________________________

Position: _______________ (Authorized by ____ Under the authorization document No._____, date _____ month ____ year_____)

Both Parties have agreed to sign the electricity sale Contract with the following contents:

Article 1. Definition

In this Contract, the terms below are construed as follows:

1. Lender is the organizations or individuals lending capital to the Seller or the Buyer to carry out this Contract.

2. Party or Parties are the Seller or the Buyer or both Parties or the unit receiving the rights and obligations of one Party or Parties in this Contract.

3. Connection point is the location where the line of the electricity Seller is connected to the power system of the electricity Buyer as agreed in Appendix A of this Contract.

4. Power delivery point is the point where the metering equipment of sold power output of the electricity Seller (the metering point of primary or backup metering System at the power Plant) specified in Appendix B.

5. Sold and purchased power is the power generated from the power plant under the possibly greatest generation capacity of the plant minus the power amount for self-use and the loss of power plant at the power delivery point calculated by kWh and sold under agreement of the Seller and delivered to the Buyer in accordance with the provisions in Appendix C of this Contract.

6. Contract is comprised of this document and the accompanying Appendices.

7. Average inter-bank trading interest rate is the average inter-bank trading interest rate of 01-month term announced by the State Bank of Vietnam at the time of payment

8. Basic interest rate is the interest rate announced by the State Bank as a basis for credit organizations to set their business interest

9. Contractual year is the year calculated by solar year of 12 (twelve) months beginning from the first day of January and ending on the last day of December of such year, except in case for the first Contractual year beginning from the date of commercial operation and  ending on the last date of December of such year. The last Contractual year ends on the last date of Contract duration.

10. Payment due date is the time limit of 15 (fifteen) days from the date the Buyer receives the Seller’s voucher of electricity bill payment.

11. Working days: Are the days except for Saturdays and Sundays and other holidays in accordance with current regulations.

12. Commercial operation day of generating unit is the day the generating unit of power plant is ready to sell electricity to the Buyer and meets the following conditions: (i) the power plant finishes the initial tests for the generating unit and connection equipment, (ii) the power plant has been issued with the power operation permit in the field of power generation and (iii) both Parties take the meter reading to begin their payment.

13. Commercial operation day of power plant is the commercial operation day of the last generating unit and the power plant is issued with the official power operation Permit in the field of power generation.

14. Power plant consists of all generating equipment, protective equipment, connecting equipment other relevant auxiliary equipment; land used for electricity works and ancillary works for power production under this Contract of the Seller.

15. Technical regulations and standards of electricity sector are the regulations, standards and practices applied in electricity sector issued by the competent organizations of Vietnam or regulations and standards issued by the international organizations or the countries in the region consistent with regulations of law, proposals of equipment manufacturers taking into account the conditions of materials, resources, fuel and engineering acceptable for the electricity sector of Vietnam at the certain time.

16. Regulations on national power system operation are the Circulars and Procedure providing for the standards of power system operation, conditions and procedures for connection to power grid, dispatch of operation of power system, power metering in the power distribution and transmission system.

17. Case of emergency means the conditions or circumstances that can disrupt the power supply services to the Buyer’s customers, including the cases of causing major failure in the national power system which can threaten lives and assets or affect the technical capacity of power plant.

Article 2. Electricity delivery, sale and operation

1. Electricity delivery

From the day of commercial operation, the Seller agrees to deliver and sell power to the Buyer and the Buyer agrees to buy the Seller’s power in accordance with the provisions of this Contract. The Buyer shall purchase all power output generated on the Buyer’s grid at the buying price specified in Clause 2 of this Article. The Seller shall enjoy the benefits related to the environment in accordance with regulations of law and international agreements.

2. Electricity sale price

The electricity sale price under this Contract is applied under the provisions of Article 14 of Decision No. 24/2014/QD-TTg dated 24/3/2014 of the Prime Minister issuing the Decision on mechanism of development assistance to the biomass power projects in Vietnam and Circular No. 44/2015/TT-BCT dated 09/12/2015 of the Minister of Industry and Trade providing for the development of project, avoidable cost tariff and the sample of electricity sale Contract applicable to the biomass power projects as follows:

a) For thermal power - power cogeneration projects: The power selling price at the delivery point is 1.220 dong/kWh (excluding VAT, equivalent to 5.8 UScents/kWh). The power selling price is modified with the volatility of the exchange rate VND / USD.

b) For other biomass power projects: The power selling price is applied under the avoidable cost tariff applicable to the biomass power projects annually announced.

3. Electricity sale

The Seller agrees to operate the power plant with the available capacity of the equipment and in line with the technical regulations and standards of electricity sector. The Seller shall not have to take legal responsibility for the Buyer’s direct damages because the Seller does not sufficiently supply the sold and purchased power in case of no fault of the Seller. Where there is no written consent of the Buyer but the Seller has reduced the sold and purchased power for the purpose of selling electricity to the third party or for other purposes without production of sold and purchased power, the Seller shall not be exempted from legal responsibility.

4. Operation plan

a) Before or on the date of implementation of this Contract, the Seller shall provide the Buyer with the chart of annual power generation capacity on the busbar of the plant by each month in line with the basic design of the power plant and provide the charts of generation capacity based on the biomass data of the previous years.

b) The Seller shall provide the Buyer with the annual power production plan, including:

- Operation plan of months in a year (power output and available capacity);

- Maintenance and repair schedule of generating units in a year (if any).

c) The Seller must provide information on maintenance and repair plan and generating unit mobilization plan for the unit dispatching the power system (at dispatching level having the authority to control) in accordance with regulation of law on operation of national power system.

5. Downtime

a) The Seller shall inform the Buyer the estimated downtime schedule and downtime for periodical repair 03 months in advance. The Buyer has to discuss with the Seller prior to the downtime if there is a requirement for change of downtime. The Seller shall discuss and reach to an agreement with the Buyer in accordance with the regulations and standards of electricity sector and comply with the Regulation on operation of power system.

b) The Seller must inform the Buyer of its unscheduled downtime, including the estimated downtime and comply with the Regulation on operation of power system.

6. Operation of power grid

The Buyer and the Seller shall operate and maintain the power grid and the equipment connected to the power plant within the scope of asset management in accordance with the Regulation on distribution power grid and transmission power grid under the connection voltage level of the plant, the regulations and standards of electricity sector and Regulation on operation of power system to ensure the sale and purchase of power under the Contract. The Buyer must discuss and reach an agreement with the Seller on balance of load and voltage stability for the distribution power grid to ensure the maximum load capacity of distribution power grid and transmission power grid.

7. Disruption in electricity receipt and purchase

The Buyer shall not have to fulfill its obligations or receive the power in the following cases:

a) The Seller’s power plant has been operated and maintained not in accordance with regulations on operation of national power system and regulations and standards of electricity sector;

b) During the time the Buyer installs the equipment, repair, replace, assess or test the power grid directly related to the connection of the Seller’s power plant;

c) The transmission or distribution power grid connected to the Buyer’s power grid with breakdown or the equipment of power grid directly connected to the Buyer’s transmission or distribution power grid with breakdown;

d) The Buyer’s power grid needs to be supported for restoration after the breakdown in accordance with regulations on operation of national power system and regulations and standards of electricity sector;

8. Disruption in electricity delivery and sale

The Seller can stop or reduce the power amount sold and delivered to the Buyer in case of installation of equipment, repair, replacement, assessment, inspection or repair of power plant that affect directly the power delivery to the Buyer.

Before stopping or reducing the amount of power delivered to the Buyer, the Seller must give a notice the Buyer 10 (ten) days in advance. In this notice, there must be the reason, estimated starting time and disrupting time of power delivery.

9. Coordination

The Buyer shall minimize the time to reduce or stop the receipt of power in cases specified in Clause 7 of this Article. Except for emergency cases, when temporarily reducing or stopping the receipt of power, the Buyer must give a notice the Seller 10 (ten) days in advance, stating the reasons and expected starting time and disruption time. In case of necessity, the Buyer must transfer the dispatching orders on operation received from the power system dispatching system related to the plant operation to the Seller and the Seller must follow such orders, except that they change the mobilization characteristics of the plant.

10. Capacity coefficient

The Seller agrees to operate the power plant in synchronization with the Buyer’s power grid to deliver power at the delivery point, at the voltage level and capacity coefficient from 0.85 (corresponding to the reactive power) to 0.90 (corresponding to the reactive power) as specified in Appendix C. The Seller’s power plant must be operated with the defined capacity coefficient under the Regulation on distribution power grid at the delivery point to the Buyer.

11. Synchronous operation

The Seller shall inform the Buyer in writing at least thirty (30) days before the first synchronization of generating units in the Seller’s power plants to the Buyer’s power grid. The Seller must coordinate the operation with the Buyer in the first synchronization and the subsequent synchronizations.

12. Standard

The Seller and the Buyer must comply with the regulations on power delivery and receipt under the Provisions on distribution power grid and regulations on power metering and other documents related to the electricity sector.

13. Change of commercial operation day

From 06 (six) months to 12 (twelve) months before the commercial operation day specified in Appendix A, the Seller must officially confirm the change of commercial operation day. The Parties must cooperate with each other and the Buyer must not make refusal if having plausible reasons.

Article 3. Connection, metering and operation of power plant

1. Responsibility at delivery point

The Seller must invest and install the equipment for transmission and delivery of power to the Buyer at the delivery point. The Buyer shall coordinate with the Seller to carry out this installation.

2. Connection

a) The Seller shall invest, build, operate and maintain the connecting equipment for connecting the plant with the transmission or distribution power grid in accordance with regulation on transmission or distribution power grid and other relevant regulations. The Seller must bear the costs to upgrade the metering system at the substation to meter the active and reactive power under 02 (two) ways on the distribution line connected with the power plant in accordance with the provisions in Appendix B of this Contract.

b) The Buyer has the right to review the design and verify the completeness of protective equipment. The Buyer must inform the Seller of the written assessment result within 30 (thirty) days) after receiving all technical documents related to the design. The Buyer shall inform in writing all design errors found. The Seller must carry out all modifications and addition proposed by the Buyer in accordance with the regulations of law on operation of national power system and the technical regulations and standards of electricity sector.

3. Connection standards

The equipment of the Seller and the Buyer must be installed, operated and connected under the Regulation on distribution power grid.

4. Inspection of implementation of connection standards

When there is a prescribed prior notice, each party has the right to inspect the connecting equipment of the other party to ensure the compliance with regulations of law on operation of national power system. This inspection does not affect the activities of the inspected party. Where the inspected party’s equipment does not meet the operation and maintenance conditions, the inspecting party must inform the inspected party of the points to be corrected. The inspected party shall take the necessary remedial measures upon requirement for reasonable correction from the inspecting party.

5. Exciter

If the Seller’s power plant has the exciter, the Seller must install the capacitors to correct the separate capacity coefficient for each generator. These capacitors must be closed and cut simultaneously with each exciter. The norm value KVAr of each capacitor must ensure the highest standard value but not exceeding the no-load requirement KVAr of generators. The Seller must make payment to the Buyer the costs of consumed power to operate the exciter in case the consumed power is taken from the Buyer’s power grid at retail price at corresponding voltage level. This payment is specified in Article 4 of this Contract.

6. Metering

a) The Seller’s responsibility:

- Install and maintain the main and backup metering equipment used to meter the power and make invoice;

- Provide the location to install the metering equipment if such location is in the power plant.

b) Requirements for metering equipment:

- In accordance with the regulations on metering and other relevant regulations

- Being able to store and record the active and reactive power under two ways;

- Being able to transmit data to locations as required by the Buyer;

- Being sealed with lead and able to record and store large data.

7. Take the meter reading

Each month (or according to the metering cycle agreed by both party), the Buyer and the Seller shall take the meter reading simultaneously.

After having informed, the Buyer goes into the power plant or the place installed with metering equipment to take the meter reading, check the meter and do other activities related to the fulfillment of obligations under this Contract. The Buyer’s entering the plant must ensure no effect on the Seller’s normal operation. The electricity employees or checker sent by the Buyer must comply with the safety regulations and rules of the plant upon entering the plant

8. Inspection of metering equipment

a) The testing and inspection of metering equipment or confirmation of precision of metering equipment must be done under the regulations on power metering by the competent or authorized organization. The inspection is done before using the metering equipment for the first time to take the meter reading of sale power of the power plant. All metering equipment must be sealed with lead and locked after inspection and the Buyer has the right to witness this process.

b) All metering equipment of sale power of power plant must be inspected annually in accordance with regulation on electricity metering. The inspection costs shall be paid by the Seller. In case of necessity, either party can recommend the inspection of precision of any metering equipment and the inspection costs shall be paid by the recommending party. The result of inspection of metering equipment must be informed to the other party upon requirement. Where the metering equipment has the error greater than the permitted limit in metering regulations, the Seller shall correct or replace and return the excessive paid amount to the Buyer plus the interest of the excessive paid amount based on the basic interest and cost of inspection of power metering. Each party shall be informed in advance and shall appoint its employee to participate in the unsealing and inspection and seal with lead the meter. Where one party the meter is broken down or is not active, such party must inform the other party immediately and the party having the meter must test and repair it.

9. Transfer of electricity ownership

At the power delivery point, the electricity ownership shall be transferred from the Seller to the Buyer. At this point, the Buyer has the right to own, control and take responsibility for the amount of power received. The power is transmitted by the 3-phase alternating current 50Hz with the voltage level specified in Appendix C of this Contract.

10. Operation of power plant

The Seller must operate the power plant in accordance with the Regulation on distribution power grid, the Regulation of electricity sector and other relevant regulations.

Article 4. Making invoice and payment

1. Making invoice

Each month (or according to the metering cycle agreed by both party), the Buyer and the Seller shall read the meter simultaneously on the agreed date to define the amount of power delivered and received in a month. The Seller shall take the meter readings under the prescribed form with confirmation of the Buyer’s representative and send the result of meter reading in writing (or by fax with later official letter or the copy sent by mail) to the Buyer within 10 (ten) working days after taking the meter reading.

2. Payment

a) The Buyer shall make payment of electricity bill to the Seller in accordance with the provisions in Clause 2, Article 2 and Appendix D of this Contract for all amount of power sold and purchased no later than the due date of payment.

b) Where the Buyer does not make payment within the above time limit, it shall pay the interest of late payment penalty for all amount of late payment. The interest of late payment penalty is calculated by the average inter-bank trading interest rate of 01-month term calculated from the date after the date of due payment.

c) Where the Buyer does not read the meter simultaneously as stipulated in Clause 1 of this Article, the Buyer still have fulfill its payment obligations to the Seller of the amount of power delivered.

3. Estimation of amount of power sold

Where there is no necessary data to define the amount of power or the payment owed by the Buyer to the Seller, except for the cases specified in Clause 4 of this Article, the Seller must estimate such data and modify the payment in line with the reality in the subsequent payment times.

4. Order of application and replacement of meter readings

To define the amount of power the Buyer has received and accepted in a payment period, the taking of meter readings, making of invoice and payment must be based on the estimated data as follows:

a) The readings of main meter in the power plant in the payment period must have the correct level in accordance with the provisions in Clause 8, Article 3 of this Contract;

b) The readings of backup meter in the power plant when the backup meter is used to meter the amount of power delivered must have the correct level in accordance with the provisions in Clause 8, Article 3 of this Contract;

c) When all meters do not record the correct amount of power delivered and received, it is required to estimate the power output delivered and received according to the monthly medium data (if any) of the power plant in the same payment period of the year preceding the Contractual year and must reasonably adjusted for the stage of making of invoice according to the data available affecting the power generation of power plant such as parameter of biomass, performance of generating unit, number of operational hours, operational time of generating unit and self-used amount of power (generally called “operational parameters”) during the time of breakdown of meter.

When there is not reliable data, it is required to estimated the amount of power delivered and received according to the average monthly amount of power of the power plant of 06 (six) payment period right before the breakdown of meter (or less if the power plant has not yet been operated for 06 (six) months and must be modified according to the downtime or operational parameters.

5. Invoice dispute

a) Where one party does not agree with the whole or avoidable cost tariff part of invoice about the power output or the paid amount, such party has the right to give avoidable cost tariff written notice to the other party before the date of due payment. After receiving the notice but the parties fail to reach an agreement, the duration for one or both parties to lodge their dispute is 01 (one) year after the Buyer receives the valid invoice.

b) Where the settlement of dispute is in accordance with the provisions in Clause 1 and 2, Article 7 of this Contract and the Seller win in a dispute, the Buyer must make payment of amount in dispute plus the interest calculated at the base interest rate with monthly compound interest from the date of due payment to the date of payment of amount in dispute.

If the Buyer is right, the Seller must return the amount in dispute received plus the interest calculated at the base rate, monthly compound interest from the date of receiving the payment to the date of payment of amount in dispute.

All payments in this item must be made within 15 (fifteen) days from the date of final decision on Dispute resolution in accordance with the provisions of Article 7 of this Contract.

Article 5. Case of unforeseen event

1. Force majeure

The force majeure is the events that occur beyond the control ability and not due to non-implementation, neglect, lack of responsibility in fulfillment of Contract obligations of one party, including the following events:

a) Decision of competent authorities affecting the ability to fulfill the obligations of one party;

b) After the date of commercial operation, the Seller cannot have the Permits or approval of the competent state authorities despite of its reasonable effort;

c) Natural disaster, fire, explosion, flood, tsunami, epidemic or earthquake;

d) Riot, rebel, war, protest, sabotage, embargo, siege, blockade, any act of war or community hostility whether the war has been declared or not;

dd) Nationalization, expropriation or confiscation of assets of the Seller in accordance with a decision of the state competent authorities;

e) Other causes beyond the control and not due to the fault of the party invoking the force majeure event.

2. Handling in case of force majeure

In case of force majeure, the party invoking the force majeure event must:

a) Quickly sends the written notice to the other party of the force majeure stating the reasons and presenting evidence demonstrating the force majeure and giving out the estimated time and the impact of force majeure on the ability to fulfill its obligations;

b) Tries its best to fulfill the obligations under the Contract;

c) Quickly takes necessary acts to remedy the force majeure and provide evidence to demonstrate the reasonable effort to remedy the force majeure;

d) Takes necessary measures to minimize harm to the parties in the Contract;

dd) Quickly gives notice to all parties of termination of force majeure.

3. Consequence of force majeure

Where after taking all measures specified in Clause 2 of this Article but failing to fulfill one part or the whole of its obligations under this Contract due to the force majeure, the breaching party shall be exempted from the responsibility related to the failure to fulfill its obligations under the Contract due to the force majeure.

4. Duration of force majeure

Where due to the force majeure and one party fail to fulfill its obligations under its obligations under this Contract within 01 (one) year, the other party has the right to unilaterally terminate the Contract after 60 (sixty) days from the date of giving the written notice, except that such obligations are fulfilled within 60 days mentioned above; provided that the Buyer does not choose to terminate the Contract due to the force majeure specified under Points b and dd, Clause 1 of this Article.

Article 6. Contract duration

This Contract takes effect from the date ... month ... year .... and terminates after 20 (twenty) years from the date of commercial operation. After termination of the Contract, the contents of this Contract continues to be valid for a period of time necessary for the parties that are obliged to continue to make the invoice for the last time; modify invoice, make payment and complete their rights and obligations under this Agreement.

For the plants co-generating thermal power in the sugar plants previously operated but their date of commercial operation cannot be identified, the duration of Contract shall be agreed upon by both Parties;

Article 7. Acts of breach of Contract, damage compensation and suspension of Contract implementation

1. The Seller’s acts of breach of Contract

a) The Seller fails to implement the date of commercial operation as specified in Appendix A within 03 (three) months, except for the force majeure;

b) The Seller fails to implement or follow the contents of Contract within 60 (sixty) days after receiving the Buyer’s written notice.

Where the Seller or the Seller’s lending Party has tried to remedy its acts of breach within 60 (sixty) days mentioned above but the remedy cannot be completed within such duration, the Seller or the Seller’s lending Party can extend the duration of remedy to a maximum of 01 (one) year from the date of written notice of the Seller’s acts of breach. The Seller must continue to complete its remedy of breach in the shortest possible time, except for the cases specified in Article 5 of this Contract;

c) The Seller denies the validity of a part or the entire Contract;

d) Breaches the Seller’s commitments under Article 10 of this Contract.

2. The Buyer’s acts of breach of Contract

a) The Buyer fails to implement or follow the contents of Contract within 60 (sixty) days after receiving the Seller’s written notice.

Where the Buyer or the Buyer’s lending Party has tried to remedy its acts of breach within 60 (sixty) days mentioned above but the remedy cannot be completed within such duration, the Buyer or the Buyer’s lending Party can extend the duration of remedy to a maximum of 01 (one) year from the date of written notice of the Buyer’s acts of breach. The Buyer must continue to complete its remedy of breach in the shortest possible time, except for the cases specified in Article 5 of this Contract;

b) The Buyer fails to make the non-dispute payment under the Contract when due and such failure of payment continues to last over 90 (ninety) days without plausible reasons;

c) The Buyer denies the validity of a part or the entire Contract;

d) Breaches the Buyer’s commitments under Article 10 of this Contract.

3. Procedure for remedy and handling of Contract breach

a) In case of breach of Contract, the aggrieved party must send a written notice to the offending party which must cooperate to settle the breach of Contract;

b) The lending party of the offending party has the right to appoint a third party or replace the offending party to remedy the breach of Contract but must inform in writing the aggrieved party. In this case, the replacement may not increase the financial burden of the aggrieved party which must accept the replacement or appoint a third party of the lending party to remedy the breach of Contract. The lending party of the offending party shall inform in writing the offending party of estimated remedy of breach in lieu of the offending party and reach an agreement with the aggrieved party on a reasonable period of time from the time of giving notice in order to fulfill its obligations under the Contract in lieu of the offending party.

4. Damage compensation

a) The party having acts of breach of Contract is obliged to make compensation due to acts of breach to the aggrieved party. The compensation value includes the actual and direct value of loss which the aggrieved party must suffer caused by the offending party and the direct benefits which the aggrieved party shall receive in case of no act of breach;

b) The aggrieved party must demonstrate its loss and loss degree due to the acts of breach and the direct benefits which the aggrieved party should have received if there were not the acts of breach.

5. Suspension of Contract implementation

Where the breach of Contract cannot be solved under Clause 4 of this Article, the aggrieved party may continue to require the offending party to remedy such acts of breach or may suspend the Contract implementation by sending a notice to the offending party. After the aggrieved party chooses to suspend the Contract implementation according to the conditions of this Contract, the parties shall not have to fulfill their Contract obligations, except for cases specified in Clause 1 of this Article and the aggrieved party has the right to require the offending party to make damage compensation.

Where the Seller is the aggrieved party and chooses to suspend the Contract implementation, the value of damage compensation is calculated by the value of power output actually generated of the Seller during a period of one year earlier by the time of suspension of Contract implementation.

Article 8. Dispute resolution

1. Dispute resolution in negotiation

a) Where there is any dispute between the parties in this Contract, the party lodging the dispute must inform the other party in writing of the contents of dispute and requirements within the prescribed statute of limitations. The parties shall negotiate and resolve their dispute within 60 (sixty) days after receiving the notice from the party lodging the dispute. The dispute resolution related to payment of electricity bill is done within 60 (sixty) days after receiving the notice from the party lodging the dispute. The dispute shall be resolved within 15 (fifteen) days from the date of notice from the requiring party.

b) In case of failure to reach an agreement as defined above, the parties have the right to send a written request to the General Directorate of Energy for assistance to resolve the problems.

c) This mechanism of dispute resolution is not applicable to the disputes which are not generated directly from this Contract between a party in the Contract and a third party.

2. Resolution of disputes in electricity market in accordance with regulations of law

Where the disputes cannot be resolved through negotiation or mediation in accordance with the provisions in Clause 1 of this Article or one of the parties fail to comply with the result of negotiation or mediation, one or the parties may require the resolution of dispute in accordance with the provisions in Circular No. 40/2010/TT-BCT dated 13/12/2010 of the Minister of Industry and Trade defining the order and procedures for dispute settlement in the electricity market or another dispute resolution body selected by both parties for their dispute resolution in accordance with the relevant regulations of law.

Article 9. Entrustment, assignment and restructuring

1. Entrustment and assignment

Where this Contract is entrusted or assigned for implementation, the regulations on rights and obligations in this Contract shall continue to be valid to the legal representative or authorized representative of the parties.

Where the Seller assigns or entrusts the Contract implementation, it must get the written approval from the Buyer, except that the Seller authorizes one part or the whole to the lending party for the purpose of lending or purchase of equipment or building of power plant. If the entrusted part of the Seller has the value equivalent to the value of equipment which can be operated, it is the valid entrustment under this Contract.

The entrusting or assigning party must inform in writing immediately the other party of the entrustment or assignment.

2. Restructuring

Where the restructuring of electricity sector affects the Seller or the Buyer’s rights and obligations in this Contract, the implementation of Contract shall be transferred to the receiving units. The Buyer shall certify and ensure in writing concerning the units’ receiving the fulfillment of obligations of power purchase or distribution and other interests and obligations under this Contract.

3. Chosen participation in electricity market

The Seller has the right to choose to participate in the electricity market in accordance with the regulations on competitive electricity market. In this case, the Seller must inform in writing 120 days in advance to the Buyer, the Electricity Regulatory Authority and unilaterally terminates the Contract after completing the prescribed notification obligations.

Article 10. Other agreements

1. Contract modification

The modification or addition of this Contract is done in writing in accordance with the provisions of Circular No….dated…..by the Minister of Industry and Trade providing for the project development, the avoidable cost tariff and the sample of electricity sale Contract applicable to the biomass power projects.

2. Cooperation responsibility

The Seller is obliged to implement the legal procedures related to the power plant. The Buyer shall cooperate with the Seller to have the necessary permit, approval and permission from the competent state authorities related to the location of the plant, fuel and control of natural resources, investment, transmission or electricity sale, possession and operation of power plant, including the additional documents or archived documents and perform other necessary and reasonable activities to implement the agreements of the parties.

3. Applicable law

Interpretation and implementation of this Contract shall comply with the regulations of law of Vietnam.

4. Waiver of rights

Failure to exercise the Parties’ rights under this Contract at any time shall not affect the exercise of rights under the Contract later. The parties have agreed that the statement of failure to exercise the rights of one party for any commitment or condition under the Contract or any breach of Contract shall not be deemed that such party waives the similar rights later.

5. Independence of the contents of the Contract

Where there is any content in this Contract said to be inconsistent with the regulations of law or invalid as judged by the Court, the other contents of Contract remain valid, if the remaining parts reflect all contents without need of invalidated part.

6. Notice

All notices, invoices or other necessary information discussions during the implementation of Contract must specify the date of preparation and relation to the Contract and must be made in writing and sent by fax or postal services. If sent by fax, the original must be sent later by the postal services with prepaid postage. The notices, invoices or other information discussions must be sent to the following addresses:

a) The Seller: The General Director, _____________________________, Viet Nam;

b) The Buyer: ___________, ___________________________________, Viet Nam;

c) In the notices, including the notice appointing the lender, the parties may specify the address of another sender or recipient in the form specified in this Clause;

d) Each notice, invoice or information discussion sent by mail, delivered and transmitted by the above ways shall be deemed as delivered and received at the time it is delivered to the receiver’s address or at the time of refused receipt by the recipient at the above address.

7. Confidentiality

The Buyer agrees to keep the information of plant confidential specified in the Appendix of Contract, except that such information has announced before by the Seller or the General Directorate of Energy.

8. Contract termination

This Contract shall be terminated in the following cases:

a) After 20 (twenty) years from the date of commercial operation;

b) Either party has the right to terminate the Contract in case of force majeure where the other party cannot implement its contract obligations for a period of over 01 (one) year. In this case, the contract termination must be done in order specified in Clause 5, Article 5 of this Contract;

c) When the Seller participates in the electricity market.

Article 11. Commitment to performance

Both parties are committed to implement this Contract as follows:

1. Each party is legally established to do business in Vietnam;

2. The signing and implementation of this Contract of each party shall comply with the conditions and contents of electricity operation Permit issued by the competent authorities and the relevant regulations of law;

3. The parties do not have any legal or administrative acts obstructing or affecting the other party in implementation of this Contract;

4. The signing and implementation of one party in this Contract shall not breach any provision of other Contracts or be a part of another Contract in which such party is a contractual party.

This Contract is made into ten (10) copies with 04 attached appendices of the same value as the integral part of this Contract. Each party shall keep four (04) copies. The Seller shall send one (01) copy of electricity sale Contract to the General Directorate of Energy and the Electricity Regulatory Authority.

 

THE SELLER’S REPRESENTATIVE (Title) (Seal and signature)   (Full name)

THE BUYER’S REPRESENTATIVE (Title) (Seal and signature)   (Full name)

 

Appendix A

TECHNICAL PARAMETERS OF POWER PLANT
 (Attached Contract No….dated…..)

Part A. General parameters

1. Name of power plant: ___________________________________________________

2. Location of power plant: _________________________________________________

3. Rated capacity: ___________________________________________________kW

4. Capacity sold to the Buyer: minimum_____________kW; maximum ___________ kW

5. Self-used capacity of power plant: minimum_____________kW; maximum ______ kW

6. Estimated annual production power: ____________________________________kWh

7. Completion date of power plant construction: _________________________________

8. Estimated date of commercial operation of power plant: ________________________

9. Voltage generated on distribution grid: _____________________________________V

10. Connection point to distribution grid: _______________________________________

11. Point where the metering equipment is placed: ___________________________________________________

Part B. Operational parameters of specific technology

1. Generation technology (co-generation of thermal power and power

2. Operational design features: ______________________________________________

 

Appendix B

SYSTEM CONNECTION REQUIREMENTS
(Enclosed with Contract No……dated……..)

 (To be applicable to each project depending on the technical characteristics of project, including one-line diagram of connecting equipment and list characteristics of metering system and voltage).

 

Appendix C

METERING AND DATA COLLECTION SYSTEM
(Enclosed with Contract No……dated……..)

 

I. Installation location and features of metering system

1. Installation location of metering System:

The main metering system and the backup metering system are installed in the power plant under the agreement on technical design of power metering system in the official letter No….of (as Appendix of Contract).

2. The features of the metering System must be consistent with the provisions in the Circular on power metering issued by the Ministry of Industry and Trade.

II. Technical requirements of metering system

The technical requirements of metering equipment, the technical requirements of metering circuit, measures of seal with lead and the requirements for meter reading and collection system must be consistent with the provisions in the Circular on power metering issued by the Ministry of Industry and Trade.

III. Metering location

Both parties shall uniformly use the current metering locations of the power plant as follows:

Cluster of generating unit	Main metering system	Backup metering system
[...]	[...]	[...]
	[...]	[...]
	[...]	[...]

IV. Method of defining the delivered power output

1. On the first date of each month, the legal representative of both parties shall take the meter reading and record it at the time of 0:00 of the first date and the power monthly delivered of the preceding month.

a) The power output which the Seller delivers to the Buyer in the payment month is calculated by the following formula:

In which:

AGi:	Amount of power of delivery way at metering point i of corresponding main metering system in a month;
AG:	Amount of power paid by the Buyer to the Seller in the payment month (kWh).

b) The power output which the Seller receives from the national power system in the payment month is calculated by the following formula:

In which:

ANi:	Amount of power of receipt way at metering point i of corresponding main metering system in a month;
AN:	The amount of power paid by the Seller to [Electricity Company…] under the electricity selling tariff to the industrial customers as regulated by the competent state authorities (kWh).

 

Appendix D

ELECTRICITY BILL PAYMENT

Each month, the Buyer shall make payment to the Seller of all amount of power sold and purchased in a month at the price specified in Clause 2, Article 2 by the following formula:

Q = P * F * A_g * (1+t)

In which:

- Q is the total payment of electricity bill from the Buyer to the Seller (dong);

- A_g is the power monthly purchased and sold;

- F is the exchange rate VND / USD (selling rate) of the Bank for Foreign Trade of Vietnam on the day preceding the day the Seller issues the payment invoice (VND / USD);

- t is the tax rate of value-added tax (%);

- P = (P_MB or P_MT or P_MN) is the selling price of electricity specified in Circular No. 44/2015/TT-BCT dated 09/12/2015 of the Ministry of Industry and Trade providing for project development, avoidable cost tariff and sample of electricity sale Contract applicable to the biomass power projects annually issued by the Ministry of Industry and Trade.

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