Chương II Thông tư 56/2014/TT-BCT: Phương pháp xây dựng giá hợp đồng mua bán điện

Chapter II

METHOD OF DETERMINATION OF PPA PRICE0}

Section 1. METHOD OF DETERMINATION OF PPA PRICE FOR NEW POWER PLANT<0}

Article 3. Principles for determination of PPA price

1. PPA price of a power plant is constructed as follows:

a) The Investor shall pay appropriate expenses for the entire economic life of the project.

b) The internal rate of return (IRR) does not exceed 12%.

2. PPA price of a thermal power plant is calculated in VND/kWh including two components as follows:

a) Electricity generation cost shall be agreed upon by the two parties in the fundamental year and shall not exceed electricity generation cost frame of thermal power plants approved by the Minister of Industry and Trade in the fundamental year. Electricity generation cost is constructed in accordance with the method prescribed in Article 4 hereof;

b) Cost of main fuel transport shall be agreed upon by the two parties in the fundamental year and determined in accordance with the method prescribed in Article 8 hereof.

3. PPA price of hydroelectric plants is the electricity generation cost calculated in VND/kWh, agreed upon by the two parties in the fundamental year and does not exceed electricity generation cost frame of hydroelectric plants approved by the Minister of Industry and Trade in the fundamental year. PPA price of hydroelectric plants is determined in accordance with the method as prescribed in Article 9 hereof.

4. PPA price is not yet inclusive of value-added-tax (VAT), tax for consumption of natural resources of water, fees of forest environment service and environmental protection for solid waste (applied to thermal power plants), expenses for construction of transmission lines and other taxes, charges according to the State's regulations (except taxes and charges included in the electricity price plan).

5. After the settled investment capital is determined, the Seller shall send to the Buyer the set of documents concerning the settled investment capital. The Seller or Buyer has the right to ask for re-determination of PPA price according to the following principles:

a) The Seller or Buyer shall issue a written request to Electricity Regulatory Authority for advices on re-negotiation of electricity price and PPA according to the settled investment capital by the two parties. Documents submitted to Electricity Regulatory Authority are instructed in Article 22 hereof;

b) After receipt of advice from Electricity Regulatory Authority, the Seller and Buyer shall carry out re-negotiation of PPA price according to the following principles:

-   Method of PPA price determination is instructed in Article 4 (for thermal power plants) and Article 9 (for hydroelectric plants) hereof;

-   Factors for calculation of PPA price is instructed in Article 4 (for thermal power plants) and Article 9 (for hydroelectric plants) hereof and updated at the same time of determination of the settled investment capital;

-   Electricity generation cost is included in the electricity generation cost frame of the year when the settled investment capital is formed;

-   Electricity generation cost takes effect since commercial operation of power plants. Yearly price is instructed in Article 12 hereof and no revision should be made to yearly electricity price of the years prior to the time the two parties sign the amended and supplemented PPA with electricity price determined on the basis of settled investment capital.

Article 4. Method of PPA price determination for thermal power plants

PPA price of thermal power plants in the fundamental year is determined in the following formula:

P_C^nđ = P_G + P_b^VC

1. P_G (VND/kWh) is the electricity generation cost in the fundamental year and determined in the following formula:

P_G = FC + FOMC_b + VC_b

Where:

FC: Average fixed price is determined in accordance with Article 5 hereof (VND/kWh);

FOMC_b: Fixed price for operation and maintenance in the fundamental year is agreed upon by the two parties in accordance with Article 6 hereof (VND/kWh);

VC_b: Variable price is determined in accordance with Article 7 hereof (VND/kWh);

Electricity generation cost P_G does not exceed electricity generation cost frame issued by the Minister of Industry and Trade. In case capacity of thermal power plants is different from capacity of standard power plants but within ± 10% of standard power plants, apply cost frame of nearest standard power plants of the same technology and assembly number;

As for thermal power plants with total capacity from 200 MW and under and thermal power plants with capacity beyond ± 10% of standard power plants, electricity generation cost shall be determined for each specific case in accordance with the method prescribed in this Chapter in proportion to the factors defined in Appendix 1 hereof.

2. P_b^VC (VND/kWh) is the cost for transport of main fuel in the fundamental year determined in accordance with the method prescribed in Article 8 hereof.

3. Cost for trial operation and acceptance of thermal power plants:

a) As for the cost for trial operation and acceptance before the thermal power plant is put into commercial operation, the two parties shall carry out negotiation on the basis of total investment capital approved for the first time.

a) As for the cost for trial operation and acceptance arising after the thermal power plant is put into commercial operation, the Buyer shall be responsible for payment of fuel cost to the Seller as regulated.

Article 5. Method of determination of average fixed price for thermal power plants

1. Average fixed price for thermal power plants (FC) is determined on the basis of financial analysis of projects according to Forms 1 and 2 prescribed in Appendix 2 enclosed herewith with IRR not exceeding 12%. Input factors for the construction of average fixed price for thermal power plants (FC) is determined in accordance with the instructions set out in Clause 2 of this Article.

2. Main input factors used for calculation of average fixed price for thermal power plants (FC):

a) Total investment is determined on the basis of the total first investment capital or settled investment capital (VND); expenses for investment, upgrading of equipment to maintain operation of power plants after 20 years of commercial operation should not be included in the project’s total investment capital or settled investment capital.

b) Economic life is regulated in Appendix 1 hereof. In case a written approval of the project’s economic life issued by competent state agencies is different from the provisions set out hereof, the former shall be applied;

c) Average electricity energy annually generated at terminals is determined according to approved design terminal capacity and the number of hours of operation of the plant at average maximum capacity over years (T_max). T_max is determined on the basis of the approved design but not less than T_max prescribed in Appendix 1 hereof. Proportion of power attenuation is averaged over the entire economic life of the power plant agreed by the two parties on the basis of the equipment manufacturer’s technical documents. Particular for gas turbine plants, gas supply capability is taken into account in the average electricity energy annually generated at terminals

d) Proportion of auxiliary power and losses to transformers of the power plant, losses to transmission lines (if any) is determined on the basis of approved fundamental design of the power plant or the equipment manufacturer’s technical documents (%);

dd) Time for depreciation of each group of main fixed assets is determined on the basis of average time for depreciation of each group of main fixed assets in accordance with time frame of main fixed asset depreciation as prescribed in the Circular No.45/2013/TT-BTC dated April 25, 2013 of the Ministry of Finance providing guidance on management, use and depreciation of fixed assets, or replacement documents. In case the time for fixed asset depreciation allowed by competent state agencies is different from that as prescribed by the Ministry of Finance, the former shall be applied.

e) Percentage of ownership capital and loan capital of the total first investment capital: ownership capital accounts for from 20 - 30 per cent and loan capital from 70 - 80 per cent. In case the percentage approved in writing by competent state agencies is different from that mentioned above, the former shall be applied;

g) Loan interests and period of repayment during the operation is based on loan contracts, or documents binding the Investor and credit institutions, lenders of which average interests of the loans do not exceed interest rate ceiling as regulated as follows:

Interests of loans in foreign currency are determined by adding mean value of US dollar swap rate for a ten-year term in 36 months close to the time of negotiation on LIBOR swaps carried out by the two parties to three per cent as annual average rate of bank service fees, guarantee fees and relevant charges, or the limit announced by The Ministry of Industry and Trade.- Interests of domestic currency are determined by adding average interest rate of deposits in Vietnam dong for a 12-month term (postpaid) intended for clients as individuals for five consecutive years preceding the year of negotiation, determined on September 30 annually by four commercial banks (Joint stock commercial Bank for Foreign Trade of Vietnam, Vietnam Bank for Trade and Industry, Joint Stock Commercial Bank for Investment and Development of Vietnam, Vietnam Bank for Agriculture and Rural Development or legal successors to these banks) to three per cent as average annual margin interest rate or the limit announced by the Ministry of Industry and Trade.

Total loan capital in the calculation of electricity price according to total first investment capital is determined by subtracting ownership capital from total investment capital. In case total loans from loan contracts or documents, agreements binding the investor and credit institutions, lenders are lower than total loans in electricity price calculation plan, the loan deficit during the operation is calculated as follows:

- Period of repayment is determined on the basis of repayment plan according to the financial analysis report in the approved fundamental design of which the period of repayment is at least ten years.

- Loan interest rate is determined on the basis of loan interest according to the financial analysis report in the approved fundamental design of which average loan interests do not exceed interest rate ceiling as mentioned above.

h) Enterprise income tax rate, other fees, charges are determined according to applicable regulations.

Article 6. Method of determination of fixed price for operation and maintenance of thermal power plants

Fixed price for operation and maintenance in the fundamental year FOMCb (VND/kWh) determined in the following formula:

FOMC_b = FOMC_b^scl+ FOMC_b^nc

Where:

FOMC_b^scl: Fixed price for operation and maintenance according to major repair cost and other expenses in the fundamental year is determined according to Clause 1 of this Article (VND/kWh);

FOMC_b^nc: Fixed price for operation and maintenance according to workforce cost in the fundamental year is determined according to Clause 2 of this Article (VND/kWh);

1. Fixed price for operation and maintenance according to major repair cost and other expenses in the fundamental year is determined as follows;

Where:

TC_scl: Total major repair cost and other expenses in the fundamental year consist of major repair cost, expenses for additional materials, outside services, and others.

In case total major repair cost and other expenses as mentioned above can not be determined, the two parties shall apply calculation method as prescribed in Clause 3 of this Article;

P_t: Generator terminal capacity according to approved design is determined on the basis of Point c, Clause 2, Article 5 hereof (kWh);

T_max : Number of hours of operation at average maximum capacity over years are determined on the basis of Point c, Clause 25, Article 5 hereof (kWh).

t_td: Proportion of auxiliary power and losses to the plant is determined on the basis of Point d, Clause 2, Article 5 hereof (%);

k_CS:  Proportion of power attenuation averaged over the entire economic life of the power plant is determined on the basis of Point c, Clause 2, Article 5 hereof (%).

2. Fixed price for operation and maintenance according to workforce cost in the fundamental year FOMC_b^nc (VND/kWh) is determined in the following formula:

Where:

TC_nc: Total workforce cost in the fundamental year consists of payroll, social insurance cost, healthcare insurance cost, union funds and other attached allowances (VND).

In case total workforce cost as mentioned above can not be determined, the two parties shall apply calculation method as prescribed in Clause 4 of this Article;

P_t: Generator terminal capacity according to approved design is determined on the basis of Point c, Clause 2, Article 5 hereof (kWh);

T_max : Number of hours of operation at average maximum capacity over years are determined on the basis of Point c, Clause 25, Article 5 hereof (kWh).

t_td: Proportion of auxiliary power and losses to the plant is determined on the basis of Point d, Clause 2, Article 5 hereof (%);

k_CS: Proportion of power attenuation averaged over the entire economic life of the power plant is determined on the basis of Point c, Clause 2, Article 5 hereof (%).

1. Total major repair cost and other expenses TC_scl (VND) are determined in the following formula:

TC_csl =VĐT_XL+TB x k_F,scl

Where:

VĐT_XL+TB: Total investment capital for construction and equipment of a thermal power plant is determined on the basis of total investment capital as prescribed in Clause 2, Article 5 hereof (VND);

k_F,scl:  Proportion of major repair cost and other expenses (%) of the thermal power plant k_F,scl is regulated in Appendix 1 hereof.

2. Total workforce cost TC_nc (VND) is determined in the following formula:

TC_nd =VĐT_XL+TB x k_F,scl

Where:

VĐT_XL+TB: Total investment capital for construction and equipment of a thermal power plant is determined on the basis of total investment capital as prescribed in Clause 2, Article 5 hereof (VND);

k_F,scl: Proportion of workforce cost (%) of the thermal power plant k_F,scl is regulated in Appendix 1 hereof.

Article 7. Method of determination of variable price of thermal power plants

Variable price of a thermal power plant in the fundamental VC_b (VND/kWh) is determined in the following formula:

Where:

VC_b^nlc: Components of variable price revised on the basis of changes to cost of main fuel (coal, gas) for the thermal power plant in the fundamental year is determined according to the method prescribed in Clause 1 of this Article (VND/kWh);

VC_b^nlb: Components of variable price revised on the basis of changes to cost of secondary fuel (oil) for the thermal power plant in the fundamental year is determined according to the method prescribed in Clause 2 of this Article (VND/kWh);

VC_b^k: Components of variable price revised on the basis of other changes in the fundamental year is determined according to the method prescribed in Clause 3 of this Article (VND/kWh);

1. Components of variable price revised on the basis of changes to cost of main fuel in the fundamental year are determined in the following formula:

Where:

HR_bq^nlc: Average net fuel loss rate of main fuel agreed by the two parties on the basis of the equipment manufacturer’s specifications and calculated in proportion with loading level as prescribed in Appendix 1 hereof (kg/kWh or BTU/kWh);

P_b^nlc: Cost of main fuel in the fundamental year is regulated as follows:

-   For domestic coal: Price of coal is the price at the coal supplier’s loading point including losses, management fee and insurance (if any) but not including transport cost (VND/ton). In case the cost for transport of fuel can not be separated from the coal purchase contract, the cost of fuel in the fundamental year is determined as the price of the coal purchase contract (VND/ton);

-   For imported coal: Price of coal is the price at the exporter’s port (VND/ton);

-   For gas: Price of gas is the price at the mine (VND/ton);

2. Components of variable price revised on the basis of changes to cost of secondary fuel in the fundamental year VC_b^nlp (VND/kWh) is determined in the following formula:

Where:

HR_bq^nlp: Average net fuel loss rate of secondary fuel (oil) agreed by the two parties on the basis of the equipment manufacturer’s specifications;

P_b^nlp: Cost of secondary fuel in the fundamental year consists of transport cost and other charges as regulated (VND/kg).

3. Components of variable price revised on the basis of other changes in the fundamental year VC_b^k (VND/kWh) is determined in the following formula:

Where:

C_vlp:  Total annual cost of secondary materials of the power plant is determined on the basis of quantity and unit price of secondary materials used for generation of electricity in the fundamental year (VND);

C_kd: Total cost for starting operation consists of fuel cost and other costs (VND); as for coal-fired thermal power plant, permissible number of starts is calculated as once a year corresponding to each state of starting; as for gas turbine power plant, permissible number of starts shall be negotiated by the two parties on the basis of demand for electricity system and characteristic performance of the power plant.

C_k:  Annual cost for repair and maintenance is calculated on the basis of total capital for construction and equipment of the power plant; proportion of regular repair cost is regulated in Appendix 1 hereof (VND);

P_t­:  Total net capacity of the power plant (kW);

k_CS: Proportion of power attenuation averaged over the entire economic life of the power plant is determined on the basis of Point c, Clause 2, Article 5 hereof (%);

T_max: Period of operation of the plant at maximum capacity is averaged over years throughout the life of the power plan project (hours) (T_max) and regulated in Appendix 1 hereof.

Article 8. Method of determination of cost for transport of main fuel with respect to thermal power plant

Cost of main fuel transport of a thermal power plant in the fundamental P_b^vc determined in the following formula (VND/kWh):

Where:

HR_bq^nlc: Average fuel loss rate of main fuel for coal-fired thermal power plant (kg/kWh) or average heat loss rate of main fuel for gas turbine plants (BTU/kWh), and determined on the basis of Clause 1, Article 7 hereof;

P_b^v/c: Cost for transport of main fuel for generation of electricity in the fundamental year is calculated in VND/kg with respect to coal fuel or in VND/BTU with respect to gas fuel.

Article 9. Method of determination PPA price for hydroelectric plants

PPA price of hydroelectric plants P_b^vc (VND/kWh) is determined in the following formula:

Where:

FC: Average fixed price of the plant is determined according to the method regulated in Article 10 hereof (VND/kWh);

FOMC_b: Cost for operation and maintenance of the plant is determined according to the method regulated in Article 11 hereof (VND/kWh);

Article 10. Method of determination of average fixed price for hydroelectric plants

1. Average fixed price for hydroelectric plants (FC) is determined on the basis of financial analysis of projects according to Forms 1 and 2 prescribed in Appendix 2 enclosed herewith with IRR not exceeding 12% and input factors as instructed in Clause 2 of this Article.

2. Input factors are used for calculation of electricity price:

a) Total investment cost, economic life, proportion of auxiliary power and losses to transformers (not including losses to transmission lines if any), proportion of ownership capital, loan capital, time of depreciation, loan interests, term of repayment during operation, enterprise income tax and other taxes and charges are determined according to provisions set out in Clause 2, Article 5 hereof;

b) Average electricity energy annually generated at terminals of hydroelectric plant is determined according to approved fundamental design (kW). In case a written approval is issued by the competent agency, such written approval shall be applied.

Article 11. Method of determination of cost for operation and maintenance of hydroelectric plants

Cost for operation and maintenance in the fundamental year FOMC_b is determined by the following formula (VND/kWh):

Where:

FOMC_b^scl: Fixed price for operation and maintenance according to major repair cost and other expenses in the fundamental year is determined according to Clause 1 of this Article (VND/kWh);

FOMC_b^nc: Fixed price for operation and maintenance according to personnel cost in the fundamental year is determined according to Clause 2 of this Article (VND/kWh);

1. Fixed price for operation and maintenance according to major repair cost and other expenses in the fundamental year FOMC_b^scl is determined in the following formula;

Where:

TC_scl: Total major repair cost and other expenses in the fundamental year consist of major repair cost, expenses for secondary materials, outside services, and others (VND). In case total major repair cost and other expenses as mentioned above can not be determined, the two parties shall apply calculation method as prescribed in Clause 3 of this Article;

A_bq : Electricity energy annually generated at the terminals is determined according to Point a, Clause 2, Article 10 hereof (kWh);

t_td :  Proportion of auxiliary power and losses to transformers of the power plant is determined according to Point a, Clause 2, Article 10 hereof (%).

2. Price for operation and maintenance according to workforce cost in the fundamental year FOMC_b^nc is determined in the following formula:

Where:

TC_nc: Total workforce cost in the fundamental year consists of payroll, social insurance cost, healthcare insurance cost, union funds and other attached allowances (VND). 

In case total workforce budget as mentioned above can not be determined, the two parties shall apply calculation method as prescribed in Clause 4 of this Article;

A_bq : Electricity energy annually generated at the terminals is determined according to Point a, Clause 2, Article 10 hereof (kWh);

t_td : Proportion of auxiliary power and losses to transformers of the power plant is determined according to Point a, Clause 2, Article 10 hereof (%).

3. Total major repair cost and other expenses TC_scl  are determined in the following formula:

TC_csl =VĐT_XL+TB x kF,_scl

Where:

VĐT_XL+TB: Total capital for construction and equipment of a hydroelectric plant is determined on the basis of total investment capital as prescribed in Clause 2, Article 10 hereof (VND);

k_scl:  Proportion of major repair cost and other expenses (%) of the hydroelectric plant is regulated in Appendix 1 hereof.

4. Total workforce cost (TC_nc ) is determined in the following formula:

TCnd =VĐT_XL+TB x kF,scl

Where:

VĐT_XL+TB: Total capital for construction and equipment of a hydroelectric plant is determined on the basis of total investment capital as prescribed in Clause 2, Article 10 hereof (VND);

k_nc:  Proportion of workforce cost (%) of a hydroelectric plant is regulated in Appendix 1 hereof.

Section 2. METHOD OF DETERMINATION OF ELECTRICITY GENERATION COST BY YEAR IN THE PPA

Article 12. Principles for determination of electricity generation by year in the PPA

1. The two parties have the right to apply average fixed price agreed annually during the PPA

In case the two parties agree to convert average fixed price as agreed into the yearly price of the PPA, the determination of this price must conform to the principles as regulated in Clause 2 of this Article.

2. Based on conditions for actual loans and project's financial capability, fixed price of thermal power plants or hydroelectric plants is converted into yearly price of the PPA ( yearly price j) provided that the average fixed price remains unchanged in comparison with the price agreed by the two parties and conforms to the following principles:

a) Financial discount rate in the calculation of yearly price is 10%;

b) The investor must perform repayment of loans for the construction of a power plant according to the term of repayment; highest proportion of revised fixed price since the date of commercial operation of the first assembly in comparison with average fixed price of thermal power plant or hydroelectric plants as agreed by the two parties does not exceed 1.2 times.

Article 13. Principles for revision of yearly price of the PPA

1. Annually, based on foreign currency loans, plan for repayment of foreign currency loans, actual figures about repayment of principals, exchange rate agreed by the two parties in the electricity price plan, exchange rate applied in the preceding year, the two parties must carry out calculation of difference of exchange rates and propose payment plan to Electricity Regulatory Authority of Vietnam for inspection and making submission to The Ministry of Industry and Trade for consideration and decision on the payment plan.

2. Components of the fixed price for operation and maintenance of thermal power plants and hydroelectric plants are revised in the following principles:

a) Price components by major repair cost and other expenses are revised on the basis of average cost slippage rate as prescribed in Appendix 1 hereof. The two parties shall study and propose mechanism of revision of price components by major repair cost and other expenses for foreign currency based items.

b) Price components by workforce cost are revised on the basis of changes to regional minimum wages at the date of payment.

Article 14. Method of determination of PPA price for thermal power plants at the date of payment

PPA price of a power plant at the time of payment for electricity bills in month t, year j P_C,j,t (VND/kWh) is determined in the following formula:

Where:

: Fixed price in year j is determined according to Clause 1 of this Article (VND/kWh);

: Fixed price for operation and maintenance in month t, year j is determined according to Clause 2 of this Article (VND/kWh);

: Variable price in month t, year j is determined according to Clause 3 of this Article (VND/kWh);

: Cost for transport of main fuel in month t, year j is determined according to Clause 4 of this Article (VND/kWh);

1. Fixed price in year j (FC_J) is determined according to Article 12 hereof.

2. Fixed price for operation and maintenance in month t, year j is determined in the following formula:

Where:

: Components of the fixed price for operation and maintenance by major repair cost and other expenses in year j (VND/kWh);

: Components of the fixed price for operation and maintenance by workforce cost in month t, year j (VND/kWh);

a) Components of the fixed price for operation and maintenance by major repair cost and other expenses are determined in the following formula (VND/kWh):

Where:

: Fixed price for operation and maintenance according to major repair cost and other expenses in the fundamental year is determined according to the method as prescribed in Clause 1, Article 6 hereof (VND/kWh);

i: Slippage rate of components of the fixed price for operation and maintenance by major repair cost and other expenses as prescribed in Appendix 1 hereof;

I: Ordinal numbers of payment years starting from the fundamental year (for the fundamental year I=1).

b) Components of the fixed price for operation and maintenance by workforce cost (month t, year j) ( FOMC_J^scl) is determined in the following formula (VND/kWh):

Where:

FOMC_b^scl: Fixed price for operation and maintenance by workforce cost is determined according to the method as prescribed in Clause 2, Article 6 hereof (VND/kWh);

L_{min,j, t}: Regional minimum wages at the time of payment in month t, year j (VND/person/month);

L_min,b: Regional minimum wages in the fundamental year (VND/person/month);

1. Variable price in month t, year j VC_j,t (VND/kWh) is determined in the following formula:

Where:

VC_j,t^nlc: Components of variable price revised on the basis of changes to cost of main fuel (coal, gas) of the power plant in month t, year j is determined according to Point a of this Clause (VND/kWh);

VC_j,t^nlc: Components of variable price revised on the basis of changes to cost of main fuel (coal, gas) of the power plant in month t, year j is determined according to Point a of this Clause (VND/kWh);

VC_j^k: Components of variable price revised on the basis of other changes in year j is determined according to Point c of this Clause (VND/kWh);

a) Components of variable price revised on the basis of changes to cost of main fuel (coal, gas) of the power plant in month t, year j is determined in the following formula:

Where:

VC_b^nlc: Components of variable price revised on the basis of changes to cost of main fuel (coal, gas) of the power plant in the fundamental year is determined according to the method as prescribed in Clause 1, Article 7 hereof (VND/kWh);

k_HS,j :  Proportion of performance attenuation in year j (%);

P_j,t^nlc: Price of main fuel (coal, gas) for generation of electricity at the time of payment in month t, year j is calculated in VND/ton for coal and VND/BTU for gas;

P_b^nlc : Price of main fuel (coal, gas) for generation of electricity in the fundamental year is determined according to Clause 1, Article 7 hereof, calculated in VND/ton for coal and VND/BTU for gas.

b) Components of variable price revised on the basis of changes to cost of secondary fuel (oil) of the power plant in month t, year j is determined in the following formula:

Where:

VC_b^nlp: Components of variable price revised on the basis of changes to cost of secondary fuel (oil) of the power plant in the fundamental year is determined according to the method as prescribed in Clause 2, Article 7 hereof (VND/kWh);

P_j,t^nlp: Price of secondary fuel (oil) for generation of electricity at the time of payment in month t, year j (VND/kg);

P_b^nlp: Price of secondary fuel (oil) for generation of electricity in the fundamental year (VND/kg).

c) Components of variable price revised on the basis of other changes in year j (VND/kWh) are determined in the following formula:

Where:

VC_b^k: Components of variable price revised on the basis of other changes of the power plant in the fundamental year is determined according to the method as prescribed in Clause 3, Article 7 hereof (VND/kWh);

i: Slippage rate of components of variable price revised on the basis of other changes as prescribed in Appendix 1 hereof;

I: Ordinal numbers of payment years starting from the fundamental year (for the fundamental year I=1).

2. Cost of main fuel transport of thermal power plant in month t, year j (VND/kWh) is determined in the following formula:

Where:

P_b^vc: Cost for transport of main fuel of the power plant in the fundamental year is determined according to the method as prescribed in Article 9 hereof (VND/kWh);

P_j,t^v/c: Cost for transport of main fuel (coal, gas) at the time of payment in month t, year j is calculated in VND/ton for coal or in VND/BTU for gas;

P_b^v/c : Cost of transport of main fuel (coal, gas) in the fundamental year is calculated in VND/ton for coal or VND/BTU for gas.

3. Total cost for starting in month t of power plant is determined in the following formula:

Where:

u: Order of assembly of the power plant;

U: Number of assemblies of the power plant;

F: Type of fuel (main fuel f =1, secondary fuel f=2);

S: State of starting of assembly;

S: Number of states of starting of assembly;

p_u,f,s: Number of starts of assembly u, using fuel f in the state of starting s in the month;

M_u,f,s:  Quantity of lost coal (kg) for coal-fired power or quantity of lost heat for gas-fired power for a starting of the assembly u, using fuel f, in the state of starting s;

D_u,f,s: Unit price for a starting of the assembly u, using fuel f, in the state of starting s is calculated in VND/kg for coal and in VND/BTU for gas.

C_kdk : Total of other costs for a starting is calculated in Vietnam dong.

Payment of the cost for starting the plant is made in accordance with the Circular No. 30/2014/TT-BCT dated October 02, 2014 of The Ministry of Industry and Trade regulating operation of competitive electricity market or replacement documents.

Article 15. Method of determination of PPA price for hydroelectric plants at the time of payment

PPA price of a hydroelectric plant at the time of payment in month t, year j is determined in the following formula:

Where:

: Fixed price in year j is determined according to Clause 1 of this Article (VND/kWh);

FOMC_j,t: Price for operation and maintenance in month t, year j is determined according to Clause 2 of this Article (VND/kWh);

1. Fixed price in year j (FC_J) is determined according to Article 12 hereof.

2. Price for operation and maintenance in month t, year j is determined in the following formula:

Where:

FOMC_j^scl: Components of the price for operation and maintenance by major repair cost and other expenses in year j (VND/kWh);

FMOC_j^nc: Components of the fixed price for operation and maintenance by workforce cost in month t, year j (VND/kWh);

a) Components of the price for operation and maintenance by major repair cost and other expenses are determined in the following formula:

Where:

FOMC_b^scl: Components of the price for operation and maintenance by major repair cost and other expenses in the fundamental year is determined according to Clause 1, Article 11 hereof (VND/kWh);

i: Slippage rate of components of the price for operation and maintenance by other costs as prescribed in Appendix 1 hereof;

I: Ordinal numbers of payment years starting from the fundamental year (for the fundamental year I=1).

b) Components of the price for operation and maintenance by workforce cost in month t, year j is determined in the following formula (VND/kWh):

Where:

FOMC_b^nc: Components of the price for operation and maintenance by workforce cost in the fundamental year is determined according to Clause 2, Article 11 hereof (VND/kWh);

L_{min,j, t}: Regional minimum wages at the time of payment in month t, year j (VND/person/month);

L_min,b: Regional minimum wages in the fundamental year (VND/person/month);

Section 3. Method of determination of electricity price of power plants put into commercial operation

Article 16. Method of determining electricity price for power plants with PPA expired but economic life unexpired

1. As for power plants that have average price for the entire life, PPA price shall be applied to the following years to the end of economic life.

2. As for power plants that have no average price for the entire project life, the two parties shall negotiate on average price, yearly price since the effective year of the PPA to the end of economic life of the plant, PPA as prescribed hereof.

3. As for equitized power plants affiliated to Vietnam Electricity, apply provisions set out in Clauses 1, or 2 of this Article and the effective year shall be from the time of equitization.

Article 17. Method of determining electricity price for power plants with expired economic life or under upgrading, replacement of equipment after 20 years of commercial operation

1. Price of hydroelectric plants and fixed price of thermal power plants with economic life expired are determined on the principle ensuring that the plant recovers all the expenses serving electricity production and business activities and the time for price calculation shall follow cycle of major repair of main equipment. In case a written approval of price calculation time issued by the competent state agency, this written approval shall be put into practice. The two parties negotiate and make the report to the Ministry of Industry and Trade, Electricity Regulatory Authority for consideration.

2. Variable price of thermal power plant with economic life expired is determined according to Article 7 hereof.

3. In case the power plant is brought into upgrading or replacement of equipment to maintain operation after 20 years, PPA price shall be considered and revised appropriately upon receipt of adequate documents.

Article 18. Method of determining electricity price for other plants

1. Based on this Circular, Vietnam Electricity and generating units shall construct the method of determining PPA price, separate mechanisms in conformity with the plant and make the submission to Electricity Regulatory Authority for inspection and making the report to the Ministry of Industry and Trade for consideration and approval.

2. After written instructions are issued by the Ministry of Industry and Trade, Vietnam Electricity and generating units shall carry out negotiation to reach an agreement and make the submission to Electricity Regulatory Authority for inspection as prescribed in Articles 20, 21, 22 and 24 hereof.

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