CIRCULAR

SEQUENCE AND PROCEDURES FOR FINANCING THERMO-POWER PLANT PROJECT IN THE FORM OF BOT CONTRACT

Pursuant to the Government’s Decree No. 95/2012/NĐ-CP dated November 12, 2012 defining the functions, tasks, entitlements and organizational structure of the Ministry of Industry and Trade;

Pursuant to the Government’s Decree No. 15/2015/NĐ-CP dated February 14, 2015 on public investment;

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

The Ministry of Industry and Trade promulgates the Circular regulating sequence, procedures for financing thermo-power plant project in the form of BOT contract.

Chapter I

GENERAL PROVISIONS

...

...

...

1. This Circular regulates sequence and procedures for financing thermo-power plant project in the form of BOT contract (hereinafter referred to as the BOT project) within the territory of Vietnam.

2. This Circular applies to organizations and individuals involved in activities in connection with the BOT project.

Article 2. Interpretation of terms

1. BOT contract means the contract signed between the Ministry of Industry and Trade and the permitted BOT investor for the construction of a thermo-power plant within the territory of Vietnam; after the construction of the plant is completed, the investor shall be entitled to operate the plant for a certain period of time; when the period expires, the investor shall transfer the plant to the Ministry of Industry and Trade.

2. The BOT project means the thermo-power plant project financed in the form of BOT contract.

3. BOT investor means organizations, individuals that express their interest in the contribution of capital for development of thermo-power plant project in the form of BOT.

4. Permitted BOT investor means BOT investor assigned to develop the BOT project by competent state agencies.

5. BOT enterprise means the enterprise established by the permitted BOT investor for the implementation of the BOT project.

6. The EPC contractor means the contractor who performs the bid package for engineering, procurement of equipment and materials and installation of the BOT project.

...

...

...

8. Memorandum of Understanding for the BOT project (hereinafter referred to as MOU) means the written agreement signed between permitted BOT investor and the Ministry of Industry and Trade.

9. Feasibility study report (hereinafter referred to as FS) means documents that describe information of research on necessities, feasibility and efficiency of the BOT project.

10. Principal Agreement (hereinafter referred to as PA) means the written agreement signed between General Department of Energy and permitted BOT investor.

11. Power Purchase Agreement (PPA) means the contract signed between the BOT enterprise and Vietnam Electricity.

12. Land Lease Agreement (LLA) means the contract signed between the BOT enterprise and competent agencies in the locality where the BOT project is situated.

13. Coal Supply Agreement (CSA) means the contract signed between the BOT enterprise and coal supplier.

14. Coal Transport Agreement (CTA) means the contract signed between the BOT enterprise and coal transporter.

15. Gas Supply Agreement (CSA) means the contract signed between the BOT enterprise and gas supplier.

Chapter II

...

...

...

Section 1: Selection of permitted BOT investor

Article 3. Selection of permitted BOT investor is instructed in accordance with the Law on Bidding

Article 4. International competitive bidding applies to:

1. Projects within the list of projects under the national electricity planning and stipulated by the Prime Minister;

2. For projects within the list of projects under the national electricity planning with no investor identified that attract participation of from two BOT investor and over, the Prime Minister shall decide manner of selection of permitted BOT investor.

Article 5. Appointment of permitted BOT investors

1. Projects within the list of projects under the national electricity planning and the permitted BOT investor thereto appointed by the Prime Minister;

2. Projects within the list of projects under the national electricity planning with participation of only one BOT investor and policies on selection of the permitted BOT investor thereto approved by the Prime Minister;

3. Projects proposed by BOT investor outside the list of projects under the national electricity planning and approved by the Prime Minister;

...

...

...

Article 6. MOU and project development plan

1. Within 20 working days since the Prime Minister issues a written approval to the permitted BOT investor for development of the BOT project, General Department of Energy shall send a draft MOU and instructions to the permitted BOT investor in preparation for negotiation and execution of MOU. Content of MOU includes:

a) Legal foundations;

b) General description of the BOT project;

c) Roles and responsibilities of the permitted BOT investor;

d) Roles and responsibilities of the Ministry of Industry and Trade;

dd) General schedule for development of the BOT project;

e) Validity period of MOU;

g) Responsibilities of the permitted BOT investor for expenses for project development, making payment for the formulation and assessment of FS, employment of legal advisor to support Vietnamese party during the negotiation and development of the project;

...

...

...

3. Within 15 working days since receipt of formal comments from the permitted BOT investor, General Department of Energy shall conduct negotiation on MOU. Process of negotiation on MOU shall not exceed 30 days.

After agreement on MOU is finalized, General Department of Energy shall make the submission to the Minister of Industry and Trade for endorsement to move forward to the MOU signing ceremony.

4. MOU signing is carried out between representatives of the Ministry of Industry and Trade and the investor.

5. Within 30 days since MOU is signed, the permitted BOT investor must prepare the detailed project development plan and submit it to General Department of Energy for consideration and approval.

6. Within 15 working days since receipt of detailed plan from the permitted BOT investor, General Department of Energy shall issue its comments in writing.

7. Contents of the detailed project development plan include:

a) Formulate and approve the planning for construction of electricity center (if any): dates for submission and approval for the planning;

b) Formulate and approve FS including date for submission and approval for FS;

c) BOT contract negotiation plan and relevant documents including date for PA negotiation; date for PA signing; expected date for first-round negotiation; expected date for completion of first-round negotiation; expected date for second-round negotiation; expected date for completion of second-round negotiation; schedule for negotiation on relevant documents: PPA, LLA, EPC contract, fuel supply contract; date for investment agreement signing; date for submission of application for issuance of Investment registration certificate; date for signing documents of BOT contract;

...

...

...

dd) Groundbreaking and construction: date for official commencement; date for commercial operation of each assembly; date for commercial operation of the entire plant.

Article 7. Formulate, appraise and approve the planning for construction of electricity center

1. Formulation, appraisal and approval of the planning for construction of electricity center (hereinafter referred to as the electricity center planning) is prescribed in the Ministry of Industry and Trade’s Circular No. 43/2014/TT-BCT dated November 19, 2014 regulating content, sequence and procedures for formulation, appraisal and approval for the electricity center planning.

2. Expenses for the formulation, appraisal of the electricity center planning are allocated from supportive capital sources in preparation for project investment.

Article 8. Formulation, appraisal and approval for FS

1. Within 12 months since the signing of MOU, the permitted BOT investor must submit FS documentation to General Department of Energy accompanied by comments from relevant ministries, sectors and from People’s committees of central-affiliated cities and provinces where the project is situated.

FS documentation must be established by an electricity consultant who was granted the permit for consultancy on thermo-power plants, having experience in the formulation of FS for thermo-power plants of the same scale and over.

2. Contents of FS documentation are prescribed in Article 25 of the Government’s Decree No. 15/2015/NĐ-CP dated February 14, 2015 on investment in the form of public-private partnerships and relevant legislative documents.

3. Sequence of appraisal of FS documentation is prescribed in Article 26 of the Government’s Decree No. 15/2015/NĐ-CP dated February 14, 2015 on investment in the form of public-private partnerships and relevant legislative documents.

...

...

...

5. Expenses for formulation, appraisal and examination of FS documentation shall be paid by the permitted BOT investor.

Article 9. Legal advice to the Ministry of Industry and Trade on negotiation on project documents

1. Within 30 days since the signing of MOU, General Department of Energy shall propose method of selecting Legal advisor for competent state agencies and make the submission to the Minister of Industry and Trade for decision.

2. Responsibilities of Legal advisor:

a) Assist the Ministry of Industry and Trade in drafting BOT contract and detailed negotiation, Government guarantees (hereinafter referred to as GGU), Confirmations and Approval by the Ministry of Industry and Trade (hereinafter referred to as MOIT’s A&C);

b) Complete a set of project contract (including BOT contract, GGU, A&C, PPA, LLA, and CSA or GSA), ensuring legality, accuracy and uniformity in information and wording ready for the signing;

c) Other tasks as prescribed in the consultancy agreement;

3. General Department of Energy shall select Legal advisor and make the submission to the Minister of Industry and Trade for approval accompanied by cost estimates for the Legal advisor to assist the process of negotiation.

4. Expenses for the hire of the Legal Advisor to assist the Ministry of Industry and Trade in negotiation on project documents are allocated from state budget. In case state budget sources are not ready, the Ministry of Industry and Trade and the investor shall be responsible for conducting negotiation on sources of expenses for the hire of the Legal advisor to ensure project development progress.

...

...

...

1. Within 15 working days since the signing of MOU, General Department of Energy shall make submission to the Ministry of Industry and Trade for the establishment of interdisciplinary working group.

2. Components of the interdisciplinary working group include:

a) Leader and some members of the Ministry of Industry and Trade;

b) Members of ministries and sectors: Planning and Investment, Justice, Finance, the State Bank, People’s committees of central-affiliated cities and provinces where the BOT project is situated, Vietnam Electricity (EVN), Vietnam National Coal – Mineral Industries Holding Corporation Limited (Vinacomin) (for projects using domestic coal), PetroVietnam (PVN) (for project using domestic gas).

3. Main tasks of the interdisciplinary working group:

a) Finalize plan for negotiation with the permitted BOT investor;

b) Organize and take part in negotiation on BOT contract, GGU and MOIT’s A&C;

c) Take part in handling issues arising during the negotiation.

4. Assignments and working method of interdisciplinary working group:

...

...

...

b) Members as representatives of Ministries, regulatory bodies and local governments shall be responsible for issues in connection with the area under their own management and assisting the leader within functions and duties assigned;

c) The interdisciplinary working group shall work as holder of several official positions;

5. Expenses for operation:

Expenses for operation of the interdisciplinary working group are allocated from state budget.

6. Operation time of the interdisciplinary working group depends on requirements for the implementation of BOT project and is decided by the Ministry of Industry and Trade.

Article 11. Conducting negotiation

1. Negotiation on PA, BOT contract, GGU and MOIT’s A&C shall be carried out when satisfying the following requirements:

a) FS documentation has been approved by the Ministry of Industry and Trade;

b) The Legal advisor has been selected by the Ministry of Industry and Trade;

...

...

...

2. General Department of Energy shall regulate negotiation on project documents with the permitted BOT investor as follows:

a) The interdisciplinary working group shall conduct negotiation on BOT contract, GGU and MOlT’s A&C;

b) EVN shall conduct negotiation on PPA and written Confirmations and Approval of EVN.

PPA shall be passed after General Department of Energy has issued written comments on long-term agreement for supply of fuel to the project and result of selection of EPC contractor.

c) Vinacomin shall conduct negotiation on CSA and written Confirmations and Approval of Vinacomin (for projects using domestic coal).

d) PVN shall conduct negotiation on GSA and written Confirmations and Approval of PVN (for projects using domestic gas).

dd) Any locality where the project is situated shall conduct negotiation on LLA and written Confirmations and Approval of local authorities.

EVN, Vinacomin, PVN and localities must agree about the plan for negotiation with the permitted BOT investor and make the report to General Department of Energy.

3. The permitted BOT investor shall be responsible for conducting parallel negotiation on project documents (including BOT contract, GGT, MOIT’s A&C; PPA; CSA; CTA; GSA and LLA) with relevant Vietnamese partners to ensure progress of the project.

...

...

...

a) Negotiation on PA

When requirements set out in Clause 1 of this Article are met, within 15 working days, General Department of Energy shall send a draft PA to the permitted BOT investor.

The draft PA includes basic definitions, validity period of the contract, general progress of the project, date of operation as requested, applicable laws, settlement of disputes, risk-sharing mechanism, tax regime, structure of electricity price, contract for land lease and supply of fuel, fundamental principles of GGU.

Within 30 days since receipt of the draft PA, the permitted BOT investor must submit comments on content of the draft to General Department of Energy.

Negotiation on PA shall be conducted after 15 working days since receipt of comments from the permitted BOT investor.

General Department of Energy and the permitted BOT investor shall organize the signing of PA after the two parties have reached agreement on detailed information of PA.

b) Negotiation on BOT contract, GGU and MOIT’s A&C

The process of negotiation is divided into two rounds. Each round consists of three sessions and each session lasts for a maximum of three days.

Each round of negotiation is considered as completed when all the terms and conditions under the contract are passed through. Any inconclusive matters shall be brought forward to the next round of negotiation.

...

...

...

Within 60 days since receipt of the draft, the permitted BOT investor must submit comments on content of the draft BOT contract, GGU and MOIT’s A&C to General Department of Energy. Negotiation shall be conducted after 30 days since receipt of comments from the permitted BOT investor.

At the end of each round of negotiation, the Ministry of Industry and Trade shall carry out collection of suggestions from relevant ministries and sectors as foundations for the next round of negotiation.

The interdisciplinary working group shall continue negotiation with the permitted BOT investor on suggestions from ministries and sectors for the completion of the draft BOT contract, GGU and MOIT’s A&C.

5. After two rounds of negotiation, the Ministry of Industry and Trade shall make the report to the Prime Minister on accomplished results and inconclusive matters.

The interdisciplinary working group shall continue negotiation with the permitted BOT investor under the direction of the Prime Minister. The negotiation is considered as completed when Vietnamese partner and the permitted BOT investor have reached agreement on all matters of project documents.

6. Within ten working days since the negotiation is completed, the Ministry of Industry and Trade shall make the submission to the Prime Minister for ratification before the signing of investment agreement with the permitted BOT investor.

Article 12. Fulfillment of project documents and signing of investment agreement

1. After BOT contract, GGU and MOIT’s A&C are agreed by the two parties, the Legal advisor assisting the Ministry of Industry and Trade shall issue a written confirmation over legality and accuracy of information and wording made in project documents for the Ministry of Industry and Trade to sign the investment agreement with the permitted BOT investor.

2. The permitted BOT must cooperate with relevant parties in completing the draft, initialing other project documents such as PPA, CSA (or GSA), CTA, LLA and make the report to the Ministry of Industry and Trade.

...

...

...

Chapter III

ISSUANCE OF INVESTMENT REGISTRATION CERTIFICATE AND SIGNING OF PROJECT DOCUMENTS

Article 13. Issuance of investment registration certificate

1. Within 30 days since the signing of investment agreement, the permitted BOT investor shall submit application to the Ministry of Planning and Investment for issuance of investment registration certificate.

2. Documentation, sequence and procedures for issuance of investment registration certificate are prescribed in Article 40 of the Government’s Decree No. 15/2015/NĐ-CP dated February 14, 2015 on investment in the form of public-private partnerships.

3. The permitted BOT investor shall be responsible for cooperating with relevant parties from Vietnam in giving explanation of comments at the request of the Ministry of Planning and Investment.

Article 14. Official signing of BOT contract and project documents

1. Within 30 days since receipt of investment registration certificate from the Ministry of Planning and Investment, the permitted BOT investor must establish the BOT enterprise and fulfill supplements as specified in the investment registration certificate for the official signing of project documents.

2. General Department of Energy shall organize signing ceremony for project documents between the permitted BOT investor, BOT enterprise and relevant parties as follows:

...

...

...

b) Signing PPA with EVN;

c) Signing CSA with Vinacomin (for project using domestic coal);

d) Signing GSA with PVN (for project using domestic gas);

dd) Signing LLA with localities where the project is situated;

3. The BOT enterprise shall be responsible for submitting requests for legal advice to the Ministry of Justice as prescribed in the Government’s Decree No. 51/2015/NĐ-CP dated May 26, 2015 on provision of legal advice.

Article 15. Handling of issues arising during financial arrangement

General Department of Energy shall cooperate with the permitted BOT investor in handling issues arising during financial arrangement. For ultra vires cases, General Department of Energy should make the report to the Minister of Industry and Trade for submission to the Prime Minister for consideration and decision.

Article 16. Issuance of A&C

The Ministry of Industry and Trade, People’s committees of central-affiliated cities and provinces where the project is situated EVN shall be responsible for issuing A&Cs to BOT enterprises as prescribed in BOT contract, LLA and PPA.

...

...

...

INSPECTION AND MONITORING OF THE IMPLEMENTATION OF PROJECT

Article 17. Monitoring implementation of project contracts and work quality

1. Monitoring the implementation of project contracts is prescribed in Article 47 of the Decree No. 15/2015/NĐ-CP and relevant legislative documents.

2. Monitoring of work quality is prescribed in Article 48 of the Decree No. 15/2015/NĐ-CP and relevant legislative documents.

3. General Department of Energy shall preside over and cooperate with relevant ministries and sectors in conducting inspection of the task of examination and acceptance to put Works into operation as prescribed in the Government’s Decree No. 15/2013/NĐ-CP dated February 06, 2013 on management of construction quality and relevant legislative documents.

4. General Department of Energy shall monitor compliance with obligations by the Investor, BOT enterprises according to project development progress and provisions as set out in the set of BOT contract.

Article 18. Reporting mode

1. Monthly reporting

During the construction of the plant, BOT enterprises shall be responsible for making monthly reports to General Department of Energy and relevant competent state management agencies on the fifth of months. Information to be reported includes:

...

...

...

b) Difficulties and proposals (if any);

c) Next month’s plans

2. Quarterly, annual reporting

BOT enterprises shall be responsible for completing quarterly reports (on the fifth of April, July and September), and annual reports (on the fifth of January) to General Department of Energy and relevant competent state management agencies.

3. Irregular reporting

In the event of natural disasters, conflagration or at the request of competent state agencies, BOT enterprises shall be responsible for making immediate reports to General Department of Energy and relevant competent state management agencies.

Chapter V

IMPLEMENTARY PROVISIONS

Article 19. Effect

...

...

...

2. Organizations and individuals involved in activities in connection with the BOT project within the territory of Vietnam shall be responsible for executing this Circular.

Article 20. Transitional provisions

1. Any project that has been developed before the effective date of this Circular is instructed in accordance with Article 72 of the Decree No. 15/2015/NĐ-CP.

2. MOU that has been signed before the effective date of this Circular shall not be re-signed as prescribed hereof.

3. PA of the project that has been signed before the effective date of this Circular shall not be re-signed as prescribed hereof.

Article 21. Implementation

1. General Department of Energy shall be responsible for providing guidance on the execution of this Circular.

2. Difficulties that arise during the implementation of this Circular should be reported (by Ministries, sectors and localities, BOT investor, the permitted BOT investor and relevant enterprises) to General Department of Energy, the Ministry of Industry and Trade for instructions./.

...

...

...

PP THE MINISTER
DEPUTY MINISTER




Hoang Quoc Vuong