JOINT CIRCULAR

GUIDING IMPLEMENTATION OF SOME ARTICLES UNDER DECISION NO. 130/2007/QD-TTG DATED 2ND AUGUST 2007 OF THE PRIME MINISTER ON MECHANISM, FINANCIAL POLICY ON CDM PROJECTS

Based on Decision No. 130/2007/QD-TTg dated 2nd August 2007 of the Prime Minister on some mechanism, financial policy on CDM projects, the MOF and MONRE jointly provide guidelines as follows:

I. GENERAL PRINCIPLES

1. This Circular provides guidelines for collection, submission, management, use of Certified Emission Reductions (CERs) selling fee, management of CERs resulted from CDM projects using ODA funds; subsidy policy to products of CDM projects stipulated under Article 5, Article 9, Article 16 of Decision No. 130/2007/QD-TTg dated 2nd August 2007 of the Prime Minister on mechanism, financial policy for CDM projects (Decision No. 130/2007/QD-TTg).

2. On the latest of 15 days before the grant, receipt, implementation of CERs shares, CERs owner shall have to report to Ministry of Natural Resource and Environment (MONRE) and register with Vietnam Environment Protection Fund (VEPF) about contact details for CER receipt, quantity of CER granted, receipt, shared among relevant investors to a CDM project.

In case of occurring changes to the contents already reported or registered, investors to CDM projects (hereinafter referred to as “Investor”) shall re-register and report again.

3. When selling or transferring CERs back to home country, CERs owner (applied only for foreign Investor) shall report it to MONRE, VEPF and shall pay CERs selling fees before transferring CERs to buyers or back to home country.

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4. Products of CDM project qualified to conditions set out in Article 5 of Decision No. 130/2007/QD-TTg shall be subject to subsidy as stipulated in Section III of this Circular. Investors as owner of CERs resulted from CDM project having products enjoying subsidy shall have to pay fees for selling CERs as stipulated under Section II of this Circular.

5. In case of conflictions between provisions under this Circular and stipulations under international convention that Vietnam participated, the stipulations under international convention shall be prevailing. Implementation by international convention shall observe stipulations under Ordinance on signing and fulfillment of international convention and its guidelines.

II. COLLECTION, SUBMSSION, MANAGEMENT, AND USE OF CERs SELLING FEES

1. CERs selling shall have to pay CERs selling fees in compliance with the regulations of signed contract or transfer CERs to home country.

2. CERs selling fee:

Rate of CERs selling fees is calculated by percentage (%) of total income which is get from CERs selling in accordance with the signed contract or CERs’ quantity which is transferred to home country by foreign investors. The rate of CERs selling fee is applied for all CDM projects in below fields:

No

Fields

Rate

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Improving energy efficiency, conservation and saving

1,2%

2

Harvest and applying renewable energy sources

1,2%

3

Afforestation or reforestation to increase capacity of greenhouse gas absorption and emission reduction

1,2%

4

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1,5%

5

Methane (CH4) recovery from waste disposal sites and coal mining for disposal, electricity generation, living

1,5%

6

CH4 emission reduction from husbandry, cultivation activities and biogas

1,5%

7

Gasses recovery and utilization from oil drilling

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8

Other fields resulting in greenhouse gas emission reduction

2%

3. CERs selling fee is defined as follows:

Payable CERs selling fee (VND)

=

Rate of CERs selling fee (%)

x

CER selling quantity or CER quantity transferred to home country

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CER unit price (VND/CER)

CER quantity and selling price are calculated on basis of the signed contract. In case, CERs owner don’t sell CERs but transfer CERs to home country, they shall have to pay fees that is calculated by actual quantity of CERs to be transfered to home country based on market price at the time of paying fee.

4. Collecting, transfering CERs selling fee

4.1. CER owner shall declare quantity of CER sold or transfer back to home country, estimate and list payable CER selling fee (in accordance with Form 01 promulgated in conjunction with this Circular); paying CER selling fee to VEPF based on figures listed in the statement before CERs are transferred to buyer or back to home country.

As for CDM projects developed and implemented in the form stipulated under Clause 3 of Article 4 under Decision No. 130/2007/QD-TTg, if foreign investor, consulting firm providing consulting services to develop CDM project, does not have office based in Vietnam, in that case, local investor shall negotiate to reach agreement and pay on their behalf CER selling fees for foreign partners.

4.2. VEPF shall appraise Statement of CER onwer, organize collection, management, use of CER selling fee in accordance with guidance under this Circular. In case CER onwer goes against the laws and does not pay CER selling fee, or does not declare true quantity of CERs sold/transfered back to home country, VEPF may check and issue notification on payable selling fee (as per Form 02 in conjunction with this Circular).

4.3. CER selling fee shall be paid in Vietnamese Dong. In case CER owner propose to pay in foreign currency, such payment shall be paid in foreign currency with interbank exchange rate to Vietnamese Dong announced by the State Bank of Vietnam at the time of payment.

5. Management and use of CER selling fees

5.1. CER selling fee is an income source for State budget, to be left in full at VEPF for covering expenses incurred from following activities:

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5.1.2. Expenses incurred for suporting propagation, information dissemination, public awareness improvement in relation to climate change and CDM, including: payment for mass media; writing, printing, publishing documents about UN Climate Convention, Kyoto Protocol and guidelines of International Executive Board on CDM; payment for seminars, training, capacity strenthening in connection to climate change and CDM; payment for survey and propagation, information dissemination.

5.1.3. Payment for supporting process of appraisal and approval on CDM project documents, management and supervision of CDM projects, including:

- Expenses incurred from activities of Executive Board for implementing UN Common Convention on Climate Change and Kyoto Protocol.

- Expenses incurred from activities in connection to management and supervision of implementation of CDM project.

Specific rates for expense items listed under Clause 5.1.2, Clause 5.1.3 shall observe cost norm, regulations issued by MOF; as for expense items not yet regulated by laws, leaders of units enjoying financial support shall based on actual condition and support level to determine expenditure rates and shall bear responsibility for their own decision.

Every year, based on their responsibilities and actual requirement: they shall propagate, disseminate information to the public in order to improve public awareness about CDM; apprasing, approving CDM project documents; management and supervision on implementation of CDM projects receiving allocated state budget, relevant agencies shall estimate budget and send it to VEPF for consideration and approval on financial support.

5.1.4. Supporting budget for preparation of CDM project documents

a. Conditions to receive financial support:

- Within scope of CDM projects stipulated under Article 3 of Decision No. 130/2007/QD-TTg and Point 2, Clause 2, Section II of this Circular.

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- Project design document has been approved officially by MONRE

- Investor shall submit a document to request for financial support, which shall attach a report on cost estimation for PDD and other related payment vouchers to be submitted to VEPF.

b. Level of financial support shall be considered and decided by VEPF within limit of the CER selling fees, and shall not exceed 30% of actual cost for preparing PDD.

5.2. The remaining amount of CER selling fee after paying for activities listed in Point 5.1 Section II of this Circular shall be supplemented to operation capital of VEPF.

5.3. VEPF shall manage, use CER selling fees paid by investors of CDM projects mobilizing ODA funds for the right purpose in the right manner, if such money is not fully spent during the respective year, the remaining amount shall be transferred to the next year for use in the right manner in accordance with the laws and regulations.

Other contents in relation to receipt, payment, management, use and publicly announcing the receipt and use of CER selling fees not yet regulated under this Circular shall observe regulations promulgated by the MOF.

III. SUBSIDY POLICY TO PRODUCTS OF CDM PROJECTS

1. The following products of CDM projects are enjoyed subsidy policy from Vietnam Environment Protection Fund:

1.1. Electricity is produced from wind power, solar, geothermal enery and tide.

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2. Subsidary requirements:

2.1. The products listed in the clause 1, item 3 of this Circular are enjoyed subsidy policy.

2.2. Subsidy option determined by VEPF results that actual producing costs for each unit are higher than actual selling price in the signed contract.

2.3. The signed and valid contract must consist of selling price of product.

2.4. The project received the approval and certified letter issued by Ministry of Natual Resource and Environment.

2.5. Investors will submit the subsidy request and dossier as guided in clause 5, item III of this Curcular to VEPF.

3. Subsidy level for each product unit

Subsidy level for each product unit is based as follows:

Subsidy level for each product unit

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Actual producing costs for each unit

+

Planned profit /each unit

-

Actual selling price for each unit

In which:

- Actual producing cost for each unit is defined as an eligible and reasonable cost to calculate taxable income in compliance with regulations on corporate income tax issued by Ministry of Finance.

- Planned profit for each unit is calculated yearly by Investor and is submitted to VEPF to conduct appraisal. Finally it must be submitted to Management Committee of Fund for official decision. The calculation of planned profit is based on profit of same product type and is not higher than average profit of the product.

- Actual selling price is the actual price at the payment time.

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4. Subsidy amount

Yearly subsidy amount is calculated:

Yearly subsidy amount

=

Subsidy level for each unit in respective year

x

Quantity of products sold in respective year

-

Actual incomes from CERs selling are allocated in respective year (if any)

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5. Duration to enjoy subsidy policy applied to products of CDM project is defined based on the time the project have products and capacity to make up production cost of the products but not exceeding actual depreciation duration to recover investment capital for equipment and produce products which are enjoy subsidy policy.

6. Basing on operation plan of project in respective year, product purchaser agreement has to be signed and subsidy policy has to be officially decided by Management Committee of Fund at least 15 days of first month of quarter. Vietnam Environment Protection Fund has to grant provisionally subsidy to beneficiary from subsidy policy not exceeding 70% of total subsidy stipulated in the yearly operation plan. Investor shall finalize the provisionally granted subsidy when closing fiscal year at least 15 January of next year. In case, the received subsidy in respective year is lower than the receivable subsidy, this difference will be granted continuously to investor. In case, the received subsidy in respective year is higher than the receivable subsidy, this difference will be transferred and deducted into the receivable subsidy of 1st quarter of next year if still being in the duration to enjoy subsidy policy, whereas investor has to pay this difference to Vietnam Environment Protection Fund.

7. Application package to enjoy subsidy policy

Application package consists of:

- Request for subsidy.

- Copies certified by authorised agency on certified emission reductions which are credits issued to a CDM project by International Executive Board (if any) or approvals of Ministry of Natural Resource and Environment.

- Purchase agreement of products which are enjoyed subsidy policy.

- Calculation and explanation on planned profit.

- Price option with specific specification:

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+ Expenditure statement and selling price for each product.

+ Explanation on payback period.

+ Other relevant documents (if any).

8. Budget for product to be enjoyed subsidy policy has to be paid by Vietnam Environment Protection Fund.

9. Subsidy budget is used in compliance with planned purposes. The finalization of subsidy is conducted accordance with current regulations.

IV. IMPLEMENTATION ARRANGEMENT

1. Investor is responsible for paying CERs selling fee in accordance with stipulations of this Circular. In case of violation, investor will be penalised administrative fee as per provisions of the Government.

2. CDM project which is supported by Vietnam Environment Protection Fund to prepare project documents listed in point 5.1.4, item II of this Circular doesn’t continue implementing due to subjective faults, whole supported budget must be paid back to Vietnamese Environment Protection Fund.

3. This Circular will come into effect after 15 days of its publication on Official Gazette. In case, CDM project was issued and sold CERs or CERs were transferred to country before the time that Decision No.130/2007/QD-TTg comes into effect, investor has not to pay CERs selling fee but still report to Ministry of Natural Resource and Environment and register CERs with VEPF as per clause 2, article 17 of Decision 130/2007/QDD-TTg./.

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ON BEHALF OF MINISTER
MINISTRY OF NATURAL RESOURCE AND ENVIRONMENT
VICE MINISTER




Nguyen Cong Thanh

ON BEHALD OF MINISTER
MINISTRY OF FINANCE
VICE MINISTER





Do Hoang Anh Tuan

Form No. 01:

FULL NAME OF AGENCY
(pay CERs selling fee)
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SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom – Happiness
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STATEMENT ON PAYING CERS SELLING FEE

(Issuing with Inter-ministerial Circular No. 58/2008/TTLT-BTC-BTM&MT dated 04th July 2008)

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- Full name of agency: ..........................................................................................

- Address: ……………………………………………………………………………….

- Telephone: …………………… Fax: ………………………………………………..

- Account Number: ………………… at Bank: ………………………………………

1. Construction and investment fields: ……….....................................................

2. Total CERs granted to project: ……………………………………………………

3. Shared quantity of CERs: …………………………………………………………

4. CER selling quantity/CER quantity to be transferred to country: ………………

5. CER selling price: …………………………………………………………………..

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7. Payable CER selling fee consists of:

Quantity of CER to be paid fee

CER price

Collecting rate

Amount (VND)

Selling price as per signed contract

CER quantity to be transferred to country

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Amounts in word………………………………………………………………….

....., date ... month ... year......

ON BEHALD OF AGENCY

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VIETNAM ENVIRONMENT PROTECTION FUND
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SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom – Happiness
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No.: ....... /TB-QBVMTVN

NOTIFICATION ON PAYING CERS SELLING FEE

(Issuing with Inter-ministerial Circular No. 58/2008/TTLT-BTC-BTM&MT dated 04 July 2008)

(No. ........)

To: ……… (Full name of CERs owner)

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Basing on the statement and appraising results of CERs selling fee, agency has conducted the selling / the transfer of CERs with quantity of……(filling specific amount), the Vietnam Environment Protection Fund notifies the payable CERs selling fee:

Quantity of CER to be paid fee

CER price

Collecting rate

Amount (VND)

Selling price as per signed contract

CER quantity to be transferred to country

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Amounts in word………………………………………………………………….

Please transfer the above amounts to the bank account as follows:

Name of beneficiary: Vietnam Environment Protection Fund

Account Number:

Bank:

The deadline is on …………..

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....., date ...month ... year......

DIRECTOR