Joint Circular No. 75/2012/TTLT-BTC-BXD-BNNPTNT guiding the principles and methods of determination of, and competence to decide on, clean water selling prices in urban centres, industrial parks and rural areas

rSSlll~ nos 11-12/Iune 2012 (Cong Beo nos427-428/July 12. 2012) THE MINISTRIES TIll:' MINISTRY OF rlNANCt' - HIE MINISTRY OF CONSTRUCTION - THf; MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT Joint Circular No. 7512012/TTLT BTC-BXD-BNNPTNT of May 15, 2012, guiding principles and methods of determination of, and competence to decide on, clean water selling prices in urban centers, industrial parks and rural areas Pursuant to the Government's Decree No. /70!2003/ND-CP oj December 25, 2UO". detailing a number ofarticles ofthe Ordinance on Price; and Decree No. 75/2008/ND-CP of June 9, 2008, amending and supplementing a number of articles of Decree No. 170/2003/ ND-CP; 25 Pursuant to the Government's Decree No. 117/2007/ND-CP of July 11. 2007, on production, supply and sale of clean water; Decree No. 12412011IND-CP ofDecember 28, 2011, amending and supplementing a number of articles ofDecree No. 11 7/2007/ND-CP; Pursuant to the Government s Decree No. 11812008/ND-CP of November 27, 2008. defining the functions, tasks, powers and organizational structure of the Ministry of Finance: Pursuant to the Government 's Decree No. 1712008/ND-CP ofFebruary 4,2008, defining thefunctions, tasks, powers and organizations of the Ministry ofConstruction; Pursuant to the Government's Decree No. OII2008/ND-CP ol January 3, 2008. defining the/unctions, tasks, powers and organizations of the Ministry of Agriculture and Rural Development; Pursuant to the Prime Minister's Decision No. 2147/QD-TTg of November 24. 2010, approving the national program to reduce clean water and water charge loss through 2025. The Minister of Finance, Minister of Construction and Minister ofAgriculture and Rural Development [ointlv issue This Joint Circular to guide principles and methods' of df'fprmin(Jtinn ot: anrl competence to decide 01/, clean water selling prices ill urban centers, industrial parks and rural areas as follows: 26 Chapter [ GENERALPROVISIONS Article 1. Scope of regulation This Joint Circular guides principles and methods of determination of clean water selling pricesand competence to decide on these prices for use as a basis for competent organizations defined by law and this Circular to elaborate. submit 01 appl ove pI ice plans 01 decide Otl clean water selling prices applicable to urban areas, industrial parks and rural areas. Article 2. Subjects of application This Circular applies to organizations competent to elaborate. submit or approve price plans or decide on clean water selling prices in accordance with taw and this Circular; water suppliers providing water supply services in wholesale or retai I form and clean water consumers. Chapter II PRiNClPLES OF DETERMINATION OF CLEAN WATER SELLING PRICES Article 3. Principles of determination of clean water selling prices 1.Clean water selling prices must correctly and fully cover all reasonable production costs and total costs arising in the process of production, distribution and consumption (including connection maintenance expenses) so that water suppliers can sustain and develop their operation on the basis at regulations. [ssue nos ll·ll/June 2012 (Gong Baa lias421'ilSlJulv 12. l(12) standards and eco no-t ec hn ic al norms announced or promulgated by competent agencies defined by law and reasonable profit norms for commercial water volumes of organizations and individuals that conduct several or all activities of exploiting, producing, conveying, wholesaling and retailing clean water (below collectively referred to as water suppliers) in accordance with the Regulation ofrricing prnmulgated hy the State and guided in this Circular: be conformable with the clean water supply demand relation and the national and regional socio-economic development conditions and people's incomes in each period: guarantee tile rights and legitimate interests of water suppliers and consumers; encourage clean water suppliers to improve service quality and strive to reduce water costs and loss and charge loss, and meet customer needs, and at the same time encourage consumers to use water economically and investors to invest in the production, supply and sale of clean water. 2. Clean water selling prices of water suppliers apply indiscriminately to all economic sectors and domestic or foreign organizations and individuals that consume water but val)' for diffcicu; watc: use pUlj}U~CS. such as water used for people's daily life (takin~ into account Sllpport rnlicit'~ for watt"r consumers being poor households in ethnic minority, mountainous. coastal sandbanks, island and border areas under the current poverty line set by the State); water used by administrative agencies and non-business Issue nos 11-12/.Junc 2012 (Gong Bao IlOS 427-428/July 12,2012) organizations; and water used for production, business and services, and conform to water use characteristics, water sources and water production conditions of each region, locality or area. 3. Clean water selling prices must be set on the pricing principles provided in Clause I of this Article according to the pricing principles, methods and competence and within the price frame or limits set by the State; but conform to the water quality prescribed incurrent technical regulations announced or promulgated by competent agencies defined by law. 4. In case clean water selling prices decided (or approved) by Peopl e' s Commi ttecs of provinces or centrally run cities (below referred to as provincial-level People's Committees) arc lower than those stated in clean water price plans worked out by water suppliers and appraised by provincial-level Finance Departments on the above-mentioned principles of correct and compl etc calculation of costs and profits, provincial-level People's Committees shall annually consider and pay the price differc nee with local budgets or adopt reasonable support mechanisms according to their competence and law, in order to help clean water producers and suppliers fully cover costs und maintain normal production or business acti vities. except c lean water produced under bui ld-opcratc-transfcr (BOT) investment projects on Clean water. Article 4. Principles of price adjustment 27 Annually, when factors forming clean water production and supply costs calculated on the principles specified in Article 3 and by [he methods of determination of total production costs specified in Article 5 of this Circular change or when there is a change in the water treatment technology or service quality regulations or the State's relevant mechanisms or policies, leading to an increase (or a reduction) in clean water selling prices, agencies competent to deci de (or approve) water prices defined in this Circular shall consider increasing (or reducing) the clean water selling price frame and specific prices as appropriate. ChapterlII METHODS OF DETERMINATION OF CLEAN WATER SELLING PRICES Article 5. Method of determination of total production and business cost of clean water 1. Reasonable and valid total production costs of clean water for use as a basis for calculation of the total cost and the price of one cubic meter (rn ') of clean water must be calculated for the corresponding commercial water output in the calculation period according to regulations. standards and econo technical norms for clean watcr production announced or promul gated by competent agencies defined by law (regardless of the actual average production cost of water suppliers in the province), and include the following costs: 28 Issue nos 1l·12/,lune 2012 (Gong BaaIIOS 427-.:/-2R!Juli' 12,2(12) No. Cost Svmbol I Direct supplies cost (\1 2 Direct labor cost c:-;( 3 General production cost C\"\," 4 Total production cost 0+2+3) C. 5 Corporate governance cost C 6 Sale cost CI> Total clean water production and business cost (4+5+6) C-\ 2. For clean water in urban centers and industrial parks (including industrial parks, export processing zones, hi-tech parks and economic zones, which arc below collectively referred to as industrial parks). each cost shall be determined as follows: aJDirect supplies cost includes costs ofraw materials, materials, fuel or power directly used for the production of the product. such as payments for clean water or unpurified water (for enterprises tna: need to purchase clean water and unpmified water), electricity, alum, chlorine and auxiliary materials used for water treatment. Direct supplies cost shall be determined to equal the total volume of each type of supplies used multiplied (x) by the unit price of such type of supplies; in which: Supplies volume used for clean water production must comply with regulations, standards and ccono-technical norms for clean water production announced or promulgated by competent agencies ~fined by law, For supplies which have no regulations, standards and econo-technical norms announced or promulgated by competent agencies. chairpersons of boards of directors or directors general or directors of water suppliers shall elaborate such norms and incorporate them in clean water selling price plans to be submitted to provincial-level People's Committees for approval: Supplies prices arc actual buying prices of supplies as set, quoted or guided by the State at the time of calculation (for types of supplies sti II priced by the State or SLJ bject to pnce management by the State in the form of price registration, price declaration. price consultation and price information publication) or arc market prices stated in sellers' lawful invoices at the time of calculation (for supplies outside the list set by the State or not subject to price notification or guidance) pi us (+) reasonable expenses (if any) for transportation to places of water production and supply. bl Direct labor cost includes amounts paid by water suppliers to their employees directly engaged in production, such as salaries or wages and salary-based allowances; mid-shift meal allowance; social, health and unemployment Issue nos n -12/.June 2012 (Gong Baonos427-428/Julv 12, 2012) insurance premiums, trade union dues, and other expenses for workers directly engaged in water production, in which: Salary or wage payment shall be determined to equal the number of workdays according to the econo-technical norms for clean water production announced or promulgated by competent agencies defined by law multiplied (x) by corresponding workday unit price (workday unit price includes basic wage and sal ary-bascd allowances provided by the State): Mid-shift meal allowance (if any) for laborers engaged in business operations of enterprises in accordance wi th the State's current regulations; Soci al, health and unemployment insurance premiums, trade union dues and other expenses (if any) for direct workers in accordance with the State's current regulations. cl General production cost means direct production costs (excluding direct supplies cost and direct labor cost specified at Points a and b, Clause 2 of this Article) incurred in production units of enterpri scs, including: fixed asset depreciation and repair costs; costs of materials, tools and instruments for workshops; wages. salary allowance and mid-shift meal allowance (if any) payable to workshop workers; social, health and unemployment insurance premiums and trade union dues of employees and workers of workshops; expenses for resting clean water standards and services bought from outside and other expenses in cash which are allowed under law to be included in costs. 29 The method of determination of supplies, service and labor costs in general production cost is that provided at Points a and b, Clnusc 2 of this Article. Fixed asset depreciation cost complies with the Ministry of Finance's regulations on management, use and depreciation of fixed assets. cI/ Corporate governance cost means the total of expenses paid for the corporate governance and executive apparatus and general expenses for the whole enterprise, including: expenses for depreciation and repair affixed assets used by the management and administration apparatus of the enterprise; salaries or wages and allowances, mid-shift meal allowance (if any) payable to directors and managers of divisions and sections; social. health and unemployment insurance premiums and trade union dues of the corporate governance and e xec utivc apparatus; costs of materials and stationeries, taxes. charges and fees and charges for services bought from outside of the enterprise's office; and other general expenses for the whole enterprise, such as payment of loan interests, provisions for stock devaluation and non-performing receivable debts, and expenses for Zll~sr reception, transactions, scientific and technological renewal research, technical innovations and improvements, environmental protection, education, training, health care for employees of the enterprise, female laborer s, supply of safe water and other expenses in accordance with current regulations. Corporate governance cost shall be allocated to the cost price according to the 30 criteria applicable to products of the enterprise, such as production of clean water, construction and installation, and production of other products (if any); and other governance expenses according to the State's current regulations. The method of determination of supplies, services, labor and fixed asset depreciation costs in thecorporate governance cost is thatprovided at Points a, band c Clause 2 of this Article. el Sale cost means all expenses related to the sale of products and services, including expenses forcomplete investment,coveringalso water meters and other auxiliary equipment installed from grade-III networks to connection points of water consumers, unless otherwise agreed upon by the parties: salaries, salary allowances and mid-shift meal allowance (if any); social, health and unemployment insurance premiums, trade union dues and expenses for salespersons in accordance with regulations: expenses for advertisement, services bought from outside, maintenance of connections and other expenses according to the State's current regulations. The method of determination of each expense of the sale cost is that provided at Points a. b, c and d, Clause 2 of this Article. Connection maintenance expenses means those for management and maintenance of connections which are currently ill usc (even if customers do not use water) and will be used in a water supply plan period in order to assure water supply service quality to meet customer needs. These expenses shall be specified by provincial-level People's Committees as a Issue nos 11-] 2/June 20]2 (CongBaanos427-428!July 12, 2012) certain percentage of total production cost suitable to the actual water use conditions in their localities. 3. For clean water in rural areas, expenses included in the costs shall be determined as follows: aJDirect supplies cost includes costs of raw materials, materials and fuel or power directly used for production of the product, such as payments for clean water or unpurificd water (for production units that need to purchase clean water and unpurified water), electricity, alum, chlorine and auxiliary materials used for water treatment. Direct supplies cost shall be determined to eq ual the total volume of each type of supplies used multiplied (x) by the unit price of such type of supplies; in which; The main supplies volume used for clean waterproduction mustcomply with regulations, standards and econo-technical norms tor clean water production announced or promulgated by competent agencies defined by law. Supplies prices are actual buying prices of supplies as set, quoted or guided by the State at the time of calculation (for types of supplies still priced by the State or subject to price management by the State in the form of price registration,pricedeclaration. price consultation and price information publication)or are market prices stated in sellers' lawful invoices at the time of calculation (for supplie.s outside In..lis! set by the State or not subject to price notification or guidance) plus (+) reasonable expenses (if any) for transportation to places of Issue hOS H·1YJUhe 2012 (Cong BaoliDS427428/July 12,2012) water production and supply. bl Direct labor cost For water supply works invested with state budget-originated capital sources and direct state budget sources and managed and operated by enterprises or public non-business units established under the State's regulations for supply of clean water in rural areas, the direct labor cost shall be determined by the method applicable to the production of clean water in urban centers and industrial parks, specifically as follows: + Salary or wage payment shall be determined to equal the number of workdays according to the econo-technical norms for clean water production announced or promulgated by competent agencies defined by law multiplied (x ) by the unit price of such workday (including basic wage and salary based allowances provided by the State suitable to the typeof enterprise and publicnon-business units): + Mid-shift meal allowance (if any) for laborers engaged in business operations of enterprises in accordance with the State's current regulations; + Social, heal th and unemployment insurance premiums, trade union dues and other expenses (if any) for workers directly engaged in production in accordance with the State's current regulations. For water supply works assigned by the State to cooperati Yes, communities or individuals for management and operation, or water supply works invested by cooperauves, 31 communities or individuals with their own capital for commercial supply of clean water, the direct labor cost shall be calculated on the basis of discussion and agreement among cooperative members or agreement between water-consuming population communities and water suppliers. to equal the average labor cost of production and business lines in the sector of service and goods provision in localities and conformable with the State's current regulations. c/ General production cost (if any) shall be calculated by the method applicahle to calculation of general cost of production and trading of clean water ill ur ban centers aud industrial parks. dI Corporate governance cost or governance cost of water suppliers (if any) shall he calculated by the method applicable to calculation of corporate governance cost for clean water production and trading in urban centers and industrial parks. eI Sale cost (if any) shall be calculated by themethod applicable tocalculation of salecost for clean water production and trading in urban centers and industrial park s. , 4. Upon determining total production and business cost, water suppliers shall correctly and adequatelycalculate reasonable and valid costs; and may not account expenses not allowed to be accounted into total production and business cost according to the Finance Ministry's Regulation of valuation of assets, goods and services and relevant laws. General costs which are incurred not on1y for clean water production and trading but also related to many areas of operation of water suppJ iers and costs, which must be allocated in the penod orcalculation, must comply with the accounting law, relevant laws and this Circular. Article 6. Method of determination of average clean water selling price (retail price) 1. Total production cost of one m' of dean water which serves as a basis for calculation of average clean water price shall be determined according to the following formula: Ct Ztb =' SLtp ln which: aJ Ztb means average total production cost of one mJ of clean water (calculated in VNDI m\ bl Ct means reasonable and valid total production and trading cost of clean water corresponding to the commercial water output (calculated in VND) which is determined under Article 5. Chapter III of this Circular. cl SLtp means commercial water output, which shall be determined as follows: SUp;::: SLsx - KLhh in which: SLtp means commercial water output (calculated in rnJ/year); Sl.sx means produced water output. + Prnduc~d water output of urban centers and industrial parks shall be calculated according to the output planned to be exploited in the year of each plant suitable to the water Issue nos ll·12/,Iunc 2012 (Gong Baa I>OS 427 128/Jiilv n. 20J2) consumption demand approved by the provincial-level People's Committee (calculated in mJ/year). + Produced water output of rural areas: For water supply works which are managed and operated by enterprises or public non business units having revenues established under the State's regulations, the produced water output shall be determined like that of urban centers and industrial parks. For water supply works managed and operated by cooperatives. communities or individuals. the produced water output is the water output exploited in the year of each supplier based on the water supply demand agreement between the water supplierand water consumers. KLhh means water volume lostor for which charge cannot be collected, which is referred to as lost water volume (including natura! loss and technical loss), compared between the produced water output and commercial water output (calculated in m3) . The lost water volume shall be determined as a percentage (%) of the produced water output. Specific water loss percentages shall be prescribed by provincial leveI People's Committees to suit practical technical conditions lind management levels and included in the clean water selling price as a presumptive limit as follows: + For the whole water supply networks which have been commissioned for under 10 years: 23%; + For the whole water supply networks which have been commissioned for to years or \ Issue nos 1l·121June 2012 (Gong Baa nos427-428/July 12. 2(12) ruor c. 32'){.; + For intermingled water supply networks which have been commissioned for ei ther under lO years or !O years or more: 27%; This loss percentage must be monitored and determined from practical production and trading activities and subject to strict management measures so as to gradually decrease to the level prescribed in the Prime Minister's Decision No. 2147/QD-TTg of November 24, 20 I0, appro ving the national program to reduce clean water and charge ln~s for each period: by 2015, 2020 and 2025, the average clean water and charge loss percentage will be 25%, l8(10 and 15 cft., respectively, For water suppliers that have water loss percentages approved by provincial-level People's Committees in their annual plans on clean water selling prices calculated after the effective date of this Circular lower than the above maximum water 10s5; percentage, the presumptive limit of water loss are the approved loss percentages, At thc same time, water suppliers arc encouraged to reduce water loss; water loss percentages approved by provincial level People's Committees shall be kept unchanged for three years. Water suppliers that are able to reduce their actual water loss percentages compared with the percentages approved by provincial-level People's Committees in price plans may use 70% of the amounts earned from the loss reduction [0 supplement their development investment and capital construction funds and the remaining 30% to supplement their reward and welfare funds. 33 2. Average clean water selling price (exclusive of value-added tax) shall be determined according to the following formula: Gttbq ~ Ztb + (Ztb x P) In which: aJ Gttbq means average clean water selling price (cabd:l!f'r! ill VNf)(m~). b/ Ztb means rota] cost of one m" of clean water which is determined according to the guidance in Clause L Article 6, Chapter III of this Circular. c! P means limit profit. Based on practical trading conditions of clean water suppliers and incomes of local people, provmciui-Ievel People's Committees shall set a reasonable profit limit in the clean water selling price structure as follows: For water suppliers engaged in production and trading that conduct all processes from water production, exploitation and supply to retail sale to consumers: The profit limit is at least 50;;', of the total cost. For water suppliers that conduct only processes from water production, exploitation and supply by mode of who lesale (or wholesale of part of water output) to retailers for retail sale of water at the set price, the parties shall agree on wholesale prices. Total profit from wholesale and profit from retail sale shall be agreed upon by the two parties but must not exceed the level prescribed above. The method of calculation of the average clean water selling price guided above shall be used for calculation of the :\Vf:,ilgP clp:m water priceand as abasisfor caiculation ofthe selling J4 price of clean water for each use purpose, ensuring that the selling price of clean water for each use purpose matchesthe averageclean water selling price. Article 7. Method of determination of the clean water selling price for each use purpose 1. Clean water wholesale price: Clean water wholesale price is the price agreed uponby a watersupplier that wholesales watertoa wholesale buyerforretail sale(awater supplier that sells clean water to another water supplierfor directsale to waterconsumers) and a retailing water supplier (a water supplier that directly sells water to water consumers) in clean water wholesale to ensure that wholesale and retail water suppliers can cover production and business costs and earn reasonable profits in accordance with Article 6, and not higher than the retail price set by competent authorities. In case no price agreementcan be reached, either party (or both parties) may request the provincial level Finance Department to organize price consultation in accordancewith law. 2. Selling price of clean water (exclusive of value-added tax) for each use purpose; aJ The selling price of clean water for daily life shall be determined under the progressive pricing mechanism whereby households consuminglessclean waterareentitled to lower prices ami those consuming more clean water pay higher prices. Clean water for other use purposes issubject to thesingle-price mechanism buthasdifferent pricesfordifferent use purposes. In areas where water sources and water supply capacityexceeddemand, theapplication Issue nos B·n/June 2012 (Gong Bao /lOS 427-428/1,,1.1' /2. 20/2) of clean water selling price for daily life under the progressive pricing mechanism may be delayed but the average daily-life water price may be applied 10 encourage consumers 10 use clean, safe and hygienic water and create conditions for water suppliers to develop their watersupplynetworksand improveproduction efficiency. Basedon thedeterminedaverage cleanwater selling price mentioned in Article 6 of this Circular, the daily-life clean water selling price frame set by the Ministry of Finance and the structure of local clean water consumers. appropriate specific sellingpricesof cleanwater (Of each use IJur{Ju~e shall be ddt: I ruined on tilt: principle that total weighed average prices of water for different use purposes equal the averageclean water selling prices (particularly for clean water for daily Jifeconsumption, total average prices must neither be lower than the minimum price nor higher than the maximum price of the price frame set by the Ministry or Finance). The for mula fur calculation uf the selli ng price of clean water for each use purpose is as follows: Guthmd « Gttbq x Httthmd In which: Gttthmd means the selling price of clean water for each use purpose Gttbq means theaverageclean water selling price Httthmd means the coefficient for price calculation by use purpose and specified in the table below: Issuenos ll·12/.June2012 (Gong Sao nos427-428/Julv 12. 2012) 35 Clean water volume consumed/month Maximum price Water use purpose calculation coefficient Level Symbol against average price - - - - .- - - - - Daily life of households - Between first] m'and to SHl 0.8 m} (household/month) Between over to m' and SH2 1.0 20 rn' (household/month) Between over 20 m' and 30 m' (household/month) SH3 1,2 Over 30 m1 (household/month) SH4 2.5 Administrative agencies, non-business units (including also Actually consumed volume HCSN 1.2 schools ,md hospitals) for public service Material production Actually consumed volume SX 1.5 Provision of services Actually consumed volume DY 3 Average clean water selling price j f) b/ For clean water volumes consumed by households for their daily life; The price calculation coefficient specified in the above table shall be applied. In case the number of daily-life water consumers in a household (including those living in condominiums) can be identified, the price calculation coefficient shall be applied according to the limit water volume (m)fpersonlmonth) as follows: Between1m3 - 2.5m)/personlmonth SH 1: 0.& If the used volume is above this level. the following progressive prices shall be applied: Over 2.5 rn' - 5 m]/personfmonth SH2: 1.0 Over 5 m]- 7.5 m3/person/month SH3: 1.2 Over 7.5 m]/personJmonth SH4: 2.5 For clean water-consuming households that have not yet installed water meters or rural households that use common water tanks, the presumptive charge for the limit volume of 4 m3/person/month shall be applied. For localities in which such per-capita presumpti ve charge cannot be calculated, the presumptive charge shall be calculated at the level of SH2 for each household with the limit volume of 16 m}/ month. Particularly for localities in which produced water output is consumed largely for daily-life activities of local households and the coridi tions forapplication of the prescribed maximum price calculationcoefficient forcalculationof theclean water selling price me lm\.\mclent, the price 36 calculation coefficient may be increased to be higher thanthe maximumcoefficient applicable to the SH1,in order to ensure the average clean water selling price coefficient of l. For students and workers who rent lodgings (with a rent term of 12 months or more) from landlords that buy water from water suppliers for supply to them, every 4 tenants (us identified in temporary residence papers and lodging rent contracts certified by local administrations or public notary offices) shall be counted as a water-consuminghouseholdfor water suppliers to apply the daily-life water price to water buyers and guide the latter in selling water to their tenants at such price. Incase water suppliers in urban centers and industrial parks supply clean water for daily life at the request of water-consuming fanner householdsin rural areas, the clean water selling priceshall be agreed to equal thedaily-lifeclean water price applicable to urban centers and industrial parks. c!For administrativeagencies, non-business units, production or service enterprises, etc., which consume clean water for other purposes, theclean water sellingprice shall he setbyclean water-producing and trading enterprises accordingto priceplansapprovedby provincial level People's Committees but must not exceed the maximum price calculation coefficient prescribed in this Circular. Appropriate price calculation coefficients shall be determined basedon the tableof maximumpricecalculation coefficients on the average price and depending on cleanwater consumption characteristics and ratios of clean water consumption for different Issue nos ]l.ll/June 2012 (Cung Bclu1I0S 427-428/Julv12. 2UI2) purposes in localities. Incase water suppliers in urban centers and industrial parks supply water at the request of water consumers jiving outside these urban centers and industrial parks for purposes other than those mentioned above, the clean water selling price is the water price for each consumption purpose in urban centers and industrial parks. In case many water consumers usc a common water meter but have contracts on waterconsumptionfor different purposes, water suppliers and water consumers shall base themselves on actual water consumption to reach agreement on specific ratios of water consumed for each purpose before applying a water price appropriate to each purpose. If water suppliers and water consumers cannot reach agreement on specific ratios of water consumed foreach purpose, they may apply the water price applicable to the main consumption pUl1JOSC in their agreed contracts. In case they cannot agree on a main consumption purpose, they shall report 10 provincial-level Finance Departments for organizingpriceconsultationsin accordance with law. For rural areas meeting with exceptional difficulties. ethnic minority and mountainous areas,coastal sandbanksand islands. and border areas as identifiedaccording to the current state stipulated criteria, if provincial-Icvet People's Committees approve plans on clean water selling prices lower than those clean water prices correctly and adequately calculated in accordance with current regulations to suit the people's payment ability, then they shall adopt Issue nos 11-12l]une 2012 (Gong Bao 1l0S 427-4281Ju{y 12,20/2) a policy or mechanism to har ruouizc urban and rural water prices between urban water suppliers and rural water suppliers being dependant accounting units of such urban water suppliers. For provinces which cannot harmonize water prices between urban and rural water suppliers due to restrictions of the law 011 enterprises. provincial-level People's Committees shall annually pay the price difference with local budgets in order to ensure the rights and legitimate interests of water suppliers. Mechanisms and procedures for paying the price difference shall be specified by provincial-level People's Committees to suit their local practical conditions but must not be contrary to current regulations on management of the state budget. Chapter IV COMPETENCE TO DECIDE ON CLEAN WATER SELLING PRICES AND MANAGEMENT OF CLEAN WATER SELLING PRtCES Article 8. Rights and responsibilities of agencies and units in elaborating, submitting and approving price plans 1. The Price Control Department of the Ministry of Finance shall coordinate with related agencies in elaborating and submitting the selling price frame ofdai ly-life c lean water to the Minister of Finance for decision. 2. Clean water suppliers shall base themselves on the selling price frame of daily life clean water set by the Ministry of Finance: valuation regulations promulgated by the State; and principles and methods of pricing clean 37 water specified in this Circular, to elaborate and reportclean water price plans to provincial-level Finance Departments for evaluation in coordination with provincial- levelConstruction Departments and Agriculture and Rural Development Departments before submission to provincial-level People's Committees for decision and approval. Article 9. Competence to decide on clean water prices l , The Ministry of Finance shall set the selling price frame of daily-life clean water for application nationwide. 2. Provincial-level People's Committees shall approve clean water price plans submitted by water suppliers and promulgate specific daily-life clean water price brackets applicable to their respective localities and conformable with the price frame set by the Ministry of Finance. In special cases in which daily-life clean water production and supply costs in saline water-submerged areas, coastal areas and areas with diffic ult water-producing conditions are higher than the maximum price of the price frame set by the Ministry of Finance, provincial level People's Committees may base themselves on their local practical conditions to decide on appropriate daily-life clean water selling prices which must not exceed 5W,4J of the maximum price of the price f arne set by the Mi 11 istry of Finance, Provincial-level People's Committees shall comply with the guidance on competence to manage and set water prices and specific water prices applicable to non-pump water supply 38 works, water prices of small-sized water supply works managed by communities and prices of water produced and traded with investments of rural communities. 3. Water suppliers shalldecide by themselves on prices of clean water consumed for purposes other than daily-life consumption which must be consistent with clean water price plans approved by provincial-level People's Committees. Chapter V ORGANIZATION OF IMPLEMENTATION Article 10.Organization of implementation 1, The Ministry of Finance shall assume the prime responsibility for, and coordinate with the Ministry of Construction and the Ministry of Agriculture and Rural Development in, regularly or extraordinarily inspecting the elaboration and promulgation of regulations on management of clean water selling prices in localities, the elaboration of price plans, and the observance of the law on water prices by water suppliers in accordance with this Circular. 2, Provincial-level Finance Departments shall coordinate with provincial-level Construction Departments, Agriculture and Rural Development Departrnents and related provincial-level departments in inspecting the implementation of decisions on dai ly-life clean water selling prices, and the formation, decision and application of clean water selling prices applicable to water consumers in therr locatities, and advising provincial-level People's Committees on promptly addressing existing problems; and at the same time, summarizing Issue nos11·121,Iune 2012 (Gong Baa IIOS 427-428!Jllly 12, 2012) and reporting actual water prices to the Ministry of Finance, the Ministry of Construction and the Ministry of Agriculture and Rural Development for monitoring and adjustment of the price frame when necessary. 3. Clean water producers and traders shall adopt plans on development of water sources and supply networks to meet consumption needs and raise the quality of water supply seJ vices, and at the same time regularly monitor and inspect the situation of clean water consumption, collect water charges at prescribed charge rates suitable to each type of water consumer; and promptly take measures to end water and water charge loss. 4. Depending on the actual clean water production and consumption in urban centers, industrial parks and rural areas in each period, the Ministry or Finance shall coordinate with the Ministry of Construction and Ministry of Agriculture and Rural Development in studying and revising methods of determination of clean water selling prices as appropriate. Article 11. EtTect This Circular takes effect ou June 29, 2012, and replaces Joint Circular No. 9S12009H'TLT BTC-BXD-BNN of May 19, 2009, of the Ministryof Finance, the Ministryof Construction and the Ministry of Agriculture and Rural Development, guiding principles and methods of determination of, and competence to decide on, clean water selling prices in urban centers. industrial parks and rural residential areas. Any problems arising in the course of implementation shou\d be promptly reported to Issue nos ll·l2J]une 2012 (r.ong Beo110S427-428/July n. 2012) the Ministry of Finance, the Ministry of Construction and the Ministry of Agriculture and Rural Development for consideration and settlcment. For the Minister" ofFincuu:e Deputy Minister TRAN VAN HIEU For the Minister of Construction Deputy Minister CAO LAI QUANG Fur the Minister ofAgriculture and Rural Development Deputy Minister HOANG VAN THANG 39