Decision No. 37/2011/QD-TTg providing the mechanism to support the development of wind power projects in Viet Nam

Article 1. Scope of regulation and subjects of application 1. This Decision provides the mechanism to support the development of wind power projects in Vietnam. 2. Subject to this Decision are organizations engaged in electricity activities related to the development of wind power projects in Vietnam.

Article 2. Interpretation of terms In this Decree, the terms below are construed mE PRIME MINISTER as follows: 1. Electricity purchaser means the Electricity Decisio~o. 37/2011/QD~TTg of June of Vietnam (EVN) Group or an empowered unit 29, 201!T.providing the mechanism to of the Group. supportthe development of wind 2. Electricity seller means a business power R!pjects in Vietnam generating and selling electricity from wind ~ .j power projects. -.HE PRIME MINISTER 3. Wind farm means a complete complex of Pursuant to the December 25, 2001 Law wind turbines, generators, complete equipment on Organization of the Government; and other construction structures which are powered by wind energy to generate electricity. PursU'«ttvo the December 3, 2004 Law on Electricity: 4. A wind power project consists of one or more than one wind farm. Purs~ to the November 2Y, 200:; Law on Investment; 5. On-grid wind power project means a wind power project built and connected to the Pursuant to the November 26, 2003 Law national power grid to supply part or the whole on Construction: of its generated electricity output. Pursuant tn the nprpmhpr 16, 2007 row 6. Connection point means a position ill on the State Budget; which the transmission line of the electricity Al the proposal of the Minister of Industry seller is connected to the electricity system of and Trade, the electricity purchaser. @ VIETNAM LAW &LEGAL FOR Issue nos 09·10/June 2011 OFFICIAl GA7FTTE 51 (Gong Bao nos 401-402lJu!y 12, 2011) ------ ------------------------ 7. Electricity delivery point means a place period with a vision toward 2030, and may be at which the output of electricity sold by the adjusted and supplemented when necessary. For electricity seller is metered. subsequent planning periods, wind power 8. Off-grid wind power project means a wind development plans shall be intergrated into power project built to supply the whole of its provincial and national electric power electricity output to consuming households in development plans. its location and not connected to the national

Article 4. Elaboration, approval and public power grid. notification of wind power development plans 9. Wind power project investor means an 1. The Ministry of Industry and Trade shall institution investing in wind power projects elaborate and submit the national w:tRd power under Vietnamese law. development plan to the Prime Minister for 10_ Model electricity purchase and sale approval; publicly notify and guide, monitor and contract for wind power projects means a inspect the implementation of the approved electricity purchase and sale contract wind power development plan. promulgated by the Ministry of Industry and 2. People's Committees of provintes and Trade for application in transactions on centrally run cities (below collectively-referred purchase and sale of electricity generated by on- to as provincial-level People's Committees) grid wind power projects between electricity which have wind power developmeoegorential sellers and purchasers. shall elaborate and submit provincial-lese) wind 11. Main works of a wind farm inc! ude wind power development plans to the J\tKtister of towers, turbines, generators and transformer Industry and Trade for approval. stations. 3. The public notification and adjusiment of Chapter II plans comply with current regulations, WIND POWER PLANNING AND 4. Principal contents of wiod power DEVELOPMENT development plans: aI The national wind power development

Article 3. Wind power development plans plan has the following principal contents: 1. Wind power development plans include - Wind potential of localities; uat io na i ami provincial wind power - List of wind power projects; development plans. Wind power development - Orientations for connection of wind power plans serve as a basis for wind power projects to the national power grid. development investment and may be adjusted in line with wind potential researches and bl A provincial wind power development assessments in each period. plan has the following principal contents: 2. The national wind power development - Wind power potential of the province; plan and local wind power development plans - Areas and boundaries of areas in which shall be elaborated only once for the 2011-2020 wind power projects are to be developed; C VIETNAM LAW & LEGAL FOR 52 OFFICIAL GAZETTE ISSU9 nos 09·10JJun9 2011 (Gong Baa nos 401-402lJuly 12, 2011) - List of wind power projects; consideration and decision. - Capacity of each wind power project and 3. Investment in the construction of wind plan on connection to the national power grid. power projects shall be made under the law on 5. Pending approval of wind power plans, management of investment in work construction. investment in wind power projects must be Ar ticle 7. Connection of wind pOWei approved by the Prime Minister. projects to power systems and regulation of 6. The Ministry of Industry and Trade shall operation of wind power plants specify ~tents of wind power plans and the 1. The connection of wind power projects order of aad procedures for their elaboration, to the national power grid must be in line with -- appraisal and approval.

Article 5. Funds for wind power approved electric power development plans. Connection points shall be agreed upon by the electricity seller and electricity purchaser on the development planning principle that the electricity seller is responsi ble 1. The,j,;entral budget shall be allocated for for investing in the electricity transmission line the elaboration. appraisal, public notification to the nearest existing point 01 connection to and adjustment of the national wind power the national power grid indicated in the developrsent plan. provincial-level electric power developmeru 2. Prcnr1llcial-level budgets shall be allocated plan. In case the point of connection to the for the t1Tm:>ration, appraisal, public notification national power grid is under an unimplemented and adj]i;,unenl of local wind power investment project on a new power grid, the dcvelopr.t'101t plans. electricity seller shall reach agreement with the 3. T~ raising of other lawful funding electricity purchaser on synchronizing the sources1'<1r the elaboration of wind power progress of investment in wind power projects 0.6' developnjiru plans is encouraged. and in investment projects on power grid development. In case no agreement on

Article 6. Investment in construction of connection point can be reached, the electricity wind power projects seller shall submit it to the Ministry of Industry 1. In~ment in the construction of wind and Trade for consideration and decision. power ~cts must be in line with approved 2. Investors of wind power projects shall wind power ,. development plans and electric invest, operate and rnaintam transrrussion lines power d~lopment plans at all levels. and transformer stations for voltage increase (if 2. For wind power projects not yet included any) from power plants of electricity sellers to in the lists of the approved national wind power connection points indicated in connection development plan and national electric power agreements with electricity purchasers. development plan, investors shall compile and 3. Depending on connection voltages, send dossiers of request for plan supplementation electricity distribution units or electricity to the Ministry of Industry and Trade for appraisal transmission units shall invest in electricity and submission to the Prime Minister for transmission lines from points of connection to e VIETNAM LAW & LEGAL FORUM Issue nos 09·101June 2011 OFriCIAL GAZETTE 63 (Gong BaG nos 401·40?JJuly 12, 2011) the national power grid under approved electric copies of the notarized investment certificate power development plans and sign agreements to the Ministry of Industry and Trade for on connection with investors of wind power monitoring and management. projects. 2. During the construction of a wind power 4. After completing investment in and project. before the 15th day of the first month putting into takeover test and commercial of a quarter, the investor shall report on the operation wind power plants, units regulating project implementation in the last quarter and power systems and operating the power market the Implementation plan for the quauer, Before shall operate wind power plants at full capacity January 15 each year, the investor shall report to generate electricity in suitability with the on the project implementation in tlTe iast year wind regime in the plants' location. and the implementation plan for the-year to the Ministry of Industry and Trade for

Article 8. Commencement of construction rmplementauon management and supervision. of wind farms Investors may commence the construction of Chapter III wind farms only after obtaining investment MECHANISM TO SUPPORT certificates and having electricity purchase and DEVELOPMENT OF WIND POWER :>J.1c contracts signed with electricity purchasers, PROJECTS connection agreements with power distribution or transmission units and reports on Wind-measuring Article 11. Responsibility topurchase data during a period of at least 12 months. electricity from wind power projects

Article 9. Tennination of implementation of I. Electricity purchasers shall purchase the projects whole electricity output generated by on-grid wind power plants in localities Linder their Past 12 months after obtaini ng investment m:m:l[';cnwn t certificates, if investors fail to commence the 2, Electricity purchase and sa)s' shall be construction of main works of their wind power projects, provincial-level People's Committees effected under electricity purchase and sale contracts made according to the model contract shall consider revoking these investment applicable to on-grid wind power projects certificates and report such to a competent state promulgated by the Ministry of Industry and agency for assignment of projects to other Trade. The model electricity purchase and sale investors. unless these investors have plausible reasons and obtain competent authorities' contract contains the following principal details: consen t to suspension or rescheduling of project aJ The contract term of twenty (20) years implementation. from the dale of commercial operation commencement. The electricity seller may

Article 10. Reporting regime extend the contract term or sign a new contract I. Within 5 working days after obtaining an with the electricity purchaser under current investment certificate. an investor shall send regulations. C VIETNAM LAW & LEGAL F 54 OFFICIAL GAZETl E Issue nos 09-10/June 2011 (Gong Baanos 401-402lJuly 12,2011) b/ The base electricity purchase price and current regulations applicable to projects in the principle for adjustment of power sale prices sectors eligible for special investment incentives, during the contract term. 2. Based on approved land use plans, e/ The agreement on connection, metering provincial-level People's Committees sha.I and operation of the wind power plant. allocate land to investors for implementing wind dI The agreement on electricity billing and power projects. The payment of compensations payment. and provision of supports for ground clearance comply with the current land law. Articfe·I2. Incentives related to investment capital, t!)(:es and charges Article 14. Electricity price subsidy for on- grid wind power projects 1. Ra+1ring of investment capital: I. Electricity purchasers shall purchase th ~ aI Invi,iiors may raise capital in lawful forms whole electricity output of wind power projects from do~stic or foreign organizations and at the price ofVND 1,614/kWh (approximately individtWs for investment in wind power projects. 7.8 US cents/kWh, exclusive of value-added tax) at electricity delivery points. The electricity blWindopower projects may enjoy incentives purchase price shall be adjusted according to under cJl1:rent regulations on the State's the VND/uSD exchange rate. investmem credit. 2. Through the Vietnam Environmental 2. Irii~rt duty: Wind power projects are Protection Fund. the State provides an electricity exempt tfQW import duty for goods imported for price subsidy ofVND 207/kWh (approximately creation:nf their fixed assets, domestically 1 US ccntlkWh) for electricity purchasers for the unavailad!materials. supplies and semi-finished whole electricity output of wind power plants. productS"imported for their production under the Law on ~ort 0 uty and Import 0 uty and current 3. The Ministry of Industry and Trade shall regulatiojjs on export duty and import duty. monitor and propose adjustments to the electricity purchase price at delivery points and 3. Enterprise income tax: Enterprise income the electricity price subsidy to the Prime tax rates, .exemption or reduction for wind Minister for consideration and decision on the powerpJ$;.ts arc the same as those for projects principle of gradually reducing and eventually in sectors eligible for special investment abolishing the price subsidy and applying the incentiv~pecifiedin the Law on Investment, market electricity salc price. the LaW'"On Enterprise Income Tax and documents guiding these laws. 4. Wind power projects eligible for the price subsidy provided herein are ineligible for the

Article 13. Land incentives mechanism of price subsidy for their electricity 1. Wind power projects, transmission lines output under other cuu eru regulations. and transformer stations for connection to the 5. Wind power projects are subject to the national power grid are eligible for land use levy clean development mechanism under CI1ITf'n' and land rent exemption or reduction under regulations. e VIETNAM LAW & LEGAL FORUM Issue nos 09-101June 2011 OFFICIAL GAZETTE 55 (Gong BaD nos 401402IJu(y 12,2011)

Article 15. Incentives and supports for off- clearance, building infrastructure and grid wind power projects developing human resources for investment in 1. Off-grid wind power projects are entitled and implementation of wind power projects. to the incentives and supports provided in bl Perform the state management of wind Articles 12 and 13 of this Decision. power projects in their loca lities. 2. Investors shall elaborate electricity price c/ Monitor, supervise and inspect the schemes and estimate total state budget support implementation of wind power projects in their and submit them to the Ministry of Industry and localities according to their compe~. Trade for appraisal and reporting to the Prime

Article 17. Effect Minister for approval. This Decision takes effect on )lnlgust 20, Chapter IV 2011. ORGANIZATION OF IMPLEMENTATION Ministers, heads of ministerial-level agencies, ." heads of government-attached agencies,

Article 16. Responsibilities of ministries and chairpersons of provincial-level people's localities for wind power projects Committees, and heads of agencies, Units and 1. The Ministry oflndustry and Trade shall: organizations related to the development of wind aI Organize and guide, and coordinate with power projects in Vietnam shall implement this provincial-level People's Committees in Decision.- inspecting and supervising, the implementation of this Decision. Prime Minister NGUYEN TAN DUNG bl Promulgate the model electricity purchase and sale contract applicable to wind power projects. cl Elaborate and promulgate technical standards on wind power technology. 2. The Ministry of Finance shall assume the prime responsibility for, and coordinate with the Ministry oflndustry and Trade and the Ministry of Natural Resources and Environment in, promulgating the financial mechanism for supports from the Vietnam Environmental Protection Fund in accordance with the Law on the State Budget. 3. Provincial-level People's Committees shall: af Adopt mechanisms to support and encourage investors in carrying out ground o VIETNAM LAW & l.EGAl. F.ORUM