GUIDANCE ON METHOD TO DETERMINE ELECTRICITY GENERATION PRICES
The Ministry of Industry and Trade issues the Circular No. 57/2020/TT-BCT dated December 31, 2020 providing method to determine electricity generation prices and power purchase agreement.
Electricity generation prices of a power plant shall be determined on a basis of rational expenses of the project owner during the entire economic life of the project and the financial internal rate of return (IRR) not exceeding 12%.
Remarkably, for power plants with power purchase agreement expired but economic life unexpired: The electricity generation price stated in the current power purchase agreement shall continue to be applied for the next years until the expiration of the economic life.
Components of price for operation and maintenance of the power plant is revised according to the following principles:
Firstly, components of price for operation and maintenance by major repair expenses and other expenses are revised according to the average cost slippage rate as specified. The two parties shall study and propose mechanism of revision of components of prices price for operation and maintenance by major repair expenses and other expenses for foreign currency-based items;
Secondly, cost for operation and maintenance by workforce cost shall be revised according to changes to region-based minimum wage at the time of payment or according to CPI index announced by the General Statistics Office but not exceed 2.5%/year.
This Circular takes effect on February 22, 2021.
