Vietnam’s Ministry of Industry and Trade (the “MOIT”) recently issued instructions to the provincial People’s Committees and Vietnam Electricity (“EVN”) under Directive No. 9608/BCT-DL dated on 16 December 2019 on the suspension of proposals and agreements for solar power projects under the feed-in tariff (“FiT”) regime (“Directive 9608”). Decision 11/2017/QD-TTg dated 11 April 2017 on incentive mechanisms for the development of solar power projects in Vietnam (“Decision 11”) expired on 30 June 2019. Directive 9608 affirms the benefits of investors in solar power projects under the FiT regime, in the absence of a new price policy due to Decision 11’s expiration.

Pursuant to Decision 11, approximately 135 projects, with a total capacity of 8,935 MW solar power, were added to the electricity plan. Of which, nearly 4,500 MW reached commercial operation. Directive 9608 clarifies that the FiT regime shall apply to projects which have signed power purchase agreements, are under construction, and will reach commercial operation by the end of 2020. Currently, the MOIT and other ministries are developing a new draft of regulations on incentive mechanisms for solar power. Pursuant to this anticipated draft, Directive 9608 requires all provincial People’s Committees and EVN to suspend all proposals for grid-connected solar power projects, until new instructions have published (the “Solar Moratorium”).

Although the grid-connected rooftop solar projects are subject to the Solar Moratorium, when these projects are permitted to proceed, it is yet unclear as to the precise FiT rate which would apply. The MOIT on 6 December 2019 requested opinions/comments of the Ministry of Finance, Ministry of Justice and EVN on the previous draft solar power decision which prescribed the FiT applicable to rooftop projects at 8.38 US cents per kWh. In response, EVN on 12 December 2019 requested the MOIT to apply 9.34 US cents per kWh, to rooftop solar projects reaching commercial operation by the end of 2020.

The information provided in this article is for information purposes only and is not intended to constitute legal advice should be obtained from qualified legal counsel for all specific situations.

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