Venture North Law Firm

On 27 May 2024, the Ministry of Industry and Trade (MOIT) issued Decision 1260 approving the electricity generation price (EGP) range for the year 2024 applicable to LNG combined-cycle gas turbine (CCGT) thermal power plant.

On 27 May 2024, the Ministry of Industry and Trade (MOIT) issued Decision 1260 approving the electricity generation price (EGP) range for the year 2024 applicable to LNG combined-cycle gas turbine (CCGT) thermal power plant (nhà máy nhiệt điện tua bin khí chu trình hỗn hợp sử dụng LNG in Vietnamese).

The ceiling price of such EGP range is VND 2,590.85 per kWh (about 10.67 UScents at the exchange rate of 1 USD = 24,262 VND), exclusive of VAT. Such ceiling price was calculated based on the following factors:

·       Net capacity (công suất tinh in Vietnamese) of 1,579,125 kW;

·       Net heat rate (suất tiêu hao nhiệt tinh in Vietnamese) of 6,330.2 BTU/kWh at 85% load;

·       LNG price (exclusive of VAT, cost for storage, regasification, distribution after regasification) of USD12.9792/million BTU; and

·       Exchange rate of 1 USD = 24,520 VND.

This Decision 1260 of the MOIT plays an important role for new LNG CCGT developers (which are defined as those who have not signed a power purchase agreement) as they will need to negotiate the EGP under their power purchase agreement with Vietnam Electricity (Selling Price) based on the approved EGP range. To be specific, the ‘power purchase agreement price’ (giá hợp đồng mua bán điện in Vietnamese), which is a component of the Selling Price, cannot exceed the ceiling price of the LNG EGP range (i.e., VND 2,590.85 per kWh for 2024). It seems that, to compare whether the power purchase agreement price exceed the ceiling price of the MOIT-approved LNG EGP range or not, the power purchase agreement price would be calculated using the same cost components used to calculate the EGP range, which might include the aforementioned factors.

This post is written by Le Thanh Nhat and Nguyen Hoang Duy.

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Venture North Law Firm

Venture North Law Limited (VNLaw) is a Vietnamese law firm established by Nguyen Quang Vu, a business lawyer with more than 17 years of experience. VNLaw is a boutique professional law firm focusing on corporate, commercial and M&A practices in Vietnam. Our goal is to be an efficient, innovative and client-friendly firm. To achieve that goal, we are designing a working environment and a compensation system which encourage our lawyers to provide more efficient services to clients and to focus on the long term benefit of the firm.

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