With the overarching goal to promote Ninh Thuan, a province in the South Central Coast region of Vietnam, into becoming a key center of clean energy in Vietnam, the Government of Vietnam has recently agreed to extend the implementation period of the Feed-in-Tariff (FiT) scheme for solar power projects in Ninh Thuan Province for an additional one and a half year (i.e. from the current deadline by 30 June 2019 under Decision No. 11 to the end of 2020).

This policy follows a recent meeting of Deputy Prime Minister Vuong Dinh Hue and of relevant ministries regarding the preparation of a Government's Resolution on special policies and mechanisms supporting the socioeconomic development in Ninh Thuan Province from 2018 - 2023 (the "Proposed Resolution"). On 22 June 2018, the Office of the Government released Notification No. 223/TB-VPCP ("Notification No. 223") announcing Deputy Prime Minister Vuong Dinh Hue's conclusions at the meeting. This notification also included instructions for the Ministry of Planning and Investment to add the FiT period extension during the finalization of the Proposed Resolution.

Under the current regulations (Decision No. 11 and Circular No. 16),2 the FiT of 2,086 VND per kWh (exclusive of VAT, equivalent to US cents 9.35 per kWh) applies to only parts of or the whole of solar power projects that reach their Commercial Operation Date (COD) before 30 June 2019 and shall apply for a PPA term of 20 years from the COD. However, Decision No. 11 has recently created concerns for many private developers over the limited time available to reach COD by the June 2019 deadline. With the Proposed Resolution, the Government of Vietnam works towards alleviating concerns and cultivating investment opportunities for solar project participants in Ninh Thuan Province.

According to an unofficial report, the local authorities of Ninh Thuan Province have issued investment approvals for more than 20 solar power projects with a combined proposed capacity of around 1,573.77 MWp. Some of the investors of those projects have also signed PPAs with EVN, initialed the final draft of PPAs with EVN's Electricity Power Trading Company, and/or started certain construction works.

Specific Issues and Implications for Investors and Actions to Consider

In light of these developments, although Notification No. 223 is a positive signal to the market, there are certain issues that solar power developers should take into consideration until there are new developments, including:

a) The proposed extension of the FiT until the end of 2020 under Notification No. 223 applies only to solar projects in Ninh Thuan Province, rather than the entire country, given the fact that Decision No. 11 remains unchanged; and

b) Legally speaking, Notification No. 223 is not a legal normative document. From the general wording of Notification No. 223, it is not entirely clear as to whether the extension applies to the general FiT scheme only or specific to the FiT rate of US cents 9.35 per kWh. This policy may require further clarification under the Government's final Resolution for Ninh Thuan Province.

Another question is, given the fact that many other provinces also attract similar levels of solar power project developments, whether the Government will apply a similar policy to other provinces and cities in Vietnam or whether developers in other provinces can apply for similar treatments.

Source: https://www.lexology.com