On 23 December 2020, Mr. Nguyen Quang Vinh, Project Development Director, a representative of Truong Thanh Vietnam Group attended the “Vietnam Clean Energy Forum (the first time) and the voting summary for the Vietnam Leading Clean Energy Enterprise in 2020” organized by the Scientific Council of Vietnam Energy Magazine in Ho Chi Minh City under the direction of the Office of the National Steering Committee for Power Development.
Mr. Nguyen Quang Vinh – Project Development Director of TTVN Group (the fourth person from the right)
Participating in the discussion on difficulties and obstacles related to mechanisms and policies in the development of clean power projects in Vietnam, Mr. Nguyen Quang Vinh presented a summary report of Truong Thanh Vietnam Group with the following main contents:
By eight-year experience in investment, production and business activities, especially from the practice of nearly 5 years of developing renewable energy projects, Truong Thanh Vietnam Group realized: in many subjective and objective factors that affected the final results of project development and investment, there is an overarching influence that is POLICIES and MECHANISMS. A good policy and a reasonable mechanism that are close to the reality and ensure the harmonization of benefits between the State and enterprises will create a driving force for investors to invest in renewable energy sector. An inadequate policy, lack of stability, an unreasonable mechanism will create bottlenecks and obstacles that enterprises take a lot of time and effort to dismantle or cannot dismantle, it easily makes investors hesitant or even discouraged, and at the same time creating loopholes for the authoritarianism and corruption to creep in…
Like any other local and foreign investors, what we concern the most is the instability, ambiguity and the slowness in adjusting unreasonable provisions and gaps in the Government’s mechanisms and policies related to renewable energy projects, for example, it took a whole year for the issue of solar power price but has not yet given a specific bidding plan to determine the selling price of solar power that caused all solar power plant projects under development suspend and wait; or the inappropriateness in collecting fees for using the sea area for the offshore wind power projects has been proposed by many enterprises and local authorities to the competent authorities for review, but until today it has remained silent.
The Resolution 55-NQ-TW of the Politburo on the strategic orientations of Vietnam’s national energy development toward 2030, with a vision to 2045 was issued earlier this year, which emphasized the need to “Build supporting policies and breakthrough mechanisms for offshore wind power development in association with the implementation of the Vietnam Maritime Strategy”, “Create a favorable and transparent environment; publicize the planning and list of investment projects, remove all barriers in order to attract and encourage the private sector to participate in investment and development of energy projects”… are very important orientations if these orientations are implemented well, it will create a great driving force for the development of the national energy system in general and the renewable energy power system in particular, but for the Resolution No. 55 to come to life, it requires to be institutionalized by specific policies and mechanisms, but actually, from the date that the Resolution No.55 was promulgated until today, “no supporting policies and breakthrough mechanisms” were issued in the line with the Resolution No.55 and it is not clear when these policies and mechanisms will be promulgated.
In addition to the above-mentioned macro obstacles, in the process of implementing renewable energy projects, investors often face many other difficulties and challenges related to accessing loans, the risk of reduction of generating capacity, the land procedures are still cumbersome, complicated and especially unreasonable in the application of policies to the offshore wind power projects, as follows:
– The enterprises who invest and develop the renewable energy in Vietnam after signing the power purchase agreement under the contract form issued by Ministry of Industry and Trade must commit to reduce the generating capacity in accordance with the dispatching order. This condition made banks very concerned to consider loans because they think that reducing capacity has no stop threshold, enterprises cannot guarantee their assets as well as the efficiency to conduct loan. In the coming years, when the price of solar power follows the bidding mechanism, both the selling price and power output will be variables, cause the access to the loans become more difficult.
– Renewable energy projects that have developed too quickly in recent times have caused transmission congestions, the main reason is that the transmission system planning and development has not been synchronized and kept up with the speed of renewable energy project development. This reduces the ability to provide resources, reduces the confidence and motivation of investors. In our opinion, to solve this problem, it should increase the investment to upgrade and expand the transmission system (including mobilizing resources from private enterprises), but in fact it is happening to the contrary: power plants had to reduce their generating capacity due to overloaded transmission lines, it occurred in some power plants in Ninh Thuan, Binh Thuan… We are very pleased with the recent news that it is the first time in the history of Vietnam’s energy industry, a private enterprise, Trung Nam Group, has been invested in power transmission infrastructure with 500 kV substation and 220/500 kV transmission line project that are connected to the national grid and we hope
that this is not an exception, but the door will be open to other qualified private enterprises who wish to invest in this field in the near future.
– The compensation and settlement procedures are always barriers that cause most of the projects to be behind schedule. Taking advantage of the State’s regulations that investors have to negotiate with the affected people, most land owners (in fact many cases are land brokers who bought the land for profiteering) proposed unreasonable compensation prices that are much more higher than the actual price levels in the localities, and they always find ways to delay working with the compensation and settlement department in order to put pressure on investors. In addition, the procedures related to the issuance of land use right certificates for renewable energy projects also have many problems: for example, the Binh Nguyen solar power plant project (Quang Ngai): Although the compensation and resettlement has been carried out with high prices and the plant has been put into commercial operation for nearly 2 years, but until today the certificate of land use right has not been granted, therefore the enterprise is unable to get a loan from the bank.
– In this regard we would like to state out the ambiguity and conflicts between different legal documents related to offshore wind power projects that caused unreasonable application of the preferential policies for the above-mentioned type of projects, as follows:
+ Pursuant to Point b, Clause 1, Article 16 of the Investment Law No.67/2014/QH13 dated 26 November 2014 and Point 6, Section I, Part A, Appendix I promulgated together with Decree No.118/2015/ND-CP dated 12 November 2015 detailing and guiding the implementation of a number of articles of the Investment Law, wind power and solar power production are in the list of industries and sectors with special investment incentives, but the wind power projects deployed in the sea are still not entitled to the exemption and reduction policy of sea rents and sea use fees like land-based solar and wind power projects, while the investment rate for offshore wind power projects is much higher and more risky, equipment wear and tear are also much greater than that on the land, that are unreasonable. The non-application of exemption and reduction policy of rental of sea areas for wind power projects still conflicts with the Prime Minister’s Decision No.37/2012/QD-TTg dated 29 June 2011 on the mechanism to support the wind power project development in Vietnam, which clearly defines “The subject of regulation of this Decision includes organizations participating in power activities related to the development of wind power projects in Vietnam” there is no distinction whether projects are located in the land or in the sea.
+ According to Point C, Clause 1, Article 10 of Decree No.51/2014/ND-CP dated 21 May 2014 of the Government, the People’s Committees of the coastal provinces and cities under the Central Government have the right to decide on the allocation of marine areas within a coastal zone of 03 nautical miles, but Circular No.02/2015/TT-BTNMT of the Ministry of Natural Resources and Environment limits the right of the People’s Committees of coastal provinces and cities under the Central Government to decide allocation, lease, and recovery of a land with coastal water surface, thus there is a conflict between the provisions of a legal document with lower legal effect and the provisions of a legal document with higher legal effect; up to now, there is no legal document that provides an official definition of what is the land with coastal water surface and whether the land with coastal water surface coincides with the marine areas within a coastal zone of 03 nautical miles or not?
+ In Decree No.51/2014/ND-CP dated 21 May 2014 of the Government and Circular No.02/2015/TT-BTNMT of the Ministry of Natural Resources and Environment, there is a distinction between the marine areas within a coastal zone of 03 nautical miles backwards and the marine areas from a coastal zone of 03 nautical miles onwards in order to apply according to 2 different laws and assign the authority to 2 different agencies to consider and decide. According to Point C, Clause 1, Article 10 of Decree No.51/2014/ND-CP dated 21 May 2014 of the Government and Circular No.02/2015/TT-BTNMT of the Ministry of Natural Resources and Environment, the People’s Committee of coastal provinces and cities under the Central Government decides to assign the marine areas within a coastal zone of 03 nautical miles backwards according to the provisions of the Land Law, while the marine areas from a coastal zone of 03 nautical miles onwards counting from the edge of the lowest sea-level on the basis of yearly average, the authority to lease the sea surface shall comply with the provisions of the Law on the Sea, therefore, the marine areas within a coastal zone of 03 nautical miles backwards allocated by the provincial People’s Committee under the provisions of the Land Law, it should be applied the policy of allocation and lease of the land as it is for the mainland.
+ Regarding the implementation of wind power projects in the sea as an activity of exploiting and using marine resources, thereby applying the same policy to this type of project as to other projects of exploitation and use of marine resources, in our opinion, it is unreasonable because according to Clause 1, Article 3 of Decree No.51/2014/ND-CP dated 21 May 2014 of the Government, “Marine area” only includes “water mass, seabed and the soil under the seabed”, which means that only what is taken from the water mass, the seabed and the soil under the seabed can be regarded as exploiting and using marine resources, while wind turbines are located in the seabed but they use wind in the air which is not a marine resource, it is just like ships only passing through the sea, it cannot be called an activity of exploiting marine resources.
In order to contribute to the successful implementation of Resolution 55-NQ-TW of the Politburo, the central and local governments, relevant authorities and departments should pay more attention to and understand the recommendations from enterprises that operate in the field of renewable energy, in order to study and propose to competent authorities to promulgate new breakthrough mechanisms and policies in the direction of dismantling difficulties and obstacles, to remove all barriers to attract and encourage the participation of private sector to invest and develop energy projects in accordance with the orientation and instructions of the Party and Government; provide stronger support for enterprises in the process of conducting investment procedures and project implementation; firstly, it is proposed to consider extending the time limit for applying the FIT pricing mechanism to renewable power projects; to promulgate guiding documents and technical regulations on offshore wind power projects in order to reasonably calculate, determine and optimize the usable area and safety corridor for construction works in general and wind turbine towers and ensure the consistency in state management.
At the Forum, the Scientific Council of Vietnam Energy Magazine announced the TOP 10 Ranking of Leading Clean Energy Enterprises in Vietnam 2020, in which Truong Thanh Vietnam Group was ranked the third place in the rankings for the second time since 2019.