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 thermal power plant (nhà máy nhiệt điện tua bin khí chu trình hỗn hợp sử dụng LNG in Vietnamese) (LNG Power Plant).

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 Power Plant 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.

Vietnam Business Law