Quyết định 2233/QD-TTg

DECISION

APPROVING THE PROPOSAL TO DEVELOP COMPETITIVE ENERGY MARKET BY 2030 WITH VISION TOWARDS 2045

THE PRIME MINISTER

Pursuant to the Law on Government Organization dated June 19, 2015; the Law on Amending and Supplementing certain Articles of the Law on Government Organization and the Law on Local Government Organization dated November 22, 2019;

Pursuant to the Law on Electricity dated December 3, 2004; the Law on Amendments and Supplements to certain Articles of the Law on Electricity dated November 20, 2012; 

Pursuant to the Law on Petroleum dated July 6, 1993; the Law on Amendments and Supplements to certain Articles of the Law on Petroleum dated June 9, 2000 and June 3, 2008;

Pursuant to the Law on Minerals dated November 17, 2010;

Pursuant to the Government’s Resolution No. 98/NQ-CP dated October 3, 2017 issuing the Program of Action for implementation of the Resolution No. 10-NQ/TW dated June 3, 2017 of the 5th Meeting of the Party’s XII^th Central Committee regarding development of the private sector economy into an important drive force for the socialist-oriented market economy; 

Pursuant to the Resolution No. 55-NQ/TW dated February 11, 2020 of Politburo regarding the Strategy to develop Vietnam’s national energy by 2030 with vision towards 2045;

Pursuant to the Government’s Resolution No. 140/NQ-CP, adopting the Government’s Action Program for implementation of the Resolution No. 55-NQ/TW dated February 11, 2020 of the Politburo regarding the orientation towards the Strategy to develop Vietnam’s national energy by 2030 with vision towards 2045;

Upon the request of the Minister of Industry and Trade,

HEREBY DECIDES

Article 1. Granting the approval for the proposal to develop a competitive energy market by 2030 with vision toward 2045, including the following subject matters:

I. SCOPE AND OBJECTIVES OF THE PROPOSAL

The Proposal encompasses 03 energy sub-sectors (e.g. coal, gas and electricity) that play important and key roles in the energy production and consumption chain in Vietnam.

1. General objectives:

Creating and developing healthy energy (e.g. coal, gas, electricity) markets over periods of time under the State regulation, ensuring national energy security and contributing to meeting the socio-economic growth demands and fulfilling goals and policies of the Party and State, as well as strengthening the international integration.

2. Specific objectives:

a) Ensuring national energy security, contributing to maintaining and upholding national security and defense, and developing our independent and autonomous economy; assuring adequate high-quality energy supplies for socio-economic development purposes.

b) Adjusting the energy sector to a state-regulated competitive market mechanism, ensuring a competitive environment that is healthy, transparent, fair, non-discriminating, appealing and diversifies investment and trading modes in the energy sector; at the same time, rationally and effectively exploiting and using domestic energy resources.

c) Developing synchronous and interconnected energy markets between coal, gas and electricity sub-sectors; ensuring transparent and market-regulated energy prices.

d) Coal market: Implement the Government's directive on the supply of coal for electricity production (especially, BOT thermo-power plants with the Government’s guarantees for coal supply contracts) and coal export purposes; step by step orienting the coal market towards a fully competitive market, and ensuring that market participants perform transactions, purchase and sell coal, provide services to support coal trading, purchase and selling activities in compliance with regulations and practices of markets.

dd) Gas market: Gradually completing a legal framework as a basis for implementing models of the competitive business of CNG, LPG and LNG: building a roadmap, operating the competitive market for downstream gas distribution by effecting regulations on the rights to rent and use third-party infrastructure; continuing to carry out the Government’s commitments and commercial ones already in effect with respect to gas collection and distribution systems developed on the basis of domestic gas exploitation projects.

e) Electricity market: Consolidating the development and expansion of the competitive wholesale electricity market, creating a solid premise for transition to a full competitive electricity retail market according to the roadmap approved by the Prime Minister.

II. ROADMAP FOR DEVELOPMENT OF ENERGY MARKETS

1. The roadmap for development of the gas market

a) Period from 2021 to end of 2025:

- Maintaining the current gas market model in which competition occurs at the stages of exploitation and import of natural gas (through pipeline systems), and each gas exploitation and distribution system has an upstream gas aggregator (except for projects obtaining the Government’s approval of other mechanisms in gas sale and purchase contracts); going into competition in the face of import and distribution of LPG and CNG on the domestic market (without using pipeline systems);

- Permitting contractors or investors of new gas exploitation projects (Blue Whale, Block B, etc. projects) to choose to negotiate about selling gas directly with household consumers or wholesaling gas to PVN/PVGas;

- Putting new business models of imported LNG projects in operation (LNG importers can sell gas directly to customers);

- Developing and completing a legal framework to pave the way for implementation of the rights to lease and use third-party infrastructure, including technical, commercial and financial regulations and standards that need to be completed before coming into use;

- Designing and issuing a set of engineering and safety standards and regulations for construction and operation of LNG storage facilities at ports of entry and LNG transport equipment, ensuring quality, design, engineering, construction and operation safety for LNG projects;

- Gas markets existing in the period of 2021 - 2025 should be built and developed according to the principles of promoting the leading roles of state-owned specialized enterprises (Vietnam Oil and Gas Group, Vietnam Gas Corporation) to ensure national energy security; should take advantage of available experience, infrastructure and optimize investments, especially at the start of LNG import; at the same time, encourage foreign enterprises and domestic private enterprises to invest in LNG import infrastructure to increase investment resources and diversify gas supplies for the national economy.

b) Period from 2026 to end of 2030:

- Gradually developing the market model in which competition occurs at the downstream gas distribution by adopting regulations on the rights to rent and use third-party infrastructure. State regulatory authorities shall consider and direct the construction and application of charges for the use of shared infrastructure, and supervise the import and distribution of electricity-generating gas;

- Continuing to implement the Government’s commitments and commercial commitments already signed, and develop gas collection and distribution systems on the basis of domestic gas projects;

- Continuing to uphold the core roles of state-owned specialized enterprises; at the same time increasingly attracting foreign and private enterprises to invest and do business in the gas sector.

c) Period from 2031 to end of 2045:

- Ensuring the ongoing implementation of the Government’s commitments and commercial commitments already signed and remaining in effect in relation to domestic gas projects and gas projects of foreign investors (if any);

- Fully operating competitive markets for the import and distribution of downstream pipeline gas and the rights to rent and use third party infrastructure; operating Vietnam’s gas market in sync with Vietnam’s electricity market;

- Designing and supplementing a legal framework to complete and duly operate competitive gas markets.

2. Roadmap for development of the coal market

a) Period from 2021 to end of 2025:

- Maintaining the model where state-owned enterprises play key roles in the exploitation, production and trading of coal nationwide; increasingly calling for foreign enterprises and private enterprises to invest and do business in the coal trading sector, especially coal import activities.

- Keeping the current model of dispensing of coal to household consumers, specifically as follows:

+ As for coal used for electricity generation purposes: Following the Prime Minister’s instructions in the Directive No. 29/CT-TTg dated December 2, 2019 under which investors of coal-fired power plants (except for BOT thermal power plants obtaining the Government’s guarantee for execution of coal supply contracts) shall have the burden of supplying legal sources of coal throughout their life, ensuring a sufficient and stable supply of coal for normal operations of these plants by entering into long-term, medium-term and short-term purchase contracts with Vietnam Coal - Mineral Industries Group. Dong Bac Corporation or other coal suppliers that have legal sources of coal, ensuring competitive and efficient coal prices; coal suppliers shall be responsible for constantly supplying coal to power plants (especially BOT power plants obtaining the Government’s guarantee for execution of coal supply contracts) under signed contracts;

+ As for coal used for other purposes by household consumers: Carrying out the competitive bidding process or dispensing coal for consumption purposes via agreements and contracts on sale and purchase of coal at variable market prices, ensuring compliance with legislative regulations;

+ As for coal used for exportation purposes:  Domestic coal producers shall export high-quality coals for which domestic demands do not exist according to the Prime Minister's annual directives.

b) Period from 2026 to end of 2030:

- Continuing the execution of government-guaranteed coal purchase agreements and coal trading contracts already signed and remaining valid; exporting coals under the Prime Minister’s direction;

- Continuing to boost the core roles that state-owned specialized enterprises play in domestic coal mining, production and trading activities;

- Gradually developing a coal market with various sellers and buyers, diversifying coal sources (produced domestically, blended and imported coals) and suppliers of coals to household consumers;

- Researching, developing tools and legal frameworks to proceed to perfect, manage and operate a fully competitive coal market.

c) Period from 2031 to end of 2045:

- Continuing the execution of government-guaranteed coal purchase agreements and coal trading contracts already signed and remaining valid; exporting coals under the Prime Minister’s direction;

- Operating the fully competitive coal market at coal market segments where market participants perform transactions and trades in coals, provide services for these coal transactions and trades comply with market regulations and practices; encouraging foreign and private enterprises to invest and do business in the coal sector;

- Reviewing, revising and supplementing tools and legal frameworks to proceed to perfect, manage and operate a fully competitive coal market.

3. Roadmap for development of the electricity market

a) The period from 2021 to the end of 2025: Consolidating and perfecting the competitive wholesale electricity market; building and putting into operation the competitive electricity retail market according to the schedule specified in the Prime Minister's Decision No. 63/2013/QD-TTg dated November 8, 2013 on the roadmap, conditions and structure of the electricity industry in order to create and develop all-level electricity markets in Vietnam.

b) The period from 2026 onwards: Perfecting, developing and expanding the scope of the competitive electricity retail market.

III. SOLUTIONS

1. General solutions

a) Solutions related to the organization and management of the energy sector:

- Bolstering the capacity of the state management apparatus for the energy sector to promptly solve legal problems and barriers;

- Setting a complete legal framework for the energy sector over the specific developmental stages of the energy markets (gas, coal, electricity market) and adopting policies to promote the development of renewable energy. Legislative documents should be updated in a timely manner to address any real issue arising from the implementation process and, concurrently, ensuring consistency, avoiding overlapping or conflicts between regulations;

- Restructuring the energy industry by setting a detailed schedule, corresponding to the developmental stages of the energy market, ensuring a clear distinction between sectors or stages having the natural monopoly and sectors or stages with the potential for competition in the energy industry in order to improve transparency, efficiency, and non-discrimination among energy market participants;

- Developing gas and coal markets associated with preference policies and stabilizing gas and coal supplies for electricity generation purposes in order to ensure national energy security;

- Formulating appropriate tax and fee policies for the energy industry, ensuring the balance of interests between the state, enterprises and the community.

b) Solutions pertaining to the planning for development of the energy industry:

Taking urgent action to implement and complete the National Energy Master Plan for the period of 2021 – 2030 with vision towards 2050 (Planning objectives stated in the Prime Minister’s Decision No. 1743/QD-TTg dated December 3, 2019) and the National Electricity Development Plan for the period of 2021 – 2030 with vision towards 2045 (Planning objectives stated in the Prime Minister’s Decision No. 1264/QD-TTg dated October 1, 2019), ensuring consistency among plans for development of coal, gas and electricity sub-sectors.

c) Solutions regarding energy prices:

- Gradually putting energy prices in use under the competitive market mechanism, ensuring that they duly reflect reasonable costs in a legitimate, transparent, and public manner. The State only needs to regulate prices and fees applied to stages having the natural monopoly in the energy industry, or in non-competitive sectors and areas;

- Adjusting electricity retail prices, depending on price fluctuations on the coal and gas markets.

d) Solutions pertaining to scientific and technological application:

- Enhancing the application of scientific and technological advances in all sub-sectors of the energy sector, boosting the automation in the operation and control stages of production lines in order to improve production and business efficiency, and environmental protection;

- Setting up energy infrastructure database; increasing investments in collection and analysis of information, and forecasting of energy markets.

dd) Solutions pertaining to human resources training, enhancement of awareness, human resources and international cooperation:

- Organizing training for the purpose of developing human resources to meet the needs for management, consultancy and operation of the competitive energy market;

- Strengthening international cooperation to attract investment capital, providing technical assistance, promoting technology transfer, developing institutions and policies, training human resources, granting preferential loans, giving credit guarantees, and providing favorable conditions to access funds from international financial institutions for projects in the energy sector.

2. Solutions for development of the gas market

a) Adding regulations on the gas market to the Petroleum Law and perfecting legislative documents in the gas industry to facilitate the preparation for investment and construction of LNG import warehouse and distribution projects, and implementing the roadmap related to gas markets.

b) Assigning more tasks of directing the gas market to the State Steering Committee for key oil and gas projects in which the Ministry of Industry and Trade plays the role of the standing entity of the Steering Committee to implement the roadmap for Vietnam’s gas markets.

c) Promoting investments in projects for mining, gas infrastructure, gas import, gas-fired power, LNG boil-off recycling to meet domestic demands.

3. Solutions for development of the coal market

a) Implementing the mechanism for conclusion of long-term coal sale and purchase contracts with large coal consumers; developing electronic contracts for coal trades; researching, testing coal listing on commodity exchanges with futures and derivatives.

b) As for imported coal: Strengthening researches into imported coal sources as a basis for formulating and organizing the implementation of a strategy for coal import and investment in coal exploitation abroad; considering the organization of the implementation of coal importation through major coal enterprises that are qualified and meet the coal trading conditions as prescribed in order to promote their strengths in negotiation when buying large quantities of coal. Researches use price indices of specific coal imports as follows:

- From now to 2025: Conducting researches into international coal indices appropriate to be used as references of prices of coal imported into Vietnam;

- The period from 2025 onwards: Piloting and continuing to perfect and adopt coal import price indices if they are appropriate for specific conditions of Vietnam.

c) Regulating domestic coal selling prices according to the market mechanism, ensuring that they can fully offset expenses incurred to generate reasonable profits of coal manufacturers in order to meet the needs for additional investments aimed at maintaining production capacity and expansion investments aimed at increasing production output, taking into account socio-economic efficiency of domestically manufactured coal.

d) Building infrastructure necessary for coal production and business activities to suit the export and import needs of each region and geographical location, especially ports designed for coal transshipment and import.

dd) Encouraging domestic and foreign enterprises to enter into partnership or affiliation with coal enterprises in order to:

- Carry out coal mining projects in areas where the coal industry has not yet mastered technologies (e.g. coal mining under civil or industrial construction works, water storage areas,...);

- Invest in construction of infrastructure used for development of the coal industry.

e) Supporting investments in the development of the coal industry and assurance of energy security by applying the following solutions:

- Support policies to invest in coal exploration activities in an appropriate manner to develop coal resources;

- Invest in the construction of infrastructure used for manufacturing, supply and import of coal.

g) Renovating and restructuring the organization of coal production and trading activities:

- Continuing to focus on coal production in the model of enterprise groups which helps create large corporations/incorporations that are able to compete on domestic and international markets;

- Strengthening the implementation of the Project for restructuring of enterprises approved competent authorities;

- Orienting coal manufacturing enterprises towards the consolidation of a number of mines determined to have the same types of mineral after the deep exploitation process in order to increase production capacity, increase productivity and reduce coal production costs.

h) Making timely adjustments to salary and wage, health care, social welfare, housing and insurance mechanisms and policies to attract workers to work at coal mines (especially, pit coal mines).

4. Solutions for development of the electricity market

a) Building a complete competitive electricity wholesale market:

- Carrying out the restructuring of the electricity sector under the provisions of the Prime Minister's Decision No. 168/QD-TTg dated February 7, 2017, ensuring the transparent, fair and efficient operation of the electricity wholesale market;

- Perfecting operational mechanisms of the spot electricity market, supporting mechanisms for the operation of the spot electricity market and the information technology infrastructure system serving the electricity wholesale market, ensuring that the electricity market operates in the approved design model.

b) Developing and operating the competitive electricity retail market:

- Researching and developing the Project for restructuring of the electricity industry to serve the competitive electricity retail market in accordance with the approved design model of the competitive electricity retail market;

- Reviewing, supplementing and completing legislative regulations supporting the operation and regulation of the competitive electricity retail market;

- Reviewing and examining adjustments to legislative regulations on the electricity retail price mechanism to suit the electricity retail market. Getting rid of barriers to ensure electricity prices are transparent and are determined according to the rules of competitive market as set out in the Resolution No. 55-NQ/TW dated February 11, 2020 of the Politburo.

Article 2. Implementation

1. Ministry of Industry and Trade

a) Taking responsibility to manage and direct the construction and development of a competitive energy market by 2030 with vision towards 2045. Formulating and requesting competent authorities to review and approve coal industry restructuring projects for coal market development and design of coal market models appropriate for the approved roadmap.

b) Presiding over, and cooperating with relevant ministries and sectoral administrations in, elaborating, amending, supplementing, seeking competent authorities’ promulgation of mechanisms, policies and legislative documents for development of energy markets over specific stages within their jurisdiction.

c) Taking charge of reviewing and completing infrastructure conditions, restructuring the energy sector, implementing necessary solutions to create and develop energy markets according to the roadmap approved by the Prime Minister.

d) Presiding over, and cooperating with relevant ministries and sectoral administrations in, formulating and seeking the Government’s ratification of energy price policies according to the market mechanism, ensuring the harmony of interests between the State, enterprises and consumers.

dd) Taking charge of formulating long-term, medium-term and annual coal export plans with respect to types of coal for which domestic demands do not exist, and submit them to the Prime Minister to seek his consent.

2. Ministry of Finance

a) Presiding over, and cooperating with the Ministry of Industry and Trade and concerned ministries and sectoral administrations in, reviewing and assessing legislative documents on tax and fee policies corresponding to the formation and development of energy markets.

b) Presiding over and cooperating with the Ministry of Industry and Trade in researching and reporting to the Prime Minister on financial mechanisms and policies necessary for the development of competitive energy markets.

c) Presiding over and cooperating with relevant ministries and sectoral administrations in researching, piloting and adopting coal import price indices.

3. Ministry of Natural Resources and Environment

a) Presiding over, and cooperating with concerned local authorities in, leading the timely settlement of problems and speeding up the licensing of coal exploration and exploitation activities to meet the schedule of exploration and construction of mines and coal mining activities according to relevant planning schemes.

b) Improving the quality of coal exploration and mining licensing to ensure that licensed enterprises are capable of conducting coal exploration and mining investment activities. Improving the efficiency and strengthening the inspection and supervision of coal exploration to ensure the reliability, the maximum exploitation of coal resources associated with labor safety and environmental protection.

c) Intensifying the overall assessment of the Dong Bac coal basin, the basic investigation of coal resources in the Red River coal basin as a basis to plan and implement coal exploration projects.

d) Presiding over, and cooperating with concerned ministries and sectoral administrations in, speeding up the implementation of the plan for basic geological survey of minerals for the period of 2021 - 2030 with vision towards 2050 (including coal minerals) to ensure it is synchronized with the National Energy Master Plan for the period of 2021 – 2030 with vision towards 2050.

dd) Researching and proposing appropriate mechanisms to allow enterprises to participate in the basic investigation of coal at their expense; considering granting licenses to explore coal deep to coal seams to improve the efficiency of coal exploration activities.

4. Ministry of Planning and Investment

a) Presiding over and cooperating with the Ministry of Industry and Trade, the Ministry of Finance and concerned ministries and sectoral administrations in formulating and requesting competent agencies to adopt or adopting, under their jurisdiction, investment incentive policies for coal exploration and construction of infrastructure for coal import, overseas investments for the purposes of exploiting coal to serve domestic demands.

b) Developing mechanisms and policies to allow economic groups and state-owned corporations to negotiate and sign long-term contracts to import energy sources at market prices and in conformance to international practices.

5. The Ministry of Science and Technology: Develop mechanisms and policies to encourage and promote the research, transfer and application of scientific and technological advances to exploit coal at the depth of below -300 at the Dong Bac coal basin; effectively exploiting and using coal basins in the Red River Delta; exploiting and extracting coal under industrial, civil construction works, water storage areas; efficiently exploiting and using low-calorific coal and other coal products.

6. Ministry of Transport

a) Updating, adjusting and supplementing the planning of seaports, canals and inland traffic systems according to regulations to meet the needs for transportation and transshipment of imported and exported coal, ensuring conformance to the rules of optimally using unoccupied grounds and water surfaces for the sustainable development of gas, coal and marine industries in the general strategy for development of the marine economy of Vietnam.

b) Agreeing on the detailed planning of specialized seaports for importation of LNG and transshipment of imported coal which is proposed as an addition to the plan for development of Vietnam’s seaports.

7. The Ministry of National Defense, the Ministry of Public Security, the Ministry of Construction, the Ministry of Science and Technology, and the State Bank of Vietnam: Cooperating, researching, perfecting and organizing the concretization of tasks and solutions related to the coal industry and coal markets.

8. People’s Committees of centrally-affiliated cities and provinces

a) Cooperating with state regulatory authorities and enterprises in supplementing and completing socio-economic development plans of provinces, cities, economic zones, industrial zones, and completing the land and sea surface (if any) use planning, taking into account the construction of gas and coal projects.

b) Giving priority to available land areas and water surfaces for the construction of gas and coal construction works.

c) Taking responsibility for compensation, resettlement after completing the site clearance process for gas, coal and electricity construction works as per regulations.

d) Closely cooperating with relevant entities and enterprises in the management of coal production in accordance with laws; promptly reviewing, updating and adjusting prohibitory or temporarily prohibitory borderlines for mineral operations. Considering giving priority to the maximal exploitation of coal resources before investing in the construction of rigid surface structures in the process of adjusting the land use planning for socio-economic development purposes.

9. Enterprises operating in the energy sector

a) Vietnam National Oil and Gas Group and enterprises operating in all sectors of the gas industry:

- State-owned specialized enterprises (Vietnam Oil and Gas Group, Vietnam Gas Corporation) are expected to play key roles in running gas business models, especially activities of investment in infrastructure construction, importation of gas for electricity generation and other household consumption purposes on the basis of upholding available resources and experience; incorporating entities having strong brands in international gas business, and step by step developing regional and international markets, and extensively participating in all supply stages of the LNG value chain, including participation in investment in upstream production, liquefaction, transportation and trading of gas;

- Enterprises shall be responsible for undertaking investments in and construction of gas projects according to the investment planning schemes and policies approved by competent authorities;

- Enterprises assigned by the State to implement LNG import projects shall be responsible for organizing the construction of the infrastructure needed for LNG import activities; managing, operating and importing LNG according to regulations;

- Presiding over conducting researches into the plans to exploit and use gas resources from Blue Whale, Block B and other fields, including plans to import LNG, recycle gas boil-off and provide gas for household consumers which must be reasonable and efficient, meeting consumer’s needs; requesting the Ministry of Industry and Trade to submit them to the Prime Minister to seek his approval.

b) Viet Nam National Coal – Mineral Industries Corporation, Dong Bac Corporation and other coal exploitation and trading enterprises:

- Performing coal mining and supply tasks according to the guidelines set out in the planning schemes, plans and contracts with coal users:

- Viet Nam National Coal – Mineral Industries Corporation, Dong Bac Corporation: Duly performing their leading roles in supplying coal for domestic consumption purposes in accordance with the roadmap for development of coal markets; investing in power source projects falling within the scope of their assigned duties.

c) Vietnam Electricity Corporation:

- Investing in and completing their information technology infrastructure system to facilitate the operation of the electricity markets at specific levels;

- Implementing regulations, plans and restructuring the Group according to the plan approved by the Prime Minister.

Article 3. Ministers, Heads of Ministry-level agencies, Heads of Governmental bodies, Presidents of the People’s Committees of centrally-affiliated cities and provinces, General Directors of Vietnam Electricity Corporation, Vietnam Oil and Gas Group, Vietnam National Coal – Mineral Industries Corporation, and Heads of relevant entities, shall be responsible for implementing this Decision./.