Công văn 1604/TTg-KTN

At the requests of the Ministry of Industry and Trade (official dispatch No. 5367/BCT-NL dated June 16, 2011); Ministry of Planning and Investment (official dispatch No. 4705/BKHDT-GSTDDT dated July 18, 2011), Ministry of Finance (official dispatch No. 10068/BTC-TCDN dated July 29, 2011), Ministry of Natural Resources and Environment (official dispatch No. 2597/BTNMT-KH dated July 15, 2011), Ministry of Justice (official dispatch No. 4180/BTP-PLQT dated July 19, 2011), State Bank of Vietnam (official dispatch No. 5500/NHNN-QLNH dated July 18, 2011); pursuant to the conclusion of the standing meeting of the Government dated August 23, 2011 on primary contents of BOT contracts and governmental guarantees applying to thermal power plant projects invested under BOT contracts; the Prime Minister makes responses as follows:

Thermal power plant projects invested under BOT contracts on the list of electricity projects stated in the Decision No. 1208/QD-TTg dated July 21, 2011 by the Prime Minister on approval of the national power development planning for the period of 2011 - 2020 with an orientation to 2030 (except for projects approved by the Prime Minister whose contents are different from contents stated herein) shall be entitled to apply the following contents:

1. Primary contents of a BOT contract:

a) Applicable laws:

- BOT companies shall operate in accordance with regulations of Vietnam law.

- Any dispute arising in the course of application and interpretation of the BOT contract may apply to foreign laws selected by parties to the contract.

b) Preferred language: The BOT contract and related project documents shall be made into Vietnamese and English. In case of any discrepancies between the Vietnamese version and the English version, the English version shall prevail.

c) Tax incentives:

- Exemption of tax on loan interest.

- Corporate income tax: tax exemption for four (4) years from the day on which the taxable income is earned; 5% tax for the next nine (9) years and 10% tax for the remaining duration of the contract.

- Export and import duties: exemption of import duties on materials, supplies and integrated equipment which cannot be produced in Vietnam or can be produced in Vietnam but have not met integration and quality requirements.

d) Mortgage of land use rights: Investors shall be entitled to enjoy exemption from land rental and have the right to mortgage the property on land at credit institutions or credit agents that are permitted to operate in Vietnam. In the cases where the property on land is transferred, the transferee shall have the inheritance of land use rights associated with the property for the remaining duration of the contract and shall not repurpose that land.

dd) Electricity prices stated in the power purchase agreement shall be expressed as U.S. dollar and the payment shall be made in Vietnamese dong.

e) In case of force majeure events resulting in the Vietnamese party not being able to continue to purchase electricity and must prematurely terminate the BOT contract: The Vietnamese Government shall acquire the plant for a price equal to the remaining value of the plant corresponding to the remaining portion of the remaining loan and equity that has not been recovered.

2. Regarding governmental guarantees:

a) Project contract term and duration of governmental guarantees:

- The project contract term shall be 20 years in case of thermal power plants using gas; 25 years in case of thermal power plants using coal.

- Duration of governmental guarantees:

+ BOT contract: the whole project contract term.

+ Power purchase agreement: 15 years if the project uses gas and 18 years if the project uses coal.

b) The Government shall provide guarantee for fulfillment of obligations of the Ministry of Industry and Trade stated in the BOT contract.

c) The Government shall provide guarantee for fulfillment of obligations to pay EVN for electricity mentioned in the power purchase agreement.

If the project uses domestic coal provided by the Vietnam National Coal - Mineral Industries Group (Vinacomin), the payment by Vinacomin shall be guaranteed through the BOT contract. The Government shall not provide guarantee for the transport of coal.

If the project uses gas provided by the Vietnam Oil and Gas Group (PVN), the payment by PVN shall be guaranteed indirectly through the BOT contract.

d) The Government shall make guarantees for fulfillment of obligations of state-owned enterprises that invest in construction, operate general infrastructure used in electricity centers.

dd) The Government shall be responsible for conversion into U.S. dollars for 30% of the project revenue in VND after deducting expenditures in Vietnamese dong.