Lawyer in Vietnam Dr. Oliver Massmann – RENEWABLE ENERGY AND FEED IN TARIFFS – QUO VADIS - INTERVIEW WITH MERGERMARKET

1. Lawyer in Vietnam Dr. Oliver Massmann – RENEWABLE ENERGY AND
FEED IN TARIFFS – QUO VADIS - INTERVIEW WITH
MERGERMARKET
1. Dear Dr. Massmann, a government official recently stated that the MoIT probably
had enough solar projects in the pipeline, explaining for that fact that such new FIT
will be much more lower than the current one (as quoted by Mr. Nguyen Ninh Hai,
Deputy Director of New and Renewable Energy Department, MOIT), do you agree
with this statement and why? Is there any other reason that you think make sense for
planning a new upcoming FiT for solar?
OM: The number of approved solar projects has gone far beyond the target capacity
in the National Power Master Plan VII (as amended). The Government has to issue
a new national power master plan (PDP VIII) to reflect the new target following the
market status. In addition, the grid does not have enough capacity to absorb all output
from solar projects at the moment and has to be upgraded. This process should take
around 1-5 years. The current FiT is also very attractive to foreign investors and high
compared to some other countries. For these reasons, the Government has to issue a
new FIT to slow down the development of solar projects, thus having time to
improve the grid and complete the legal framework.
2. With the market now anticipating the new FiT for solar, which is underway, what
is the current situation of those solar projects seeking to be the last one to enjoy the
9.35 US cents feed in tariff? Do you think the anticipation for the new FiT has
triggered/ or will trigger a rise in deal value for renewables in Vietnam in the
meantime? Perhaps in Ninh Thuan province? If so, by roughly how much %?
OM: Solar projects seeking to be the last one to enjoy the current FIT now have to
accelerate their development process so that they will come into commercial
operation by 30 June 2019. If they cannot (and this is the current situation of many
solar projects), the investors tend to delay the construction and wait to see what
will happen after 30 June. I am aware that the new FIT is only one of the options,

2. besides auction or a hybrid option. The Government has not yet decided on the
final model. Ninh Thuan is already overloaded and investors should look for
opportunities in other provinces.
3. Besides the new FiT, what changes would you like to see in the new PPA for
projects coming into operation after 30 June 2019? Can you rank these changes
from most needed, needed to have, and good to have for the long-term outlook of
M&A deals in renewables? Can you briefly explain the reasons for the ranking as
well?
OM: The bankability of the PPA is of utmost importance. Without this, the
investors find it very hard obtaining financing for their projects. Another change I
expect is a clear indication of whether the PPA is a take-or-pay agreement. This
will help investors secure and ensure the profits and revenue of their projects. The
last change but also of not less importance is a dispute resolution clause which
provides international arbitration to be an option to resolve the dispute. This could
be a great concern for foreign investors, especially those of large utility scale
projects.
4. From talking to a market source, the current FiT rate for wind energy projects is
profitable enough for investors and he himself as an investor doesn’t want the FiT
rate for wind energy projects to go up any more. What would be your argument for
the hike in wind FiT and how would it benefit the long-term outlook of M&A deals
in wind energy projects?
OM: I believe the reason for a recent increase in the wind FiT is to improve
profitability of the projects, help investors to recover the investment capital more
quickly and arrange a better financing deal with the banks. I note that the PPA is
only for 20 years, so if it takes too long to recover the capital, together with the
high maintenance cost after that, the investors will no longer be interested in
keeping the projects. The new wind FIT will make wind projects more attractive to
investors for acquisitions as there is still room for further development after the
projects have recovered their investment capital.

3. Please do not hesitate to contact Dr. Oliver Massmann under
omassmann@duanemorris.com or any lawyers in our office listing if you have any
questions or want to know more details on the above. Dr. Oliver Massmann is the
General Director of Duane Morris Vietnam LLC.