VIETNAM - BIOMASS POWER PROJECTS - NEW LAWS AND HOW TO GET HIGHEST LEVELS OF LEGAL CERTAINTY AND BANKABILITY UNDER EU-VN INVESTMENT PROTECTION AGREEMENT (“EVIPA”) AND COMPREHENSIVE AND PROGRESSIVE TRANS-PACIFIC PARTNERSHIP (“CPTPP”)

1. VIETNAM - BIOMASS POWER PROJECTS - NEW LAWS AND HOW TO GET
HIGHEST LEVELS OF LEGAL CERTAINTY AND BANKABILITY UNDER EU-VN
INVESTMENT PROTECTION AGREEMENT (“EVIPA”) AND COMPREHENSIVE
AND PROGRESSIVE TRANS-PACIFIC PARTNERSHIP (“CPTPP”)
On 07 July 2020, the Ministry of Industry and Trade (“MOIT”) issued Circular No. 16/2020/TT-
BCT to amend and supplement certain provisions of Circular No. 44/2-15/TT-BCT dated 09
December 2015 of the MOIT Minister on project development, avoided cost tariff and
standardized power purchase agreement for biomass power projects.
In particular, this new Circular provides that investors be only allowed to build on-grid biomass
power investment projects, which have been included in the approved Power Development Plan
or Provincial Power Development Plan.
In addition, feed-in-tariff for on-grid biomass power projects will follow Decision No.
08/2020/QD-TTg dated 05 march 2020, which increases the feed-in tariff for biomass co-
generation heat power to 7.03 US cents per kilowatt hour (up from 5.8 US cents), and for other
types of biomass projects to 8.47 US cents per kWh (up from 7.3 to 7.5 US cents depending on
location).
Investors whose projects operated before 25 April 2020 will sign a new Power Purchase
Agreement (“PPA”) with the buyer in order to be entitled with the abovementioned feed-in-tariff
from 25 April 2020 until the expiry of the signed PPA.
How to get highest levels of legal certainty and bankability under the EU-Vietnam Investment
Protection Agreement and the CPTPP
The recent EVIPA and CPTPP further open the market to foreign investors. The investors now
can bring their technology and know-how, especially those from countries with high level of
development in renewable sectors to Vietnam with less market access barriers and being more
secured. In particular, the CPTPP and the EVIPA make it possible that foreign investors could
sue Vietnam’s Government for its investment related decisions according to the dispute
settlement by arbitration rules. The final arbitral award is binding and enforceable without any
question from the local courts regarding its validity. This is an advantage for investors
considering the fact that the percentage of annulled foreign arbitral awards in Vietnam remains
relatively high for different reasons.

2. Although the transition period for the aforementioned Investor-State Dispute Settlement (ISDS)
mechanism is 5 years from the effective date of the EVIPA, Duane Morris Vietnam has the legal
and technical tools to make such provisions work in favor of investors from now.
For more information on the above, please do not hesitate to contact the author Dr. Oliver
Massmann under omassmann@duanemorris.com. Dr. Oliver Massmann is the General Director
of Duane Morris Vietnam LLC, Member to the Supervisory Board of PetroVietnam Insurance
JSC and the only foreign lawyer presenting in Vietnamese language to members of the
NATIONAL ASSEMBLY OF VIETNAM.