Vietnam Wind Energy - Eurocham Legal Sector Committee - Meeting with Chairman of EVN Mr Duong Quang Thanh - Presenting Major Legal Issues for Getting Deals Done

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Vietnam Wind Energy - Eurocham Legal Sector Committee -
Meeting with Chairman of EVN Mr Duong Quang Thanh -
Presenting Major Legal Issues for Getting Deals Done
On 18 December 2015, Mr. Oliver Massmann, the Managing Partner of Duane Morris Vietnam
LLC, Chairman of the Legal Sector Committee of Eurocham, attended the conference "EVN-
HCMC Dialogue with Korean, American and European enterprises" held by EVN HCMC.
Besides the presentation on how to improve the quality of power supply in Vietnam of EVN
HCMC, Mr. Massmann had an opportunity to give a speech in Vietnamese and raise major
issues in relation to wind power energy projects in Vietnam, including:
- The Government offers low FiT rate in comparison to the investment of the investors;
- Power Purchase Agreement (PPA) is required to follow a specific template, which is
not bankable;
- The PPA template is unclear whether it is a “take or pay” agreement;
- There is no clear guidance and procedure to obtain the approval for the amendment of
the PPA template.
The speech received the sympathy from many foreign investors in the conference. Mr. Duong
Quang Thanh, the Chairman of the Members’ Council of EVN, well received the comments with
positive feedback and personally congratulated Mr. Massmann for the successful speech after
the event.
Followings are the brief analysis of the issues and the response from Mr. Thanh to each issue.
1. Low FiT rate
- Mr. Massmann raised the concern that the FiT, as regulated in Decision No.
37/2011/QD-TTg, is 7.8 cents USD/kWh, equivalent to 1,614VND/kWh, is very low
compared to the investment capital of the investors in the projects. Accordingly, such
purchase price cannot ensure the profits for the investors. Therefore, instead of fixing the
price, the Government can regulate the ceiling price and give the parties the rights to
negotiate the price. In addition, it would be appreciated if EVN can share information
about the exact timeline that the new FiT would be published.
- As discussed by Mr. Thanh, EVN understood the concern of the investors on the low
FiT. The Government is considering the issue. However, Mr. Thanh could not say
exactly when the new FiT will be published.
2. The PPA template is not bankable
- Mr. Massmann recommended to enhance the bankability of the PPA, such as to clearly
define force majeure events (Articles 5.1 and 5.3 of the template PPA) and distinguish
the natural force majeure event and force majeure event due to political issue; to clearly
define events of default of either Seller and Buyer (Articles 6.2 and 6.3 of the template
PPA).

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- In response, Mr. Thanh explained that the purpose of PPA template is to cut down the
negotiation process between the parties. EVN noted the comments and will propose to
amend the template.
3. The PPA template is unclear whether it is a “take or pay” agreement
- Mr. Massmann suggested that in order to secure and ensure the profits and revenue of the
project, it must be clear that it is a “take or pay” agreement. Because under the current
template, EVN will be released from the obligation to purchase the power in specific
circumstances.
- Said by Mr. Thanh, for the time being, it is difficult to make clear that this is a “take or
pay” agreement as the power generated from the wind power projects will depends on
many factors, such as speed and force of the wind. However, EVN noted the comment
and will consider to amend the PPA template.
4. No clear procedure to obtain approval for amendment of PPA
- Mr. Massmann addressed that in practice, the parties will need to agree on the additional
agreements suitable for each project. Therefore, although the template PPA is
compulsory, in case the parties are willing to amend, there must be a clear procedure to
obtain the approval for the amendment of the PPA.
- On behalf of EVN, Mr. Thanh noted the comment and will consider to propose
appropriate changes.
Although the issues raised by Mr. Massmann could not be addressed in details during the
conference, Mr. Thanh said that EVN would do their best to cooperate and would research on
the appropriate solution and propose to the Government for amendment in the future.
***
Please do not hesitate to contact Oliver Massmann under omassmann@duanemorris.com if you
have any questions or want to know more details on the above. Oliver Massmann is the General
Director of Duane Morris Vietnam LLC.

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