Vietnam’s Ministry of Industry and Trade (MoIT) has raised concerns over 14 solar projects in the central province of Ninh Thuan that are believed to be unjustly benefiting from preferential tariffs. A comprehensive review and a set of corrective actions are being proposed to address these discrepancies.

In an official document sent to Vietnam Electricity (EVN), the MoIT has elaborated on the conclusions of a governmental inspection carried out on April 28 on the implementation of national electricity development plans 7 and 7.1.

Following the inspection’s findings, the MoIT has asked EVN to scrutinise and provide details on the 14 solar projects that are currently, or have in the past, benefitted from the preferential tariff scheme, contrary to the guidelines laid out in Resolution 115.

Moreover, EVN has been directed to review all grid-connected solar and wind projects that have received commercial operation date approvals under the feed-in tariff (FIT) system.

Based on the inspection’s conclusions, EVN is expected to thoroughly examine the entire process of these projects, from agreement formations and power purchase agreements to inspection conditions, commercial operation recognitions, and payment procedures.

The key question arising from the situation relates to why these 14 solar projects have been identified as benefiting from the tariff scheme improperly.

The government inspection concluded that even though the beneficiaries of the 9.35 US cents/kilowatt hour rate specified in Resolution 115 should be solar power projects that had approval from the prime minister or were listed in the national power development plan with a total capacity of 2,022MW, the MoIT later advised and expanded the application of the FIT rate to other projects in various power development plans.

Beyond the five projects with a combined capacity of 789MW that rightfully benefit from the FIT, another 14 projects with a total capacity of 964MW were found to be inappropriately granted the preferential FIT rate. These projects include notable names like Hacom Solar, Sinenergy Ninh Thuan 1, and Thuan Nam Duc Long, among others.

This broadened beneficiary criteria led to these 14 projects receiving the preferential rate, causing EVN to pay out an additional $62.49 million by June 30, 2022. The inspection agency identified that the responsibility for this lies squarely with the MoIT.

Adding another layer to the inquiry, for large-scale rooftop solar systems with 1MW of capacity, the MoIT’s Inspection Agency has called on EVN to collaborate with provincial power companies to review projects developed on agricultural and forestry lands under the investment model of farms.

The inspection agency has recommended that the MoIT take the lead and coordinate with relevant ministries to find appropriate economic solutions for the 14 solar projects that are allegedly benefiting improperly.

Additionally, there is a call to review the large-scale rooftop solar systems developed on agricultural and forestry lands under the farming investment model, with actions to be taken as per the regulations.

Vietnam Investment Review