Ministry refines gas-to-electricity price mechanism

This morning, April 17, the Ministry of Industry and Trade informed the press that it has just completed drafting a mechanism for buying and selling gas-fired power to report to the Government before seeking widespread opinions.

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According to the National Power Development Plan 8, the total installed capacity of power sources by 2030 will be 150.489 GW, nearly double the current capacity of around 80 GW. Of this, the newly invested gas-fired power capacity will be 30,424 MW, including ten projects utilizing domestic gas sources with a total capacity of 7,900 MW and 13 projects utilizing imported liquefied natural gas (LNG) with a total capacity of 22,824 MW.

In line with the Prime Minister's Decision 500/QD-TTg, the Ministry of Industry and Trade has finalized and submitted to the Government the implementation plan for the National Power Development Plan 8.

Regarding gas-fired power, the Ministry has convened several meetings to discuss and gather input from relevant ministries, local authorities, experts, business communities, and associated organizations. Through these discussions, consensus has been reached on the need to establish a framework for gas-fired electricity development, aimed at addressing key challenges hindering the progress of this energy source.

Following extensive research and development, the Ministry of Industry and Trade has now completed a draft for submission to the Government, before seeking public opinions.

The proposed framework encompasses power generating units owning gas-to-power plants connected to the national electricity grid, as well as power utility companies such as the Vietnam Electricity Group, the Vietnam Oil and Gas Group, and EVN National Load Dispatch Center.

Additionally, the draft outlines mechanisms for gas-to-power plants utilizing imported LNG, emphasizing that enterprises must proactively negotiate, sign, and bear responsibility for contracts and commercial agreements. The competent authority has endorsed the principle of transferring gas prices to electricity prices for power plants.

According to the Ministry of Industry and Trade, determining the proportion of electricity through long-term power purchase agreements (PPAs) at an appropriate level during the project's debt repayment period is crucial to ensure the feasibility of attracting investment in LNG power projects. This approach aims to mitigate significant impacts on retail electricity prices and ensure fair competition with other types of power sources in the electricity market.

Regarding the mechanism for gas-fired power plants using domestic natural gas, the competent authority has agreed on the principle of converting gas prices to electricity prices for power plants and directed relevant agencies and units to guide the consumption mechanism for gas from the offshore gas field of Blue Whale and the Lot B gas project.

Electricity transactions continue to be conducted according to standardized contracts issued by the Ministry of Industry and Trade to participate in the competitive wholesale electricity market and supply electricity from power plants to the spot electricity market.

The procurement costs of power plants using domestically extracted natural gas or imported LNG are reasonable, legitimate expenses, factored in and adjusted within retail electricity prices.

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