Hogan Lovell OffshoreBook 2023 230809 OnlinePDF - Flipbook - Page 312
312
Vietnam
2. THE OFFSHORE WIND
PROMOTION SYSTEM
Currently no government subsidies or
promotion systems are provided specifically to offshore wind power projects. The
feed-in tariff for offshore wind is slightly
higher than onshore projects due to the
higher associated development, construction, and operation costs. The latest tariff is
set at VND 1,928 per kWh (or USD0.085 per
kWh) for onshore projects and VND 2,223
per kWh (or USD0.098 per kWh) for offshore
projects. However, such tariffs only apply to
projects which have been "partially or fully
operational" before 1 November 2021. If a
project is partially operational, such tariff
only applies to the operating portion of the
project before the tariff expiry date. This
deadline has been a critical issue for largescale offshore wind power projects, and
indeed no large-scale offshore wind power
project has been able to the deadline. On 7
January 2023, the MOIT issued an electricity generation price range to be applied to
the portions of wind power projects which
have signed power purchase agreements
(PPAs) with Vietnam Electricity (EVN) before
1 November 2021 but were not operational
by that date. The ceiling price of the electricity generation price range is set at VND
1,587 per kWh (approximately USD0.067 per
kWh) for onshore projects and VND 1,816
per kWh (approximately USD0.077 per kWh)
for offshore projects, which is only about
82% of the latest feed-in tariff. Notably, the
price range is denominated in VND only
(instead of USD), and therefore investors
would be assuming exchange rate risk. While
the Prime Minister has made it clear that
the feed-in tariff mechanism will ultimately
be replaced with a competitive wind power
auction mechanism, it is unclear when such
an auction scheme will be finalised by the
MOIT.
Other than the incentive on tariffs, offshore
wind power projects will generally enjoy the
investment incentives applicable to wind
projects, including:
2.1 Corporate income tax preferences
Income from new investment projects in
renewable energy production will be subject
to corporate income tax at 10% for the first
15 years. 3 The lowest corporate income tax
rate available to regular companies is 20%. 4
2.2 Import duty preferences
There is an exemption from import duty in
respect of goods imported to form fixed assets of the project or imported raw materials
and manufactured materials not yet able to
be produced within Vietnam and imported
to service production of an offshore wind
project.
Current wind power regulations do not
provide for territorial exclusivity for an investor to conduct a site survey for a potential
offshore wind power project in a particular
marine space. As a technical legal matter, a
specific site for developing and operating
3 Article 15, Decree No. 218/2013/ND-CP dated 26 December 2013 of the Government detailing and guiding the implementation of the Law on Corporate Income Tax (as amended).
4
Article 13.3, Law No. 32/2013/QH13 adopted by the National Assembly on 19 June 2013 on the amendments to the Law on Corporate Income Tax.
