Decision No. 854/QD-TTg of July 10, 2012, on approving the 5 year business development plan and investment of electricity of Vietnam period 2011 – 2015

DECISION

ON APPROVING THE 5 YEAR BUSINESS DEVELOPMENT PLAN AND INVESTMENT OF ELECTRICITY OF VIETNAM PERIOD 2011 – 2015

PRIME MINISTER

Pursuant to the Law on Organization of the Government dated December 25, 2001;

Pursuant to Decision No. 176/QD-TTg dated October 5, 2004 of the Prime Minister approving the strategy of Vietnam Electricity Sector Development period 2004 - 2010 and orientation to 2020;

Pursuant to Decision No. 1855/QD-TTg dated December 27, 2007 of the Prime Minister approving the national energy development strategy of Vietnam by 2020, with a vision to 2050;

Pursuant to Decision No. 1208/QD-TTg dated July 21, 2011 of the Prime Minister approving the national electricity development plan period 2011 - 2020 with a vision to 2030;

Considering the proposal of Minister of Industry and Trade

DECIDES:

Article 1. Approving the 5 year business development plan and investment of the Electricity ofVietnam (EVN) for the period 2011 – 2015 with the following major contents:

I. GENERAL OBJECTIVES

1. Developing the Electricity of Vietnam into a powerful economic group which plays a key role in the electricity sector; ensuring security and quality of electricity supply and meeting the requirements of economic and social security development.

2. Improving the efficiency in business and production and development investment through the optimal use of all available resources, focusing on key areas: operation management and investment to develop the power source, transmission electricity grid, distribution and sale of electricity.

II. MAIN TASKS

1. Investing in power source and power grid investment in the national electricity development plan period 2011 - 2020 with a vision to 2030 to ensure adequate supply of electricity demand for the national economy.

2. Being responsible for purchasing electricity from the power sources, power import, management and operation of transmission electricity grid and distribution electricity grid, performing a key role in securing the power supply to the nation.

3. Implementing the measures to further reduce the power loss, the saving program in the production, transmission and distribution of electricity.

4. Implementing the program to provide electricity to rural and mountainous areas as planned, by 2015, 98% of rural households and by 2020 most of the rural households have access to electricity.

5. Performing assigned tasks in the construction and development of the electricity market in accordance with the roadmap approved by the Prime Minister.

6. Strengthening international cooperation, expanding integration and studying to connect electricity grid with Laos, Cambodia, China and other countries in the region in order to buy, sell and exchange power.

7. Continuing to organize, innovate, improve corporate governance capacity, completing mechanisms; focusing on mobilization and efficient use of funds; studying, developing and applying science and advanced technology, increasing revenue, reducing costs, ensuring business efficiency, conserving and developing capital; improving the efficiency of operation to develop the Electricity of Vietnam into a sustainable and strong economic group.

III. MAJOR PLAN TARGETS

1. 5 year electricity supply plan for the period 2012 – 2015

a) The Electricity of Vietnam is responsible for meeting power demand with rate of commercial power increase on average of 13%/year for the period of 2011 – 2015, specifically as follows:

b) The Group shall prepare plans to be able to meet the power demand with the higher rate of increase.

2. Plan of power development investment

a) Ensuring the progress of putting into operation of 42 generating sets under power project with a total capacity of 11,600 MW, of which there are key power source projects:

- Projects of hydroelectric power plant: Son La, Huoi Quang, Ban Chat;

- Thermal power projects: Hai Phong 2, Quang Ninh 2, Mong Duong 1, Nghi Son 1, Thai Binh, Vinh Tan 2, Duyen Hai 1 and 3.

b) Starting the construction of 14 projects with a total capacity of 12,410 MW to put into operation in the period 2016 - 2020, including the key projects:

- Nuclear power plant projects in Ninh Thuan 1 and 2;

- Thermal power projects of Duyen Hai 3 and Vinh Tan 4;

- Bac Ai storage hydroelectric power

The list of power source projects to be put into operation and started the construction for the period 2011 - 2015 in Appendix I attached to this Decision.

3. Plan of investment in power grid development

a) Completing and putting into operation 318 transmission power grid projects of 220 - 500 kV with a total length of line of 11,577 km approximately and a total capacity of transformer station of 44,450 MVA approximately;

b) Investing in the renovation and development of the 110 kV power grid, medium and low voltage from voltage level of 35 kV to 0.4 kV; ensuring to enhance the power quality and power distribution capability.

Portfolio of transmission power grid projects of 220 - 500 kV for the period 2011 - 2015 in Appendix II issued together with this Decision.

4. Plan and target of finance and business period 2011 - 2015

a) Approving the orientation of the plan of finance and business of EVN for the period 2011 - 2015 as follows:

- Allocating the losses due to electricity business and production not included in the power price from before 2011 for the years 2012 and 2013; Allocating the differences of exchange rate in the period from 2012 to 2015 under the guidance of the Ministry of Finance;

- Total charter capital after re-evaluation of asset is 143 404 billion dong

- Increasing the annual labor productivity growth, ensuring the labor productivity growth rate higher than the growth rate of wages; reducing power used for the production, transmission and distribution of power to ensure electricity used for transmission and distribution of power in 2015 not to be higher than 8%.

- Gradually raising the price of electricity, by 2013 the average selling price of electricity shall be equal to that of the market price on average;

- In the years 2012 – 2015, the Group shall ensure its business with profits.

- By 2015, the financial targets shall meet the requirements of the financial institutions for loans: Coefficient of payable debt/ equity of less than 3 times; self-investment rate greater than 30%; coefficient of debt payment: Greater than 1.5 times.

b) Investment capital plan

Focusing all efforts and mobilizing domestic and foreign capital sources to meet investment capital need and loan payment in the period 2011 - 2015 of 501.470 billion dong. In which:

- Investment capital need is 368.759 billion dong:

+ Power source is 223.281 billion dong approximately;

+ Transmission power grid: 65.699 billion (accounting for 17,8%);

+ Low and medium voltage distribution power grid: 76 151 billion (accounting for 20,7%);

+ Other works are 3628 billion dong (accounting for 1.0%).

- Investment capital contribution of power projects: 2.042 billion dong

- Payment of principal debts and loan interest: 130,668 billion dong.

c) Plan and target of rural electrification

- By the year 2015, 100% of communes and 98% of rural are provided with electricity and enjoy the power price in accordance with current regulations;

- Continuing to allocate investment capital to renovate and upgrade the rural low voltage grid received to enhance the power supply capacity for the production and living needs in rural areas, especially in the mountainous areas and islands. Promoting rural development with the orientation by 2020, most of the rural households have access to electricity.

IV. SOLUTIONS TO IMPLEMENT 5 YEAR PLAN, PERIOD 2011 – 2015

1. Solutions in power production and supply

- Safely and stably operating the power system: Ensuring the progress of repair of power plants, the power grid works as planned;

- Reasonably mobilizing the capacity, electric energy of hydroelectric power plants, the power sources purchased from independent power plants and the customer's backup power sources;

- Ensuring the primary energy sources for electricity generation: Exploiting optimally the energy sources, particularly hydroelectric power source, gas fuel source and coal spurce in the country;

- Putting the new power plants into operation on schedule and stably.

2. Solution on management and organization

- Rationally developing the unified organizational model and management apparatus in power plants, electrical transmission and distribution companies;

- Improving the organization, gradually putting into operation 03 power generation Corporations directly under the Electricity of Vietnam;

- Reviewing and completing the Charter / Regulations on organization and operation of the affiliated units and subsidiaries; performing specialization to improve the management efficiency and reducing staff;

- Participating in the formulation and development of the electricity market in Vietnam under the roadmap approved by the Prime Minister.

3. Solution on financial guarantee.

a) Reducing the cost of production, transmission, distribution and sale of electricity:

- Thoroughly saving cost, avoiding waste, not increasing the cost of overhaul and auxiliary material cost per unit of electricity. Reducing the rate of the cost of major repairs on the fixed assets of the units;

- Rationally developing the unified organizational model and management apparatus in power plants, electrical transmission and distribution companies;

- Further improving the work of rebuilding the material rate, costs and wage rate

b) Revenue increase:

- Organizing the implementation effectively and as prescribed on electricity price adjustment according to the market mechanism;

- Directly selling electricity to all customers using electricity, especially in industrial areas, new urban areas;

- Enhancing the inspection of electricity price fixing for customers according to the purpose of power use and other electricity users, enhancing the management measures to reduce the power loss.

c) Strengthening the financial management to improve the efficiency of capital use

- Re-evaluating the assets of the parent company and its subsidiaries, making procedures for the increase of the charter capital of the Group and other affiliated units;

- Implementing the settlement of the investment capital of finished works in accordance with the provisions of the State;

- Implementing the payment and settlement of debts, materials and equipment in stock and fixed assets.

4. Solution for construction investment

a) Solution to ensure the investment capital source:

- Effectively using ODA loans and foreign loans: Quick disbursement of ODA loan signed by loan Agreement;

- Strengthening the cooperation with international organizations for ODA loans, domestic commercial banks to borrow capital for the investment of power project development;

- Adjusting the electricity selling price by the market mechanism under the Decision No. 24/2011/QD-TTg of April 15, 2011 of the Prime Minister to ensure the business has a reasonable profit rate for re-investment to expand the power development;

- Raising capital by the issue of domestic bonds and international bonds for electrical projects for the period 2011 - 2015;

- Making use of foreign loans from the credit capital source for export assistance through the bidding to select contractor to provide equipment or EPC contractor; the foreign loans can be found in the form of Supplier Credit or Buyer Credit;

- Effectively using the state budget funds to implement migration and resettlement of power source works and projects in the power grid development program in the mountainous areas and islands under the decision of the Prime Minister;

- Implementing divestment in associated companies in the areas of real estate, securities, banking and insurance; by 2015 divesting all investment capital in these areas to focus on investment of power projects.

b) Solution to ensure the progress of power source and grid:

- Raising the capacity of Project Management Board; fulfilling the rights and responsibilities under the Regulations on decentralized investment decision of the Group; executing management and closely supervising the implementation of the Contractors;

- Promptly studying and making proposal to the Prime Minister and the Ministries and sectors to resolve difficulties and obstacles to ensure quality and progress according to the actual situation of each project.

5. Applying new technology to decrease the costs and raise labor productivity:

- Gradually modernizing the management of power plants and transformer stations through the investment in the remote control equipment, being equipped with transparent communication systems; raising the information technology level to reduce operation staff in power plants and transformer stations to perform a non-person transmission transformer stations in the period 2014 - 2015;

- Looking for and making cooperation with foreign partners in the area of manufacturing electrical equipment for joint ventures and association to manufacture electrical equipment with high domestic demands for import substitution;

- Raising the capacity of project management, design and technology to actively participate in the program of auxiliary equipment localization of thermal power plants.

6. Solution of effective electricity saving and using:

- Implementing mode of stable and safe operation in electrical systems; reasonably arranging repair plan for the power plants; strengthening technical management, raising capacity of equipment using; limiting incidents, saving fuel cost and reducing power losses in order to mobilize power supply maximally and efficiently; rationally mobilizing power and electric energy of hydroelectric power plants, the power sources purchased from independent power plants and the backup power sources of customers;

- Participating in developing and promoting the implementation of policies to encourage energy saving and improve efficiency of power using.

Article 2. Implementation organization

1. The Ministries and agencies concerned under competence and functions assigned, shall direct and coordinate with the Electricity of Vietnam to organize the implementation of this Decision.

2. People's Committees of centrally-affiliated provinces and cities shall concretize the plan of power development in the area of province and city in accordance with this Decision.

3. The member Council of Electricity of Vietnam is responsible for implementation, ensuring the completion of the approved plan.

Article 3. This Decision takes effect from its signing date.

The Ministers, Heads of ministerial-level agencies, Chairman of People's Committees of centrally-affiliated provinces and cities concerned, Chairman of member Council and General Director of the Electricity of Vietnam Group are liable to execute this decision. /.