On 8 May 2025, the Government issued Decree No. 100/2025/ND-CP on amending and supplementing a number of provisions of Decree No. 56/2025/ND-CP dated 3 March 2025 (“Decree 56”) on a number of articles of the Law on Electricity on electricity development planning, electricity network development plans, electricity project investment and construction, and bidding for investor selection in electricity business projects (“Decree 100”). Decree 100 introduces a legal framework for domestic gas and LNG power projects to ensure energy security and to improve operational efficiency of Vietnam’s energy sector. As the key change, Decree 100 amends Article 15 of Decree 56 to provide a mechanism to ensure the consumption of domestically exploited natural gas sources; principles of transferring fuel prices to electricity prices and long-term minimum contract electricity output for gas-fired power projects:
- Mechanism regarding domestic gas power projects: Maximum dispatch priority is determined by grid demand and gas availability. This applies to projects that begin operations before 1 January 2036. This priority remains in in effect until domestic gas is no longer used by the plant. In case the domestic supply is inadequate, flexible fuel options are available.
- Mechanism regarding LNG power projects: A minimum contract volume of 65% of the average yearly production is guaranteed. This guarantee is valid for debt repayment for a maximum of ten years after the date of operation. After the initial period, contract volumes are negotiable. This mechanism applies to projects whose operations begin prior to 1 January 2031.
Following the methodology of PDP8, Decree 100 was issued to facilitate the energy transition, balance the needs for energy security, and provide investors with realistic timetables for planning and execution.
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Please do not hesitate to contact Dr. Oliver Massmann under [email protected] if you have any questions on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.
