Numerous solar power projects (SPPs), deficient in proper planning, have been expeditiously approved for inclusion by the Ministry of Industry and Trade. Unfortunately, this agency has also provided incorrect advisory, leading to many projects benefiting from preferential electricity pricing (Feed-in Tariff or FIT) amounting to trillions of dong…

“Fictitious” Approvals

The Government Inspectorate of Vietnam (GIV) yesterday (25/12) published its review findings and recommendations regarding the compliance with policies and laws in managing and implementing the planning and investment of power projects in line with the seventh National Power Development Plan (NPDP VII) and its revisions. In this conclusion, GIV identified several shortcomings, limitations, faults, and violations in the management and execution of the adjusted NPDP VII.”

The Government Inspectorate of Vietnam (GIV) identified numerous instances of non-compliance and breaches in the management and implementation of solar power projects. Specifically, the formulation of the “National Solar Power Development Plan up to the year 2025, Vision to 2035” was not properly aligned with the planning period up to the year 2020 as established in Decision No. 11/2017/QD-TTg regarding the Mechanism to Encourage the Development of Solar Power Projects in Vietnam. Additionally, this was inconsistent with the revised period of NPDP VII for 2016-2020.

Regarding the approval of an additional 168 solar power source projects with a total capacity of 14,707 MW submitted for inclusion into the electricity plan for the period 2016-2020, GIV reports that the Ministry of Industry and Trade approved the inclusion in the provincial-level electricity plan of 114 solar power projects with a total capacity of 4,166 MW to be operational within the development to operational period of 2016-2020.

Besides the 14 projects (870 MW) approved in the electricity development plan for four provinces before 2016, updated for the period 2016-2020, and 8 projects (122 MW) already approved in the electricity development plan for five provinces, the remaining 92 projects with a total capacity of 3,194 MW were individually approved for inclusion in the electricity development plan of 23 provinces based on proposals from the People’s Committees of these provinces, originating from requests by investors, without any legal basis in planning (lacking any and all planning), violating Clause 1, Article 4 of Decision No. 11/2017/QD-TTg.”

Similarly, the Ministry of Industry and Trade’s advisory and proposal to the Prime Minister for the individual approval of an additional 54 projects with a total capacity of 10,521 MW into the adjusted NPDP VII, based on proposals from the People’s Committees of various provinces originating from investor requests (23 projects with a total capacity of 5,200 MW to be operational within the period 2016-2020; 31 projects with a total capacity of 5,321 MW to be operational within the period 2021-2025), was executed without establishing a national solar power development plan up to the year 2020, as required by Clause 2, Article 4 of Decision No. 11/2017/QD-TTg, thus lacking a legal basis in planning.

Moreover, the approval of numerous solar power source projects, primarily in the Central and Highland regions, necessitated a comprehensive plan for investment, transmission grid, and capacity release, was not implemented as per GIV’s analysis.

The Inspectorate also noted that the Ministry of Industry and Trade’s approval of solar power projects not exceeding 50 MW to be included in the provincial-level electricity plan and the Prime Minister’s approval of projects over 50 MW for inclusion in the adjusted NPDP VII, based on proposals from the People’s Committees of various provinces and originating from investor requests, were conducted without any planning adjustments, and without establishing a plan as mandated by Clause 2, Article 4 of Decision No. 11/2017/QD-TTg. This resulted in approvals lacking a legal basis in planning, overall coherence, and a foundation for investment management, leading to non-transparent and potentially exploitative approval processes.”

Furthermore, the approval of 168 solar power projects totaling 14,707 MW/850 MW, which is 17.3 times higher than the capacity approved in the adjusted NPDP VII, is noteworthy. Notably, the individual approval of 137 projects with a total capacity of 9,366 MW operational within the period 2016-2020; by the end of 2020, the actual invested capacity of grid-connected solar power was 8,642 MW, 10.2 times higher than the capacity approved for 2020 in the adjusted NPDP VII (850 MW), and even exceeding the planned capacity for 2025 (4,000 MW).

Additionally, the rooftop solar power (RSP) generating capacity has also been rapidly increased with a large capacity of (7,864 MW), raising the total capacity of solar power sources to 16,506 MW, 19.42 times higher than the approved capacity in the adjusted NPDP VII, resulting in a shift in the power source structure from 1.4% to 23.8% according to the NPDP VII adjustment.

Moreover, there are 6 projects or components of projects (452.62 MW) that have been completed but are not yet commercially operational…

And Advisory “Errors”

In inspecting the issuance and advisory of regulations placed upon RSP management, GIV discovered that the Ministry of Industry and Trade had issued and advised on some legal documents and implementation guidelines with several loopholes and shortcomings, potentially leading to the exploitation of policies for rapid investment in many large capacity RSP systems and clusters, which were not stringently managed in the implementation process, owing to a lack of coordination between the Ministry of Industry and Trade, Provincial People’s Committees, and EVN. Many systems/clusters of RSP were invested and constructed on agricultural and forestry land with large areas under the guise of new farming and breeding farm investments, violating planning and land use plans, yet benefitting from the RSP incentive mechanism (FIT price of 8.38 UScents/kWh for 20 years), which requires reassessment and reconsideration in applying the FIT price.”

Regarding power source investment, GIV affirmed that the investment in coal-fired and gas-fired power sources has not been completed as per the plan (only achieving 82%). The solar power capacity invested and operational by the end of 2020 reached 16,506 MW, of which the grid-connected solar power capacity was 8,642 MW, 10.2 times higher than the planned capacity (850 MW), showing rapid and concentrated development mainly in the Central and Highland regions, areas with low load demand, leading to an imbalance in the power source structure.

The responsibility for the incomplete investment in coal-fired and gas-fired power as per NPDP VII lies with EVN, PVN, and TKV.

In terms of power grid investment, EVN is identified as having not completed the investment in the power grid as assigned in the adjusted NPDP VII, particularly in low achievement rates for power line investment (58.55% for 500kv lines, 52.97% for 220kv lines), 87.07% completion for 500kv substations, and 92.63% for 220kv substations, with many projects behind schedule.

The investment in coal-fired and gas power also did not meet the plan, especially with low rates of power line investment, but the total installed capacity of the power sources increased by 15.57% compared to the plan. Notably, the grid-connected solar power and rooftop solar power invested by the end of 2020, with a total capacity of 16,506 MW due to the addition of many projects, and the encouragement of rooftop solar power investment was not stringently managed and controlled, leading to a significant increase in solar power capacity…

GIV also identified several shortcomings and violations in the advisory and implementation of Decision No. 13/2020/QD-TTg dated 06/04/2020 on the mechanism to encourage the development of solar power in Vietnam. This led to 14 solar power projects benefitting from the preferential price of 9.35 UScents/kWh incorrectly, as per Resolution No. 115/NQ-CP. From 2020 to 30/06/2022, EVN had to pay an additional amount of approximately 1,481 billion dong compared to payments made as per the correct subjects in Resolution No. 115/NQ-CP. Additionally, the Ministry of Industry and Trade’s advisory on the conditions for grid-connected solar power projects to apply the FIT price of 7.09 UScents/kWh under Clause 1, Article 5 of Decision 13/2020/QD-TTg was not in accordance with the conclusions of the Standing Government at Notice No. 402/TB-VPCP dated 22/11/2019 of the Government Office.”

Transfer To Central Inspection Commission For Consideration Of Officials Under The Management Of The Political Bureau And Secretariat

Based on the inspection conclusions, GIV recommended that the Prime Minister assign the Ministry of Public Security to take over the case files and documents to consider and investigate as per legal regulations on nine matters, including the issuance of guidance and advisory on the development of RSP, which revealed loopholes, shortcomings, and violations, leading to rapid investment in many large-capacity RSP systems and clusters on agricultural and forestry land with large areas under the guise of new farming and breeding farm investments, violating planning and land use plans, while still benefiting from the RSP incentive mechanism (FIT price of 8.38 UScents/kWh, applicable for 20 years).

The management and use of land for the investment and construction of solar and wind power projects on land reserved for national mineral reserves/exploration, exploitation, processing, and use of titanium ore in Binh Thuan Province; the management and use of land for the investment and construction of solar power projects encroaching on the irrigation planning and management of the Tan My irrigation system project in Ninh Thuan Province… were also transferred to policing authorities by GIV.

Besides recommending related units to conduct reviews and handle responsibilities as per legal regulations, the Inspection Agency reported that it had transferred the inspection conclusions to the Central Inspection Commission for consideration and handling by officials under the management of the Political Bureau and Secretariat related to the identified shortcomings, faults, and violations.

Additionally, GIV also provided specific recommendations for addressing the economic considerations for 14 solar power projects that had been and are continuing to enjoy the preferential pricing mechanism not in accordance with the contents of Government Resolution No. 115/NQ-CP dated 31/08/2018, to report to the Prime Minister. The Ministry of Industry and Trade has been requested to coordinate with EVN to review and address solar and wind power projects that have been recognized for commercial operation date (COD) and are enjoying the benefits of the FIT pricing structure without the approval of the competent state authority in written form accepting the construction project completion by the investor. In the process of review, if signs of criminal law violations are detected, cases designated as such will be subject to transfer to the investigative agency for consideration and processing as per regulations.

English translation by Le & Tran.