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The new Law on amending and supplementing a number of laws No. 03/2022/QH15 (the “New Law”) was passed by the National Assembly of Vietnam on 11 January 2022 and took effect from 1 March 2022. The New Law provides changes to nine current laws, which includes the Law on Electricity 28/2004/QH11, as amended from time to time (the “Law on Electricity 2004”).
Accordingly, the New Law amends Article 4 of the Law on Electricity 2004 which now allows all economic sectors, including the private sector to (i) invest in the construction of the transmission grid; and (ii) operate the transmission grid they have invested in constructing. The purpose of this change is to promote the involvement of private investors in the construction of the transmission grid to meet the demand for a sustainable and stable transmission system due to the rapid development of renewable energy industry in Vietnam in recent years.
Also under Article 4 of the Law on Electricity 2004, as amended by the New Law, the state of Vietnam maintains its monopoly over the following activities:
- management of the national power grid system; and
- construction and operation of large electricity plants of particular socio-economic importance and of significance in terms of national defense and security.
Regarding the overall operation of the transmission grid, while the New Law maintains the monopoly of the State, it expressly excludes the State from operating the transmission grid sections that are developed by the private sector.
This new change brought by the New Law will open up more opportunities for private investors, including foreign investors, to become involved in the energy industry in Vietnam, especially in the construction and operation of the transmission system. More detailed regulations are expected in order to clarify the distinct and potentially overlapping responsibilities of State and private grid operations.
We will keep you updated on any further guidance or regulations of the state authorities of Vietnam in this regard.
The information provided here is for information purposes only, and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.
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Kevin Hawkins
Partner, Vietnam
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