Vietnam: Circular Regulating the Operation of the Competitive Electricity Generation Market

Last Updated: 22 July 2010
Article by Dao Nguyen, Thinh Phu Dan and Kevin B. Hawkins

Originally published 22 July 2010

Keywords: Electricity Law, electricity market, Vietnam, State ownership, competitive electricity generation market

In 2004, Vietnam passed the new Electricity Law that outlines the development of a competitive electricity market in 3 phases: in Phase 1, it is contemplated that a competitive power generation market would be established; Phase 2 envisions the development of a competitive electricity wholesale market, and Phase 3 involves development of a competitive electricity retail market. It is estimated that the market restructuring process will take up to 20 years to complete. If successful, a competitive generation market will replace the current State ownership. Generation will be separated from transmission and distribution functions and the current State owned monopoly, Electricity of Vietnam, will be restructured and all subsidiaries privatised. It is envisioned, however, that the transmission network will continue to be State owned. Such market reforms aim to create competition in electricity generation, thereby increasing the effectiveness and responsibility of each power plant and benefiting consumers. To implement Phase 1, the Ministry of Industry and Trade ("MOIT") issued Circular No. 18/2010/TT-BCT on 10 May 2010 regulating the operation of the competitive electricity generation market ("Circular 18").


Circular 18 regulates activities of a competitive electricity generation market and responsibilities of the participants in such market. It is issued to implement legislation already in place with respect to the establishment of a competitive electricity generation market. We discuss these below.

Legal Framework for the Competitive Electricity Generation Market

With the enactment of the Electricity Law on 3 December 2004 ("Electricity Law"), the Government of Vietnam started to pursue a far reaching electricity sector reform policy:

  • The State policy for the electricity sector is to develop an electricity market on the principles of transparency and competition to achieve economic efficiency, to attract investments from both State and non-State sources to the energy sector and to ensure legitimate rights of consumers and investors in this sector.
  • The State monopoly in this sector will be limited to power transmission, national load dispatch and strategically important large power plants, leaving power distribution and non-strategic power generation to potential private sector investors.
  • The State encourages investments from foreign private sector investors and joint ventures between foreign investors and domestic enterprises in the electricity sector.

The MOIT is entrusted with the responsibility of establishing a competitive electricity market in Vietnam.

The Electricity Regulatory Authority of Vietnam ("ERAV") was established on 19 October 2005 by the Prime Minister under Decision No. 258/2005/QD-TTg. ERAV is a department under the MOIT and is empowered with, among other things, the following key functions:

  • Establishing the master plan for electricity sector development;
  • Advising the MOIT on power market structure and industry restructuring policy;
  • Designing the electricity market for each phase and regulating competition among the electricity market participants;
  • Issuing and enforcing licenses to electricity sector entities;
  • Establishing the tariff setting principles including transfer pricing between sector entities; developing tariffs for regulated activities;
  • Adopting electricity purchase agreements of the single buyer;
  • Ensuring the procurement of adequate new generation and transmission capacity;
  • Monitoring the progress of implementation of new projects in generation and transmission projects;
  • Monitoring the functioning of the electricity market.

Road Map for Electricity Market Development

To implement Article 18.2 of the Electricity Law, the Prime Minister has approved the roadmap, and the conditions for establishing and developing a competitive electricity market in Vietnam in Decision No. 26/2006/QD-TTg dated 26 January 2006 ("Decision 26").

Pursuant to Decision 26, Vietnam's electricity market will be established and developed in 3 phases:

  • Phase 1 (2005 - 2014): Competitive electricity generation market
  • Phase 2 (2015 - 2022): Competitive electricity wholesale market
  • Phase 3 (from 2022 onwards): Competitive electricity retail market

In Phase 1, a competitive electricity generation market will replace the current system of State monopoly and subsidies.

In Phase 2, a competitive wholesale power market will be established. The distribution companies owned by the Electricity of Vietnam Group will be allowed to convert into independent power producers (IPPs) to directly buy electricity from generation entities.

The generation entities, in turn, will compete to sell to these IPPs. The wholesalers will also compete to sell to the distribution companies and large wholesale customers.

In Phase 3, eligible customers will be allowed to choose electricity suppliers that best suit their demand (retailers) or purchase electricity directly from the spot market.

Obligation to Participate in the Electricity Market

Circular 18 requires all licensed power plants with a capacity of 30MW and above to join the competitive power generation market except the following:

  • Power plants under Build-Operate-Transfer form of investment;
  • Wind power plants and geo-thermal power plants; and
  • Power plants which belong to industrial parks and which sell only a part of their total output to the national electric grid and cannot determine their long-term electricity selling plan.

In addition, Circular 18 provides plans for operating the electricity market including real-time operation, export and import, calculation of power prices, electricity market software, information systems and regulations for information disclosure and reports on the operating of the electricity market. It also sets out provisions for dispute resolution and deals with violations.

Circular 18 took effect on 25 June 2010.

Learn more about our Vietnam offices and Infrastructure practice.

Visit us at

Copyright 2010. JSM, Mayer Brown International LLP and/or Mayer Brown LLP. All rights reserved. Mayer Brown is a global legal services organization comprising legal practices that are separate entities ("Mayer Brown Practices"). The Mayer Brown Practices are: JSM, a Hong Kong partnership, and its associated entities in Asia; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; and Mayer Brown LLP, a limited liability partnership established in the United States. The Mayer Brown Practices are known as Mayer Brown JSM in Asia.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein. Please also read the JSM legal publications Disclaimer.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.