Biomass power projects can enjoy preferential treatments in terms ofinvestment capital, investment credit, export credit and import taxexemption of materials and other goods that make fixed assets for theprojects , Vietnam Economic News reported on April 18.

Accordingto the newspaper, preferential treatments for biomass power projectswill take effect from May 10, 2014 under the Decision 24/2014/ND-CP.

Accordingto the decision, plans for development and use of biomass energy atnational and district levels are set up once for the period until 2020with vision toward 2030 and will be adjusted and supplemented whennecessary. After that period, development plans for biomass power willbe integrated into power development plans at national and districtlevels.

The plans for biomass power apart from meeting allconditions regulated at Article 72 of the Construction Law in terms ofsite plan and sources of capital, investors of biomass powerconstruction works also have to satisfy some conditions as follows:investment certificates, agreement documents to buy electricity of thebuyers, agreements for power connections with power transmission ordistribution companies and opinions of state agencies according tocurrent regulations on management and investment in construction works.

Thedecision also states that within 12 months of receiving investmentcertificates, if investors do not launch key work items of the biomasspower projects, or at a maximum of 24 months without operation since itcommits to operate the biomass power projects, people's committee atdistrict levels are responsible for the revocation of investmentcertificates, informing state agencies to hand over the projects toother investors (except for cases with legitimate reasons approved bythe agencies).

Apart from regulations on planning, Decision24/2014/ND-CP also specifies support mechanisms to develop the biomasspower projects. The electricity buyers (Electricity of Vietnam) areresponsible for buying all power produced from the biomass power plants.Within six months of the day that investors in biomass power projectsmake written proposals on selling electricity, EVN will have to signelectricity purchase contracts with them. A contract will be valid for20 years, which can be extended later.

Biomass power projects canenjoy preferential treatments in terms of investment capital,investment credit, export credit and import tax exemption of materialsand other goods that make fixed assets for the projects. Land lease andland use fees for biomass power projects, grid systems and transformerstations connecting to the national grid will be exempted and reducedaccording to current laws applied for projects in the fields ofinvestment incentives.

In terms of electricity sale prices, asfor biomass power projects connecting to the national grid, biomasselectricity will be priced at 1,220 VND, equivalent to 5.8 cents [USdollar] per kW (excluding value added tax VAT) and can be adjusteddepending on the VND/USD exchange rate variations. Other biomass powerprojects that apply the Avoided Cost Tariff, the Ministry of Industryand Trade will keep a watch and propose purchasing prices and report tothe Prime Minister for approval.

Investors draw up electricityprice projects, determine total support levels from the state budget andsubmit to the MOIT for appraisal and report to the Prime Minister forapproval. Total support levels will be extracted from the VietnamEnvironment Protection Fund.

Biomass power is the use of biomassto create electricity. This is a form of recycled energy and has largevolumes, thus has attracted much attention for investment anddevelopment from many countries.-VNA