03 notes about sanctioning administrative violations when running rooftop solar power projects in Vietnam

When operating projects of rooftop solar power (“RSP”), investors shall strictly comply with the provisions of the law in various aspects. To minimize legal risks raised from the implementation of RSP projects, investors should be aware of violations that are subject to administrative sanctions. 

Through this article, BLawyers Vietnam would like to highlight several common administrative violations regarding RSP projects for investors to note.

1. Violations of the regulations on investment and construction activities of RSP projects

RSP projects shall be defined as energy works belonging to the group of industrial works and subject to regulations of construction laws. Accordingly, investors of RSP projects shall adhere to construction regulations on their projects. Investors should note the following common violations in terms of investment and construction activities of RSP projects:

(i) Violations of the regulations on selecting organizations and individuals to participate in construction activities

The investors who select ineligible organizations or individuals to participate in construction activities of RSP projects, such as construction surveying; preparation of construction planning and design; design or assessment of construction design; architectural design and assessment of architectural design; construction works; supervision of construction work, etc shall be imposed the sanctioning of administrative violations.

In addition, investors should consider the risks when engaging foreign contractors in construction activities. Specifically, the construction law specifies that the following violations will be administratively sanctioned: allowing foreign contractors to participate in construction activities without the required construction permits; failing to fulfill commitments stated in the joint venture contracts with Vietnamese contractors, or not using Vietnamese subcontractors according to regulations as for foreign contractors, etc and other relevant violations as prescribed by law.

(ii) Violations of the regulations on the preparation, appraisal, and approval of construction investment projects

Violations of the regulations on the preparation, appraisal, and approval of construction investment projects such as failing to organize preparation, appraisal, and approval of construction investment projects for works as required; failing to submit the feasibility study of construction investment to construction authorities for approval as required by law; revising construction investment projects in contravention of the regulations of the law; approving construction investment projects in violations of the regulations.

(iii) Violations of the regulations on construction design and construction estimate 

Violations of the regulations on construction design (design following fundamental design, one-step design) and construction estimate that RSP project investors often face such as failing to submit construction design to construction authorities for appraisal as required; failing to organize commissioning as required; or revising construction design without obtaining reappraisal or reapproval when changing one of the details as required by law, etc.

(iv) Other violations of the construction regulations

Other violations of the construction regulations such as violations of construction survey regulations; violations of construction commencement and execution regulations; violations of construction order regulations; violations of maintenance, operation, and utilization of structure regulations; violations of document management and storage regulations; violations of the regulations in case of construction incidents, etc.

For violations in terms of investment and construction of RSP projects, in addition to the main form of sanction being a warning and a fine, the investor must also exercise additional sanctions and other remedial measures as prescribed by law.

2. Violations of the regulations on operating licenses for RSP projects

RSP is a conditional business line which means that in addition to the business registration licenses, the investor must apply for an Electricity Activity License (“EAL”) with the competent state authority (“Competent Authority”). Investors implementing RSP projects should note the following violations of the EAL:

  1. Operating without the EAL, operating while the EAL has been revoked by the Competent Authority, or while the EAL has expired, lost, or misplaced without notifying the Competent Authority;
  2. Failing to submit annual reports or lately reporting on the operation situation as prescribed;
  3. Failing to carry out procedures for amending and supplementing the EAL when the contents of the EAL change;
  4. Failing to notify the Competent Authority before closing or transferring electricity activities if the EAL is still valid;
  5. Arbitrarily repairing, leasing, lending or renting, borrowing the EAL; and
  6. Other violations prescribed by law.

In addition to the main form of sanction and additional sanctions, the investor implementing the RSP projects shall also take remedial measures such as returning the issued EAL or repaying the illegal profits obtained from the violations.

3. Other relevant violations investors should note

During the implementation of RSP projects, investors must adhere to regulations governing the construction and installation of electrical works; electricity generation activities; electricity transmission activities; electricity distribution, and electricity purchase and wholesale. Investors operating RSP projects may face a fine of up to tens of millions of dong and other sanctions at the discretion of the Competent Authorities.

In summary, investors operating RSP projects must adhere to a range of legal requirements. Therefore, to avoid legal risks, it is critical for the investors to understand the applicable provisions on the sanctioning of administrative violations while operating RSP projects.

Should you have any questions about the above contents, please revert to BLawyers Vietnam at consult@blawyersvn.com. We are more than happy to hear from you!

Date: 25 May 2022

Writer: Linh Nguyen & My Trang

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