Legal newsletter in January 2024 (Petrol and oil trading, Insurance business, Solar power and wind power generation pricing framework)

Legal newsletter in Jan

Our Newsletter #18 would lead you on the following:

LEGAL UPDATE

I. Resolving inadequacies in petrol and oil trading

On 17 November 2023, the Government issued Decree No. 80/2023/ND-CP (“Decree 80/2023”) amending and supplementing some articles of Decree No. 95/2021/ND-CP dated 01 November 2021 and Decree No. 83/2014/ND-CP dated 03 September 2014 of the Government on petrol and oil trading, which takes effect from the date of promulgation with the notable contents below.

1. Price formula and method of operating gasoline prices

The time for adjusting and announcing gasoline prices is reduced from 10 days to 7 days and is fixed every Thursday.

Time to review and announce the cost of transporting petrol and oil from abroad to Vietnamese ports; from domestic oil refineries to the port, premium to calculate petrol and oil prices from domestic production sources reduced from 06 months to 03 months.

2. Petrol and oil distribution system
  1. Petrol and oil retail agents are only allowed to enter into petrol and oil retail agent contracts with no more than 03 traders that are either petrol and oil distributors or petrol and oil wholesalers.
  2. Decree 80/2023 abolishes the type of general petrol and oil retail agent in the intermediary stage of a petroleum business. Specifically:
    • Traders that have been issued certificates of eligibility for petrol and oil general agents shall be allowed to continue their business in accordance with regulations on petrol and oil general agents in Decree No. 95/2021/ND-CP and Decree No. 83/2014/ND-CP until their certificates of eligibility expire;
    • Except for the above case, regulations on petrol and oil general agents in Decree No. 95/2021/ND-CP and Decree No. 83/2014/ND-CP cease to have effect from the effective date of this Decree.
3. Regulations on traders’ petrol and oil trading licenses
  1. Regarding storage conditions when granting licenses to wholesalers, and petrol and oil distributors, regulations have been amended and supplemented to strengthen management, supervision, inspection and decentralization to enable the local Department of Industry and Trade to supervise and check compliance with regulations.
  2. Regarding the revocation of petrol and oil trading licenses, Decree 80/2023 has amended and supplemented regulations to ensure compliance with the law and avoid sudden disruption of petroleum supply, especially in times when domestic supply is affected and scarce. For example, the Department of Industry and Trade revokes certificates of eligibility for petrol and oil retail agents in the following cases:
    • The trader stops acting as a petrol and oil retail agent and has requested the relevant Department of Industry and Trade in writing to revoke its certificate of eligibility for petrol and oil retail agents;
    • The trader has ceased all of its petrol and oil trading activities for 30 days or more;
    • The trader is dissolved or declared bankrupt in accordance with regulations of law;
    • The trader has committed violation(s) regarding eligibility requirements for petrol and oil retail agents and failed to remedy such violation(s) within 90 days from the issue date of the decision to impose administrative penalties;
    • A trader that is facing penalties for a violation against regulations on quantity and quality of petrol and oil sold on the market and other relevant regulations of law on quality re-commits such a violation.
II. Guiding implementation of several articles of the Law on Insurance Business

On 02 November 2023, the Ministry of Finance issued Circular No. 67/2023/TT-BTC (“Circular 67/2023”) on guidelines for the law on insurance business and Decree No. 46/2023/ND-CP dated 01 July 2023 of the government on elaboration of the law on insurance business, which takes effect from the date of promulgation with the following notable points:

1. Regulations on providing insurance services and products in an online environment

Circular 67/2023 stipulates that insurance enterprises and branches of foreign non-life insurance enterprises are allowed to carry out the process of providing insurance services and products in an internet environment for some insurance products as follows:

  1. Microinsurance, health insurance, term life insurance with a term exceeding one year, and other insurance products with a term of one year or less, for which insurers, reinsurers, branches, or mutual micro-insurers do not require appraisal or risk assessment prior to entering into an insurance policy, as specified in Item II.2.(i) below.
  2. Health insurance, term life insurance with a term of one year or less, motor vehicle insurance, trip and tourism insurance provided in any form specified in Item II.2 below.
2. Forms of provision of insurance services and products online

Circular 67/2023 adds new regulations on forms of providing insurance services and products in an online environment, including:

  1. A portal/website with registered domain name as per applicable legal regulations, e-commerce selling website, or networked applications that enable service users or policyholder to access the portal, etc. created by insurers, branches of foreign non-life insurers, and mutual micro-insurers for online provision of insurance service and productions;
  2. Portals/websites with registered domain names as per applicable legal regulations, e-commerce selling websites, e-commerce service websites, etc. that are created by insurance brokers or insurance agents for providing online insurance. E-commerce service websites include the following types:
    • E-commerce trading floor;
    • Other types of websites prescribed by the Ministry of Industry and Trade.
3. Subjects allowed to buy life insurance

Circular 67/2023 has set a limit on the age to buy life insurance; specifically, life insurance buyers must meet the following conditions:

  1. Be an organization legally established and operating in Vietnam, or an individual in Vietnam aged 18 years or older with active legal capacity at the time of entering into the insurance policy;
  2. Meeting the conditions to buy insurance according to insurance rules, conditions and terms.
4. Regulations on the waiting period in life insurance contracts

The waiting period is the time during which insurance events occur and will not be paid by insurance enterprises or branches of foreign non-life insurance enterprises for certain health insurance benefits.

If previous regulations on waiting times were determined by insurance companies, now waiting times must comply with the provisions of Circular 67/2023, specifically:

  1. The waiting period shall be calculated from the start date of the insurance term or the date of the most recent contract reinstatement;
  2. No waiting period shall be applied in the case of accidents;
  3. As for the case of diseases, the maximum waiting period is 90 days. As for the case where the insurer agrees to insure for pre-existing diseases, the maximum waiting period is 1 year;
  4. As for maternity benefits, the maximum waiting period is 270 days;
  5. In the case of products with a waiting period outside the waiting period specified in points c and d of this clause, the insurer or branch of a foreign non-life insurer shall provide a clear explanation in the documentation explaining methods and factors for calculating premiums.
5. Regulations on bonuses and support for insurance agents and other benefits as agreed in the insurance agent contract

Circular 67/2023 has guidance on bonuses, insurance agent support and other benefits as agreed in agency contracts of life insurance enterprises, implemented as follows:

  1. For agents who market new insurance policies:
    • Insurance policies with a term of 1 year or less and renewable annually: Total bonuses, support, and other benefits of insurance agents in each fiscal year do not exceed 20% of the actual insurance premium.
    • Insurance policies with a term of more than 1 year: Total bonuses, support, and other benefits of insurance agents do not exceed 30% of the actual first-year insurance premium.
  2. For agents who service renewed insurance policies with a term of more than 1 year: Total bonuses, support, and other benefits of insurance agents in each fiscal year do not exceed 7% of the actual renewed insurance premium collected in the fiscal year.
III. Regulations on methods of building electricity generation price framework applicable to solar and wind power plants

On 01 November 2023, the Ministry of Industry and Trade issued Circular 19/2023/TT-BCT (“Circular 19/2023”) regulating the method of building a power generation price framework applicable to solar and wind power plants, which takes effect from 19 December 2023 with the following contents:

1. Subjects of application

Circular 19/2023 stipulates 03 groups of applicable subjects as follows:

  1. Vietnam Electricity;
  2. Organizations and individuals participating in investment in solar and wind power plants;
  3. Other relevant organizations and individuals.
2. Principles for building an electricity generation price framework

Principles for building the electricity generation price framework for wind and solar power plants are determined as follows:

  1. The electricity generating price range of ground-mounted solar power plants, floating solar power plants, inland wind power plants, offshore wind power plants, and offshore wind power plants ranges from the minimum value (VND0/kWh) to highest value, which is established and issued annually.
  2. The maximum value for solar power plants is determined by the standard electricity price using the following method:
    • Method for determining the electricity generation price of a standard solar power plant.
    • Method for building the average fixed price of a standard solar power plant.
    • Method for establishing the fixed operating and maintenance price of standard solar power plants.
  3. The maximum value applicable to wind power plants is the electricity generation price of a standard wind power plant determined according to the following methods:
    • Method for determining the electricity generation price of a standard wind power plant.
    • Method to build the average fixed price of a standard wind power plant.
    • Method for establishing fixed operating and maintenance prices of standard wind power plants.
  4. The electricity generation price framework for ground-mounted solar power plants and floating solar power plants should be based on the average annual radiation intensity of the three regions: North, Central and South.
  5. Selecting a standard solar power plant to build a power generation price framework for North, Central and South regions.
3. Regulations on orders and procedures for building electricity generation price frameworks

Step 1: Before November 1 each year, Vietnam Electricity Group has the following responsibilities:

  1. Proposing the selection of a standard solar power plant and a standard wind power plant to calculate the electricity generation price framework.
  2. Calculating or hiring a consultant to select a set of parameters and calculate the electricity generation price of a standard solar power plant or standard wind power plant.
  3. Preparing documents to calculate the electricity generation price bracket for ground-mounted solar power plants, floating solar power plants, inland wind power plants, offshore wind power plants, and offshore wind power plants for the next year, and submitting it to the Electricity Regulatory Authority for appraisal.

Step 2: Within 05 working days from the date of receiving the dossier to calculate the electricity generation price framework, the Electricity Regulatory Authority is responsible for checking the detailed content of the dossier, completeness and validity of the dossier.

In case of necessity, the Electricity Regulatory Authority shall issue a written request to Vietnam Electricity Group to amend, supplement, or clarify the dossier’s contents. No later than 15 working days from the date of receiving the request to amend, supplement, or clarify the contents in the records of the Electricity Regulatory Authority, Vietnam Electricity is responsible for sending a written report, explaining the content in the dossier upon request.

Step 3: Within 20 working days from the date of receiving the valid dossier and the report clarifying the contents in the dossier of Vietnam Electricity Group, the Electricity Regulatory Authority is responsible for organizing the Appraisal of the electricity generation price framework.

In case of necessity, the Electricity Regulatory Authority shall organize consultation on the electricity generation price framework through the Advisory Council established by the Ministry of Industry and Trade or the affected subjects.

Step 4: No later than 15 working days from the date of organizing the appraisal of the electricity generation price framework, the Electricity Regulatory Authority is responsible for submitting to the Minister of Industry and Trade for approval of the electricity generation price framework for the following year and publishing it on the website.

If next year’s electricity generation price framework has not been announced, it is allowed to temporarily apply the most recently effective electricity generation price framework.

4. Application for approval of electricity generation price framework

According to the provisions of Circular 19/2023, the application file for approval of the electricity generation price framework includes:

  1. Proposal of Vietnam Electricity Group on selection of parameters and calculation of electricity generation price framework.
  2. Parameter table and documents for calculating electricity generation prices for standard solar power plants and standard wind power plants as prescribed in Chapter II and the Appendix issued with this Circular.
  3. Documents related to parameters for calculating electricity generation prices.

The above is not official advice from BLawyers Vietnam. If you have any questions or suggestions about the above, please contact us at consult@blawyersvn.com. We would love to hear from you.

Date: 26 Jan 2024

Writer: BLawyers Vietnam

Legal News and Update Team

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