VIETNAM Law and Practice Contributed by: Adam Moncrieff and Thuy Huynh, Orrick
From a lender’s perspective, timing conditions are often the most sensitive. Vietnam has become increas- ingly focused on whether planned projects actually progress, especially after delays in several important project categories. If a project misses key milestones, the developer may face pressure to amend approv- als, justify delays or in some cases risk adverse treat- ment in future planning or licensing discussions. That makes milestone management a legal issue, not just a project management issue. Changes to the terms of approvals are possible, but are typically uncommon or not allowed if the change goes to the core of the project. A small technical update may be manageable. A change in technolo- gy, scope, capacity, development pathway, location, marine impact, fuel type or environmental footprint is much more significant. In practice, the more closely the change touches the original planning basis for the project, the more difficult and time-consuming the amendment process becomes. 3.4 Eminent Domain, Condemnation and Expropriation Rights to Construct and Operate Generation Facilities Private generation developers do not usually enjoy direct eminent domain rights in Vietnam. They cannot simply condemn land in their own name for a power plant. Instead, land access is achieved through the state’s land administration system, including land allocation, land lease, land recovery and compensa- tion processes, or through negotiated arrangements where the legal structure permits. This distinction is important because many foreign investors assume that once a project is approved, site control will fol- low automatically. In Vietnam, that is rarely the case. Compensation and resettlement are governed primar- ily by land law and local implementation plans. The state determines the applicable framework, but the practical process is highly localised and can be one of the most challenging and time-consuming aspects of project implementation. Delays are common until previous land users agree compensation terms, where replacement land is not ready, or where multiple agen- cies need to co-ordinate site clearance. These are not minor administrative issues; they are often one of the most common and cause significant delays.
The commercial impacts can be significant. A power generation project may have a viable tariff and strong sponsor support, but still fail to complete construction and achieve commercial operations because of delays in site availability, land clearance and reaching agree- ment with previous land users on compensation. For that reason, project developers and lenders pay close attention to the land clearance strategy, the province’s track record and whether the approval package puts the risk mainly on the developer or leaves room for state assistance. Developers may often need to top up compensation packages brokered by local authorities to expedite reaching agreement with previous land users. Land risk and delays around site delivery are very real issues in Vietnam. 3.5 Decommissioning a Generation Facility Vietnam does not yet have a deeply developed, tech- nology-neutral decommissioning code for all types of generation assets. The legal obligations usually arise from a combination of environmental law, land obli- gations, project approvals, construction rules, waste management requirements and licence conditions. That means decommissioning is dealt with as part of broader project compliance rather than through a single comprehensive closure regime. The approach is workable, but it leaves important questions to be addressed case by case. For conventional thermal and hydropower assets, the state’s expectations are relatively clear at a high level. Operators are expected to close facilities safely, man- age residual environmental risks, dispose of equip- ment lawfully and restore or hand back land in accord- ance with the approved legal basis for the site. What is less clear is the extent to which long-term financial provisioning will be standardised across technologies. Vietnam has not yet adopted a uniform sector-wide decommissioning fund model for ordinary generation assets. An exception was the BOT power scheme for ther- mal power projects developed by foreign developers. Some of the earliest projects developed and oper- ated under that scheme have now been success- fully handed back to EVN. The project concession agreements for these BOT power projects contained detailed requirements on project hand-over at the end
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