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EN

THIS ACTION IS FUNDED BY THE EUROPEAN UNION

ANNEX

of the Commission Implementing Decision on the financing of the Annual Action Programme

in favour of Viet Nam for 2020

Action Document for the EU-Viet Nam Sustainable Energy Transition Programme

ANNUAL PROGRAMME

This document constitutes the annual work programme in the sense of Article 110(2) of the

Financial Regulation and action programme/measure in the sense of Articles 2 and 3 of

Regulation N° 236/2014.

1. Title/basic act/

CRIS number

EU-Viet Nam Sustainable Energy Transition Programme

CRIS number: ACA/2020/040-898

financed under the Development Cooperation Instrument

2. Zone benefiting

from the

action/location

Viet Nam

The action shall be carried out at the following location: Viet Nam.

The project team will be based in Hanoi.

3. Programming

document Addendum N°1 to Multiannual Indicative Programme for Viet Nam

2014-2020- C(2018)4741

4. SDGs Main SDGs on the basis of section 4.4: 7 & 13

5. Sector of

intervention/

thematic area

Sustainable Energy DEV. Assistance: YES

6. Amounts

concerned Total estimated cost: EUR 142 053 752

Total amount of EU budget contribution: EUR 142 000 000, of which

EUR 121 000 000 for budget support and

EUR 21 000 000 for complementary support.

This action is co-financed in joint co-financing by GGGI for an amount

of EUR 53 752

7. Aid

modality(ies)

and

implementation

modality(ies)

Budget Support

Direct management through:

- Budget Support: Sector Reform Performance Contract

- Grants

- Procurement

Indirect management with:

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- United Nations Industrial Development Organization (UNIDO)

- Global Green Growth Institute (GGGI)

8 a) DAC code(s) 23183 - Energy conservation and demand-side efficiency (50%)

23210 - Energy generation, renewable sources – multiple technologies

(40%)

23110 - Energy policy and administrative management (10%)

b) Main Delivery

Channel

12000 - Recipient government

9. Markers

(from CRIS DAC

form)

General policy objective Not

targeted

Significant

objective

Principal

objective

Participation development/good

governance ☐ ☐

Aid to environment ☐ ☐

Gender equality and Women’s and

Girls' Empowerment

☐ ☐

Trade Development ☐ ☐

Reproductive, Maternal, New born

and child health

☐ ☐

RIO Convention markers Not

targeted

Significant

objective

Principal

objective

Biological diversity ☐ ☐

Combat desertification ☐ ☐

Climate change mitigation ☐ ☐

Climate change adaptation ☐ ☐

10. Global Public

Goods and

Challenges (GPGC)

thematic flagships

Switch to Green

Global Climate Change Alliance +

SUMMARY

In order to sustain its ambitious socio-economic development pathway, Viet Nam needs to

further develop its provision of reliable and sustainable energy services. In light of Viet Nam's

climate change commitments, the need for mainstreaming environmental protection and

concerns about energy security, the Government of Viet Nam aims to accelerate its energy

transition towards a higher share of clean and renewable energy, while at the same time

improving energy performance and reducing energy losses.

Building on the ongoing Energy Sector Policy Support Programme to enhance Access to

Sustainable Energy in Rural Areas of Viet Nam, which started in 2017, this action aims at

contributing to a sustainable energy transition in Viet Nam. Its specific objectives are:

1. Improved energy efficiency;

2. Larger share of renewable energy in the energy mix; and

3. Improved performance of the Viet Nam Energy Information System.

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The action will specifically support the implementation of the third phase of the "Viet Nam

National Energy Efficiency Programme” (VNEEP3) and the "Renewable Energy

Development Strategy" (REDS).

The action falls within the Sustainable Energy focal sector of the EU-Viet Nam Multiannual

Indicative Programme 2014-2020 (MIP). The action is fully in line with the MIP's specific

objectives 1.1 "The production and consumption of energy in Viet Nam is more efficient" and

1.2 "The clean and renewable energy share of the total energy produced in Viet Nam is

increased".

The action will be implemented mainly through a Sector Reform Performance Contract.

Complementary support measures will be provided to enhance institutional capacities and the

legal and technical framework, support the development of the private sector and increase

overall awareness on the benefits of energy efficiency and renewable energy solutions.

1 CONTEXT ANALYSIS

Context Description 1.1

Viet Nam continues to experience high economic growth compared to regional and global

economies. Average gross domestic product (GDP) growth rate reached approximately 7.0 %

during 2001-2010, dropped to around 5.8 % during 2011-2015 and gradually recovered to

6.8 % from 2016 to present. This economic growth, in combination with urbanisation and

rapid population growth, has boosted demand for energy in general and electricity in

particular. In 2015, total primary energy (PE) supply in Viet Nam was 70,588 kiloton of Oil

Equivalent (KTOE). According to forecasts in the current National Power Development Plan

(Revised PDP 7), Viet Nam's power demand will increase on average by 8.7 % annually in

the next 15 years (2016-2030). Accordingly, domestic power supply capacity would need to

increase threefold, from 38,358 MW in 2015 to 60,000 MW in 2020 and 129,500 MW in

2030. Hence, in the next 15 years, power demand would increase 1.5-fold every 5-year cycle.

This growth rate is considered high compared to the region and the rest of the world.

Viet Nam has substantial hard coal reserves as well as oil and gas. However, the demand in

industry and for power generation is so high that the country became a net importer of coal

since 2015. Oil and gas reserves are also substantial and mainly located offshore. Exploration

is ongoing and is expected to increase proven reserves further, although exploration may be

technically and economically challenging. Viet Nam is a net exporter of crude oil, but a net

importer of refined oil and is currently planning the extension of national refining capacity.

All of the country’s gas production is consumed nationally, although the import of LNG is

planned with two import terminals scheduled to be completed by 2023. This trend increases

Viet Nam's exposure to energy market volatility and therefore impacts its energy security.

The Government of Viet Nam is well aware that it needs to balance the need for increasing

energy supply for socio-economic growth with ensuring energy security and environmental

protection. This implies working simultaneously on two strategic dimensions: (i) Enhancing

energy efficiency and improving energy performance to reduce energy losses; and

(ii) Shifting the energy mix towards reducing fossil fuel, promoting efficient exploitation and

increasing the portion of renewable energy in energy production and consumption, and

reducing greenhouse gas emissions from the energy sector.

Policy Framework (Global, EU) 1.2

The action falls within the Sustainable Energy focal sector of the EU-Viet Nam Multiannual

Indicative Programme 2014-2020 (MIP). The action is fully in line with the MIP's specific

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objectives 1.1 (The production and consumption of energy in Viet Nam is more efficient) and

1.2 (The clean and renewable energy share of the total energy produced in Viet Nam is

increased). Moreover, by supporting the establishment of the Viet Nam Energy Information

System (VEIS), the action also contributes to the achievement of the MIP's specific objective

2.2 (The government’s ability for accountable, transparent and cost-effective service delivery

is enhanced).

The action will support directly the achievement of SDG 7 (Ensure access to affordable,

reliable, sustainable and modern energy for all) and will contribute significantly to SDG 13

(Take urgent action to combat climate change and its impacts).

The action is in line with the EU's 2030 climate and energy framework, and the European

Consensus on Development, in particular with its "Planet" dimension on protecting the

environment, managing natural resources and tackling climate change.

Public Policy Analysis of the partner country/region 1.3

Viet Nam’s Socio-Economic Development Strategy (SEDS) 2011-2020 lays the foundation

for Viet Nam to become a modern, industrialized society, well integrated into the international

economy and defines three breakthrough areas: (i) promoting human resources development,

(ii) improving market institutions, and (iii) infrastructure development. A new SEDS

2021-2030 and a new Socio-Economic Development Plan (SEDP) 2021-2025 are under

preparation.

Energy policy is a key element of the Government's development policy. In particular, it is

viewed as a way to promote poverty reduction, social equality and economic development.

Overall energy policy in Viet Nam is guided by the National Energy Development Strategy to

2020, vision to 2050 (NEDS)1, adopted in 2007. An evaluation of the NEDS is on-going and a

new NEDS to 2030, vision to 2050, is expected to be adopted early 2020. The policy focus

over the last 5 years has been on the Electricity Law, adopted in 2004 and amended in 20122,

and on the seventh National Master Plan for Power Development for 2011-2020, vision to

2030 (PDP7) adopted in July 20113 and revised in March 2016

4. This reflects the priority to

increase electricity supply.

In the landmark United Nations Framework Convention on Climate Change (UNFCCC) Paris

Agreement in 2015, Viet Nam committed to 8% GHG emissions reduction by 2030 compared

to the business as usual (BAU) scenario in its Nationally Determined Contributions (NDC)5.

However, with international support GHG reduction could increase up to 25 %. The

Government is currently reviewing its NDC.

(i) Energy efficiency

In Viet Nam, commercial energy intensity, as a measure of the energy efficiency of an

economy calculated as units of energy per unit of GDP, is comparatively high at 270 kilogram

of oil equivalent (kgOE)/USD 1,000 in 2015. This is significantly higher than the global

average commercial energy intensity. Viet Nam is among the most energy intensive countries

in South East Asia.

1 Decision 1855/QĐ-TTg (2007) 2 Decision 28/2004/QH & 24/2012/QH13 3 Decision 1208/QĐ-TTg (July 2011) 4 Decision 428/QĐ-TTg (March 2016) 5 https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/Viet%20Nam%20First/VIETNAM%27S%20INDC.pdf

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Viet Nam committed to reduce energy intensity by reducing its energy consumption per unit

of GDP by 1-1.5 % (Resolution at the 12th

National Congress of the Communist Party).

Energy efficiency is also one of the key measures to reduce Viet Nam’s greenhouse gas

(GHG) emissions and improve its energy security. It also has social, environmental and

economic benefits including stable energy supply, job creation, improved well-being,

mitigated environmental pollution and reduced production cost towards sustainable and

low-carbon development. Over the past 10 years, Viet Nam has managed to save 3.4% of total

energy consumption (energy efficiency rate) during the period 2006-2010 and 5.65%

equivalent to 11,261 million tonne of oil equivalent (TOE) during the period 2011-2015.

These rather modest results were achieved through the implementation of the “Viet Nam

National Energy Efficiency Programme” (VNEEP) phase I (2006-2010) and phase II (2011-

2015). Viet Nam still has a lot of opportunities to minimize energy losses and waste in the

supply and utilization processes across all sectors, from industrial production, commerce and

service to household consumption and transport. Well aware of this substantial room for

further energy savings, a new National Energy Efficiency Programme, the so-called VNEEP3,

has been approved by the Prime Minister on 13 March 20196. The overall objectives of this

programme are i) To mobilize all the national and international resources for stimulating

economical and efficient use of energy through the synchronous implementation of

assignments and solutions of State management, technical assistance, science and technology

research and product development, market transition, human resource training and

development, and also utilization of support from the international community in the field of

economical and efficient use of energy; and ii) to formulate the habit of using energy

economically and effectively in all social activities; to reduce intensive use of energy in a

variety of economic sectors and industries; energy efficiency becomes a regular activity in

key energy users and key economic sectors that consume a lot of energy, with an aim at green

growth and sustainable development. This new programme is expected to set the efficiency

rate at 8-10 % of total national commercial energy consumption for 2019-2030 in the business

as usual (BAU) scenario.

(ii) Shifting the energy mix

To cope with the increasing electricity demand, new generation capacities need to be

deployed at a rapid pace. The revised PDP77 plans that 116 new power plants would be put

into operation in the period 2016-2030, of which 43 hydro, 57 thermal, 11 renewable energy8,

3 pumped storage hydro and 2 nuclear. However, various projects are incurring delays,

particularly those developed under a build–operate–transfer (BOT) scheme. The reasons put

forward are the lengthy procedures and negotiations in which the biggest challenge is

settlement on currency exchange rates. If large BOT plants are delayed, they will affect the

capability to ensure sufficient electricity supply to the power system. Other challenges and

difficulties identified by the Ministry of Industry and Trade (MOIT) are: i) lack of

harmonisation in the legal & regulatory framework; ii) new OECD regulation requiring only

ultra-supercritical technology for coal-fired thermal projects investments; iii) low electricity

tariffs; iv) primary fuel resources security; and v) increased public awareness on pollution

generated by coal-fired power plants.

The focus of the revised PDP7 on increasing the contribution of coal to power development

from 33 % of power generation capacity in 2015 to 43 % by 2030 (more than twice the 2020

6 Decision 280/QĐ-TTg (March 2019) 7 http://www.erav.vn/userfile/files/428_2016.pdf 8 Expected total installed capacity by 2030: wind 6,000 MW, solar 12,000MW, small hydro 27,800 MW.

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GHG emissions level), represents a challenge for Viet Nam to comply with their international

climate change commitments.

In November 2016, the National Assembly adopted a resolution on abandoning the

construction of the Ninh Thuan nuclear power plant due to economic reasons. Nuclear power

was expected to provide 3.3% of the electricity production in 2030.

Hydropower is still the most important primary energy source for electricity production with

an installed capacity of 15.9 GW which represents 37.6 % of the total installed capacity as of

December 2016. However, hydropower potential is almost fully exploited at present.

Furthermore, recent droughts and decreasing water flows have impacted hydropower

generation output reliability. Apart from large-scale hydropower (above 30 MW), which in

Viet Nam is not counted as renewable energy (RE) source because of the substantial amount

of greenhouse gases released by the reservoirs, renewable energy - including small-scale

hydropower - represented only a minor part of the electricity production (3.7%).

In terms of non-hydro RE development, Viet Nam has enacted various legal documents

aiming at achieving the objectives set out in the Renewable Energy Development Strategy

until 2030, vision to 2050 (REDS)9, which was adopted in 2015 as a basis for delivering on

Viet Nam's commitments at COP 21 in the area of renewable energy. A support mechanism

was approved in April 2017 for the development of solar power projects (feed-in tariff, FIT)

and subsequently a circular was issued regulating solar power project development and

standardized power purchase agreements (PPA) for solar power projects. In September 2018

an increased FIT for wind power was approved.

These new support mechanisms have generated a very strong interest from the private sector

to invest in RE. Despite some remaining investment risks related to standard PPA provisions,

at the end of June 2019, there was a total installed RE capacity of 4,500 MW of solar power,

300 MW of wind power, 350 MW of biomass power and 10 MW of waste-to-energy.

However, new challenges arose such as the need for more robust power planning

mechanisms, improving the grid absorption capacity of variable RE or taking into

consideration externalities. The recent decision to develop in 2019–2020 a new Power

Development Plan (PDP8) which should enter into force in 2021 is significant. It is expected

that PDP8 will adjust the electricity mix by increasing the share of RE and decreasing the

share of coal power. It should also improve and revise the power planning mechanisms.

(iii) Energy data and statistics

Looking at the current status of energy data and statistics, Vietnamese agencies and

institutions are already collecting a fair amount of data and have developed strong technical

expertise. However, there are several shortcomings of the data & statistics framework that

need to be addressed with concrete action in order to meet the key objective of improving the

quality of data and statistics in the energy sector:

- Fragmented legal framework and lack of integrated strategy for energy statistics;

- Absence of a systematic data collection system based on dedicated questionnaires and

procedures;

- Lack of clarity on data sources and methodology;

- Ownership of data still perceived as a source of power;

- Dissemination of energy statistics is not systematic or regular;

- Lack of a comprehensive data quality assurance framework;

9 Decision 2068/QĐ-TTg (November 2015)

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- No “official” international reporting;

- No IT system or database to support and facilitate data collection, processing and

dissemination.

With EU support provided since 2016 through the EU Technical Assistance Facility for the

'Sustainable Energy for All' Initiative (TAF) and the EU-Viet Nam Energy Facility (EVEF),

MOIT is now committed to establish the Viet Nam Energy Information System (VEIS) and

has promulgated on 14 December 2018 an action plan to establish the VEIS by 202410

. In

order to put in motion the VEIS the first two priorities are: i) improving the existing legal

framework; and ii) establishing an institutional framework.

Stakeholder analysis 1.4

Within Government, energy is under the overall responsibility of MOIT. Three main

departments are in charge of energy:

- Electricity and Renewable Energy Agency (EREA);

- Department of Energy Efficiency and Sustainable Development (DEESD); and

- Oil, Gas and Coal Department.

Beside these 3 departments, the Electricity Regulatory Authority of Viet Nam (ERAV), which

falls also under MOIT, acts as the regulator and plays a key role in market-oriented sector

reform, including electricity pricing, monitoring supply and demand balance to ensure secure

and quality power supply, licensing & dispute settlement.

Despite the absence of an overarching management structure, coordination within the sector is

ensured by EREA. Moreover, the close involvement of the Vice Minister of MOIT in charge

of energy contributes to an effective coordination of activities. The establishment of DEESD

at the end of 2017 is a positive development which marks a clear shift in the involvement of

MOIT in important horizontal topics such as the implementation of the NDCs or the National

Green Growth Strategy.

Other key players are the Ministry of Natural Resources and Environment (MONRE), which

leads the Climate Change Action Plan, and the Ministry of Planning and Investment (MPI),

which leads the Green Growth Action Plan, and have therefore a stake in national energy

policy.

The Ministries of Transport, Construction, Agriculture and Rural Development, Science and

Technology, Training and Education, Finance, and Planning and Investment are key

stakeholders of the VNEEP3. In order to ensure proper coordination of the VNEEP3 it is

expected that its steering committee will be chaired by the deputy prime minister in charge of

industry and trade.

Electricity of Viet Nam (EVN), a state-owned enterprise (SOE), and its various operational

subsidiaries play a key role in the implementation of the REDS as, for the time being, sole

buyer of RE generated. It will also have a key role in the implementation of the VNEEP3.

Local and international civil society organisations (CSOs) active in the energy sector

coordinate their activities under the umbrella of the Viet Nam Sustainable Energy Alliance,

established in 2012.

10 Decision 4651/QD-BCT (Dec. 2018)

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The private sector has become extremely active in the development of RE projects. With the

forthcoming implementation of VNEEP3, we can anticipate that the current limited

involvement of the private sector in the energy efficiency business will pick up.

Several development partners, including the EU and some Member States, support the

development of the energy sector in Viet Nam (see section 3.2 below)

Problem analysis/priority areas for support 1.5

Viet Nam is facing a serious risk of power shortage over the period 2020-2025. One of the

main reasons is the delay in the implementation of 16 BOT coal-fired power plant projects.

This risk has been well identified by the Government, which is now seeking for solutions. In

order to compensate for the lack of additional power supply capacity, the promotion of RE

technologies has been significantly improved since 2016. At the same time, the Government

also aims at decreasing the demand for electricity in order to mitigate the need for additional

generation capacity and to reduce the overall energy intensity of the country.

The action aims at supporting Viet Nam to achieve the objectives set in its REDS and

VNEEP3 and will pursue the ongoing EU support to establish the VEIS by 2024.

Other areas of assessment 1.6

1.6.1 Fundamental values

On democracy and human rights, the main risks in Viet Nam are use of death penalty,

challenges with rule of law and restrictions on space for CSOs. The risks are well identified in

the EU's existing budget support programmes and mitigating measures have been established.

Viet Nam is an authoritarian one-party state ruled by the Communist Party of Viet Nam

(CPV). Opposition parties remain illegal and individuals who challenge the legitimacy of the

CPV’s rule or criticise the government are reportedly harassed and arrested. In theory, the

National Assembly, elected by popular vote every five years, has most of the powers and

characteristics of a western-style parliament. However, its role remains strictly delimited by

the political and institutional organisation of the country which vests supreme power in the

CPV.

There is little to no pluralism allowed in CSO and media landscapes in Viet Nam.

Independent media and CSOs are somewhat tolerated and move in a grey area bordering

illegality. CPV maintains a firm grip on power through a combination of stringent legislation,

influence over the military and internal security, tight control of state-run media and internet,

and arrest and imprisonment of political activists and bloggers. Media (print, TV, radio) are

state-owned.

The CPV expects peoples' voices to be heard through the "mass organisations" (farmers'

union, women's union, youth union, etc.). The legal framework for NGOs/associations is

cumbersome and controlled. Whilst overall, there has been increased participation of CSOs

into development cooperation, this excludes political issues and is declining since 2016. There

is an internet blogger community, which exposes cases of corruption and criticises the regime

and has faced severe backlash under national security provisions of the Penal Code.

In light of the above situation, the EU pays close attention to fundamental values in its

relations with Viet Nam at all levels. The implementation arrangements under the Partnership

and Cooperation Agreement, EU-Viet Nam Free Trade Agreement and our cooperation

programmes share the objective of engaging with the Government and CSOs in Viet Nam in

human rights issues. An annual human rights dialogue takes place between the EU and Viet

Nam. Whilst, on balance, the overall situation on fundamental values in Viet Nam has

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remained stable or even improved, over the longer term there are negative trends in some

areas, which will require continuous monitoring and due adaptation of mitigating measures as

the situation evolves.

1.6.2 Macroeconomic policy

Overall, Viet Nam pursues a macroeconomic policy based on stability and sustained levels of

growth. GDP growth has been consistently strong over the medium term, leading Viet Nam to

be increasingly in the spotlight as an example of a well performing country. Growth is

currently underpinned by buoyant domestic demand, increased exports and investment as well

as growing tourism. Export-oriented manufacturing in electronics, telecommunication

products and textiles continued to be key engines of industrial growth.

Viet Nam has an outward-looking economy and its macroeconomic strategy is based on

increase of external trade. The foreign-invested sector accounts for about 18 % of Viet Nam’s

GDP, nearly a quarter of total investment, two thirds of total exports, 18.5 % of total budget

revenue and millions of direct and indirect jobs. It is also a consistent and strong driver of

GDP growth.

The balance of payments remains in surplus, underpinned by a trade surplus, resilient

remittances and large inflows of foreign direct investment (FDI). Viet Nam’s economic

agenda continues to focus on public debt sustainability and building financial reserves while

addressing widespread investment needs and strengthening the banking sector. It has stepped

up market-oriented reforms to reduce the economic role of the state through the continued

equitisation and divestment of SOEs.

Growth is projected to stabilize around 6.5 %, led by export expansion, rising domestic

consumption and strong investment fuelled by FDI and strengthening agriculture. Robust

private consumption is supported by rising incomes and stable inflation. Business sentiment

remains buoyant and the doing business environment is seen as improving.

External balances are projected to benefit from robust exports and FDI inflows. On the fiscal

front, the Government has set a deficit target for 2018 equal to 3.7 % of GDP seeking to

encourage capital investment to support growth while consolidating finances to sustain

macroeconomic stability. In view of these risks, the Government is making efforts to enhance

macroeconomic resilience, including its efforts to build-up foreign reserves, strengthen public

debt management and its recent initiatives to equitise state-owned enterprises.

Risks to the outlook are mostly on the downside. If escalating trade tensions around the world

slow global trade substantially and disrupt global production networks and supply chains, the

growth outlook for Viet Nam will be much dimmer. Not only would such developments hurt

its export prospects, they would also hold back FDI. Heightened volatility in international

financial markets is another downside risk.

1.6.3 Public Financial Management (PFM)

The Financial Development Strategy (FDS) 2010-2020 is the key document guiding the

reform process, which was further elaborated in development strategies of PFM sub-

components. These documents are further broken down into medium-term action plans

(MTAP) and annual work plans, prepared by MOF, with a medium-term perspective on the

solutions and actions to achieve the objectives of the FDS. The reform process is broadly

credible, though delays in some areas have affected overall progress.

The priorities for further reforms of the PFM system during the period 2017-2019 are:

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- Enhancing the effectiveness in domestic resource mobilisation: Government aims to

expand the tax base and restructure tax revenue towards increasing the proportion of

domestic resources to 84-85 % of total state budget revenue by 2020. The target for state

budget revenue is set at the minimum of 23.5 % of GDP for the period 2016-2020.

- Enhancing allocative efficiency in parallel with financial and state budget restructuring.

- Further strengthening the management of public debt: limit the issuance of new

government guaranteed loans, and restructure the loan portfolio toward more

sustainability in terms of sources, currencies and terms. Keep the public debt within the

limit of 65 % of GDP, government debt at a maximum of 54 % GDP and sovereign loans

at a maximum of 50 % of GDP.

- Reforming financial management of public service delivery units: gradually reduce the

financial dependence of public service delivery units on the state budget so that they can

operate as financially independent by 2020.

- Continued tax and customs administrative reforms in order to further improve the doing

business environment.

A long period of economic growth has helped Viet Nam to raise state budget revenue. Whilst

revenue collection during 2011-2015 increased in real terms, it declined as percentage of

GDP, with an average of 23.4 % of GDP during 2011-2015 comparing to 26.4 % during

2006-2010. The reduction in oil and tariff revenues was the main reason for this downward

trend.

Recognising the situation, government has taken measures to reform tax policies toward

higher level of mobilisation and stronger reliance on domestic revenue. Accordingly, the

collection during 2016-2017 increased slightly to 24.6 % of GDP. The share of domestic

revenue in total state revenue increased from 68 % during 2011-2015 to 81 % during

2016-2017.

Government is proposing a number of policy options in order to further increase domestic

mobilisation, including: Broadening the VAT base and unifying the VAT rate; broadening

corporate income tax base; reducing tax rate applied for SMEs; increase excise rates (sin-tax)

on several goods; expanding the personal income tax base; building property tax system; and

increasing environment tax on oil and gas. Government is still in the course of conducting

public consultation on the tax policies changes, nevertheless some of the proposed changes

have faced strong reaction from public and business associations.

The legal framework for State Audit is reasonably well defined. Whilst audit coverage has

been improving over the past few years, State Audit of Viet Nam (SAV) only has the

resources to cover around 60 % of central government units and 50 % of provinces. State

Budget accounts are audited on an annual basis. The audit report is submitted to the National

Assembly and there are mechanisms to follow-up on implementation of audit

recommendations.

1.6.4 Transparency and oversight of the budget

The disclosure of budget information is regulated in the State Budget Law (SBL). The SBL

2002 provided for disclosure of some key budget documents. Nevertheless, the guidance at

sub-law levels was limited. The new SBL 2015 has strengthened the disclosure requirements

and there is a new circular providing detailed guidance on disclosure of budget documents.

Aside from SBL, other laws such as the Law on management of public debt and public

procurement law also have disclosure requirements. This is expected to be reflected in the

next Open Budget Index (OBI) assessments.

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Budget transparency and oversight is an area that needs to be further promoted by the

Government. Since the new SBL came into force, results have been positive as the majority of

key budget documents were published with higher level of quality and comprehensiveness

comparing to previous documents. The website of the Ministry of Finance (MOF) has been

improved with a separate section dedicated to the disclosure of budget documents which are

accessible to the general public. Nevertheless, the analytical information on investment

expenditure and public debt still remain limited and is expected to be improved in medium-

term only, when budget classification for recurrent and investment expenditure are aligned

and the new public debt management law takes stronger effect.

One positive development is the increasing engagement of the government, particularly in

conducting OBI assessment and development of a citizen's budget.

2 RISKS AND ASSUMPTIONS

Risks Risk level

(H/M/L)

Mitigating measures

Persistent low electricity prices

undermine return on investment in

energy efficiency and affect

competitiveness of non-hydro

renewables

H Policy dialogue in the context of the

VEPG will pursue support for the

ongoing energy sector reform and the

implementation of wholesale electricity

market and a more cost reflective

electricity tariff policy.

Cumbersome administrative

procedures and approval process of

the Government which often delay

the achievement of the objectives

M Policy dialogue at sector level in the

context of the VEPG keeps the

momentum

Limited capacities of the

Government to manage and steer

the VNEEP3 which targets various

sectors at central and provincial

level

M Technical Assistance (TA) provided in

the context of the ongoing EU-VN

Energy Sector Policy Support

Programme and this action will enhance

DEESD's capacities to supervise the

implementation of the VNEEP3

Lack of a long-term reliable energy

outlook strategy might limit the

capacity of the Government to

develop a sustainable energy

transition

L Danish support to the Viet Nam Energy

Outlook report (latest report was

published in October 2019).

Current TA support and policy dialogue

under the framework of VEPG provides

assistance in the development of the new

Energy Development Strategy and the

upcoming PDP8

On democracy and human rights,

the main risks are use of death

penalty, rule of law and

authoritarian nature of state

apparatus impeding on space for

civil society.

H Policy dialogue in the new framework of

PCA Joint Committee and human rights

dialogue better informs the EU's analysis

of the situation and allows EU to raise

human rights issues in an appropriate

forum.

EIDHR and CSO projects, along with

implementation of the EU roadmap on

CSO engagement

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On the macroeconomic side, the

main risks are increased levels of

public debt, slow-down in growth

due to instable international

environment on trade and

overreliance on key economic

sectors.

L Policy dialogue linked to budget support

operations is expected to continue, as is

dialogue on the non-cooperative tax

regimes process. The EU Delegation also

organises joint dialogue sessions with

IMF, World Bank, ADB, UN and EU

Member States on macroeconomic issues

On PFM and transparency, the

principal risks are a slow-down in

the pace of PFM reforms, lack of

capacity in external audit and

challenges with transparency and

access to information.

M Policy dialogue on PFM and linked to

budget support programmes, support to

the State Audit Office of Viet Nam via

an ongoing project, the pipeline

Enhancing Economic Governance action

and EU following up with other

development partners on Open Budget

Index and other transparency initiatives

Assumptions

The objectives set in the REDS and the VNEEP3 are pursued by the Government

MOIT remains committed and continues to lead the VEPG

Government pursues its PFM reform

3 LESSONS LEARNT AND COMPLEMENTARITY

Lessons learnt 3.1

Very often, the ambitious objectives set out in the policy documents underestimate the

complexity and the comprehensiveness (e.g. considerations for externalities, maintenance and

operational costs). The absence of concrete implementation plans and adequate financial

resources lead to delays and frequent adjustments. Over the last two years, the EU has

provided TA to support the development of detailed action plans for the establishment of the

VEIS and for the implementation of the VNEEP3.

The complexity of the domestic legal framework, which undergoes frequent revisions, is a

real constraint which generates hurdles in policy development and programme

implementation.

Inter-ministerial coordination remains an issue in Viet Nam. Programmes are more likely to

succeed if they fall under the responsibility of a single ministry.

The on-going energy sector budget support programme demonstrates that budget support is a

suitable modality to influence policy orientations.

In the energy sector, the absence of a coordination mechanism between development partners

and the Government prior to 2017 has been addressed with the support of the EU and its

Member States. The Viet Nam Energy Partnership Group (VEPG) was officially established

in June 2017 and became fully operational in 2018. Through assessments of sub-sectors of the

energy sector, the 5 technical working groups of the VEPG identified key challenges and

priorities (see section 3.2 below for further details on the VEPG).

Complementarity, synergy and donor coordination 3.2

All major Development Partners (DPs) active in Viet Nam, such as WB, ADB, KfW, AFD,

GIZ, USAID and JICA, are supporting the energy sector in Viet Nam since the nineties. The

focus at that time was mainly on rural electrification, electricity generation (hydro) and

[13]

transmission. Now that the electrification rate is reaching 99 % of the households, DPs are

focusing more on the development of renewable energy, the promotion of energy efficiency

and, to a lesser extent, power market reform and energy planning. This shift of priorities is in

line with current challenges faced in the energy sector and is well reflected in the VEPG.

The EU is a fairly new player in the energy sector, but is currently the only DP providing

budget support in the energy sector. As such, EU support is particularly complementary with

interventions in the energy sector by other DPs. The action is also complementary with EU

support provided to the private sector via Climate Investor One and GET-Invest.

Most of the ODA in the energy sector is provided through sovereign loans. However with its

lower middle-income country status, Viet Nam is no longer eligible for concessional loans

from multilaterals (WB, ADB). This, coupled with the current public debt ceiling (65 % of

GDP) and the Government's decision to focus ODA on areas like transportation, health,

education, vocational training, smart urban development and irrigation, makes it challenging

for DPs to get new programmes approved.

A mapping of current donors and international support in the energy sector is available and

updated on a regular basis.

Technical assistance to enhance institutional capacities is still needed, but is rather limited.

EU and DE are the largest TA providers, including through the ongoing EU-Viet Nam Energy

Facility and the EU Technical Assistance Facility (TAF) for the 'Sustainable Energy for All'

Initiative (SE4All).

In order to improve coordination among energy sector stakeholders and to engage in thorough

policy dialogue with the Government on the necessary sector reforms, the VEPG was

launched in June 2017 and gathers all major development partners active in the energy sector

(WB, ADB, KfW, AFD, GIZ, USAID, JICA, KOICA, UNIDO, UNDP, GGGI,…). 5

Technical Working Groups (TWGs) were established on (i) Renewable Energy; (ii) Energy

Efficiency; (iii) Energy Access; (iv) Power Market Reform; and (v) Energy Data & Statistics.

Each TWG is chaired by a high official from MOIT and co-chaired by a DP's high official.

The 5 TWGs have produced a set of 40 policy recommendations to inform Viet Nam's sector

policy development and planning process. These policy recommendations have been adopted

by the VEPG High Level Meeting (chaired by MOIT Minister, EU Ambassador and World

Bank Country Director) in November 2018.

For the purpose of ensuring complementarity, synergy and coordination, the Commission may

sign or enter into joint donor coordination declarations or statements and may participate in

donor coordination structures, as part of its prerogative of budget implementation and to

safeguard the financial interests of the Union.

4 DESCRIPTION OF THE ACTION

Overall objective, specific objective(s), expected outputs and indicative activities 4.1

The overall objective is to contribute to a sustainable energy transition in Viet Nam.

The specific objectives are:

1. Improved energy efficiency (VNEEP3);

2. Larger share of renewable energy in the energy mix (REDS);

3. Improved performance of the Viet Nam Energy Information System (VEIS).

Induced outputs of the policy supported through budget support:

[14]

1. Improved energy efficiency (VNEEP3)

1.1. Legal and technical frameworks on economical and efficient use of energy are

amended and/or supplemented;

1.2. Network of energy efficiency and cleaner production units is expanded;

1.3. Average energy consumption for the industrial sectors/sub-sectors is reduced;

1.4. Key energy users apply the Energy Management System.

2. Larger share of renewable energy in the energy mix (REDS)

2.1. Existing mechanisms to encourage investment in developing RE power generation

(i.e. FIT) are revised;

2.2. Direct Power Purchase Agreements (DPPA) are allowed and the electricity market

is progressively adjusted to allow for an optimised generation and uptake of

renewable energy;

2.3. On-site renewable or hybrid energy supply for remote, deep-lying and offshore

areas are supported.

3. Improved performance of the Viet Nam Energy Information System (VEIS)

3.1. Legal framework set up and prepared for information infrastructure investment;

3.2. VEIS organisational capacity and infrastructure are strengthened.

Direct outputs will include:

- Additional fiscal space created by the transfer of funds and increased predictability

of funds;

- Continued high-level policy dialogue with the Government, jointly with other

development partners, on the energy transition in Viet Nam;

- Strengthened capacities of and coordination among key stakeholders in the energy sector,

like Government, private sector and social organisations.

Intervention Logic 4.2

The action will increase State Budget funding, the size and share of discretionary budget

allocations and aid predictability for the sustainable energy transition in Viet Nam. It will

strengthen energy sector coordination, alignment on priority energy sector policies and reduce

transaction costs. The effectiveness and sustainability of the action relies on the Government's

implementation of reforms and increased resource mobilisation. Policy dialogue between

energy stakeholders is well established and will continue in formal and informal settings, with

a high degree of institutionalization and coordination at all levels. The action will also

enhance institutional capacities and the legal and technical framework, support the

development of the private sector and increase overall awareness on the benefits of energy

efficiency and renewable energy solutions.

The expected outputs will contribute to improve energy efficiency, the share of renewable

energy in the energy mix and the performance of the Viet Nam Energy Information System.

They include strengthened legal and technical frameworks on economical and efficient use of

energy, revised mechanisms to encourage investments in RE generation, improved investment

[15]

procedures and monitoring for RE development, approved legal framework and information

infrastructure investment for the establishment of the VEIS with adequate organisational

capacity in place. These outputs are based on the provisions of respectively the VNEEP3,

REDS and VEIS, aiming to contribute to a sustainable energy transition in Viet Nam.

Mainstreaming 4.3

The action is relevant for several cross-cutting issues identified in the European Consensus on

Development: environmental sustainability, gender equality and good governance.

The overall environmental impact of the VNEEP3 and the REDS is expected to be positive

and to contribute significantly to the achievement of Viet Nam's NDCs. The EU also provides

support to the Ministry of Industry and Trade (MOIT) for the strategic environmental

assessment (SEA) of the next Power Development Plan (PDP8).

In terms of gender equality, increasing gender diversity in the energy sector is a key priority.

The action includes activities to promote this gender diversity among energy sector

stakeholders. In addition, public awareness on energy efficiency and renewable energy will

aim particularly at promoting women and girls to take up their role as drivers of change in the

energy transition. Moreover, women play a key role in household energy use in Viet Nam,

which gives them a strong potential to drive energy transition by advocating for cleaner

energy and increased energy efficiency.

Intensive policy dialogue is expected to contribute to the improvement of governance in the

energy sector. In addition, the establishment of the VEIS will facilitate the release of reliable

data that will improve decision making in the energy sector.

Contribution to Sustainable Development Goals (SDGs) 4.4

This intervention is relevant for the United Nations 2030 Agenda for Sustainable

Development. It contributes primarily to the progressive achievement of SDGs 7 "Ensure

access to affordable, reliable, sustainable and modern energy for all" and 13 "Take urgent

action to combat climate change and its impacts". By supporting the implementation of the

VNEEP3 and enhancing public awareness on energy savings, the action will also contribute to

SDG 8 "Promote sustained, inclusive and sustainable economic growth, full and productive

employment and decent work for all", SDG 9 "Build resilient infrastructure, promote

inclusive and sustainable industrialization and foster innovation", and SDG 12 "Ensure

sustainable consumption and production patterns".

5 IMPLEMENTATION

Financing agreement 5.1

In order to implement this action, it is foreseen to conclude a financing agreement with the

partner country.

Indicative implementation period 5.2

The indicative operational implementation period of this action, during which the activities

described in section 4 will be carried out and the corresponding contracts and agreements

implemented, is 72 months from the date of entry into force of the financing agreement.

Extensions of the implementation period may be agreed by the Commission’s responsible

authorising officer by amending this Decision and the relevant contracts and agreements.

[16]

Implementation of the budget support component 5.3

Rationale for the amounts allocated to budget support 5.3.1

The amount allocated for the budget support component is EUR 121 000 000, and for

complementary support is EUR 21 000 000. This amount is based on available resources

under the MIP, an initial needs assessment and the regular EU policy dialogue during the

implementation of the ongoing Energy Sector Policy Support Programme to enhance Access

to Sustainable Energy in Rural Areas of Viet Nam and in the VEPG.

Criteria for disbursement of budget support 5.3.2

a) The general conditions for disbursement of all tranches are as follows:

- Satisfactory progress in the implementation of the Renewable Energy Development

Strategy and the Viet Nam Energy Efficiency Programme 3 and continued credibility

and relevance thereof;

- Maintenance of a credible and relevant stability-oriented macroeconomic policy or

progress made towards restoring key balances;

- Satisfactory progress in the implementation of reforms to improve public financial

management, including domestic revenue mobilisation, and continued relevance and

credibility of the reform programme; and

- Satisfactory progress with regard to the public availability of accessible, timely,

comprehensive and sound budgetary information.

b) The performance indicators for disbursement that may be used for the variable tranches

are in the following areas: renewable energy, energy efficiency, energy information

system.

The chosen performance indicators and targets to be used for disbursements will apply for the

duration of the action. However, in duly justified circumstances, the Ministry of Industry and

Trade may submit a request to the Commission for the targets and indicators to be changed.

Note that any change to the targets should be agreed ex-ante at the latest by the end of the first

quarter of the assessed year. The agreed changes to the targets and indicators shall be agreed in

advance and may be authorised in writing (either through a formal amendment to the

financing agreement or an exchange of letters).

In case of a significant deterioration of fundamental values, budget support disbursements

may be suspended, reduced or cancelled, in accordance with the relevant provisions of the

financing agreement.

Budget support details 5.3.3

The disbursements under this sector reform performance contract will consist indicatively of

five fixed tranches for an amount of up to EUR 50 000 000, and five variable tranches for an

amount of up to EUR 71 000 000 amounting in total to an amount of up to EUR 121 000 000.

Indicative

breakdown

Total (in

EUR

million)

2021 2022 2023 2024 2025

Fixed tranche 50 10 10 10 10 10

Variable tranche 71 11 15 15 15 15

Total 121 21 25 25 25 25

[17]

The budget support is provided as direct untargeted budget support to the national treasury.

The crediting of the euro transfers disbursed into Viet Nam Dong will be undertaken at the

appropriate exchange rates in line with the relevant provisions of the financing agreement.

Implementation modalities for complementary support to budget support 5.4

The Commission will ensure that the EU appropriate rules and procedures for providing

financing to third parties are respected, including review procedures, where appropriate, and

compliance of the action with EU restrictive measures11

.

Grants (direct management) 5.4.1

(a) Purpose of the grants

Increasing public awareness on the benefits of renewable energy and energy efficiency is a

priority for the Government of Viet Nam. Social and professional organisations are expected

to play a key role to ensure the widespread dissemination of the information. In that context,

the EU will support public awareness activities carried out under the supervision of the

Government of Viet Nam. In addition, increasing gender diversity in the energy sector will be

a key priority in the energy transition in Viet Nam.

This grant would contribute to achieving the overall objective of the action, and more

specifically its specific objectives 1 and 2.

(b) Type of applicants targeted

Potential applicants for funding will be legal entities, priority will be given to organisations

with a strong experience in public awareness raising on sustainable energy development and

on gender diversity.

Expected results include: i) citizens and economic operators have a better understanding of

the socio-economic benefits of renewable energy and energy efficiency; 2) increased gender

diversity among energy sector stakeholders.

Procurement (direct management) 5.4.2

A facility will provide, on a demand-driven basis, expertise and capacity development in areas

such as technology and knowledge transfer through cooperation on areas like research, higher

education and R&D for renewable energy and energy efficiency, renewable energy and

energy efficiency policy, legal and regulatory frameworks, norms and technical standards,

power market analyses, energy governance, energy information systems, energy budgeting

and planning. It would contribute to the achievement of objectives 1, 2 and 3 (see section 2.1

above).

The main beneficiaries/users of the facility will be MOIT and its various subsidiary

institutions, and other energy stakeholders like the Provincial People's Committees, relevant

Committees of the National Assembly, the Ministry of Planning and Investment, the Ministry

of Finance, the Ministry of Science and Technology as well as relevant social organisations.

The facility will ensure the communication and visibility of the action.

11 www.sanctionsmap.eu Please note that the sanctions map is an IT tool for identifying the sanctions regimes.

The source of the sanctions stems from legal acts published in the Official Journal (OJ). In case of discrepancy

between the published legal acts and the updates on the website it is the OJ version that prevails.

[18]

Indirect management with the United Nations Industrial Development 5.4.3

Organization (UNIDO)

A part of this action may be implemented in indirect management with the United Nations

Industrial Development Organization (UNIDO). This implementation entails promotion,

stimulation of market demand and adoption of energy efficiency by industry and SMEs for

their greater energy performance, reduced carbon footprint and enhanced productivity &

competitiveness. This would contribute particularly to the achievement of objective 1 (see

section 2 above). The envisaged entity has been selected using the following criteria: strong

industrial energy expertise, experience from projects on energy management systems and

system optimization and SMEs projects in many parts of the world including South East Asia

and Viet Nam. This complementary support action will build on the good results of the

MOIT-UNIDO project "Promoting Energy Efficiency in Industry through System

Optimization and Viet Nam Energy Management Standards" (IEE project). In addition,

energy efficiency is an integral part of many other UNIDO projects and programmes such as

eco-industrial park, resource-efficiency and cleaner production, greening of various industrial

sectors.

In case the envisaged would need to be replaced, the Commission’s services may select

another replacement entity using the same criteria. If the entity is replaced the decision to

replace it needs to be justified.

Indirect management with the Global Green Growth Institute (GGGI) 5.4.4

A part of this action may be implemented in indirect management with the Global Green

Growth Institute (GGGI). It would contribute to the achievement of objective 1 (see section

2.1 above). It will provide support to local start-ups to create marketable innovative energy

efficiency solutions. More specifically, it will provide accelerating programmes, which

includes engaging with start-up community, providing technical guidance and financial

support. It would also aim at enhancing and creating a national network of innovative energy

efficiency start-ups. The project will act as a catalyst to get access to existing financial

support schemes such as the SME Development Fund. The envisaged entity has been selected

using the following criteria: strong engagement in the energy sector with the Government of

Viet Nam, with local and international private sector. This complementary support action will

build on the GGGI's ongoing global and pacific Greenpreneurs Programme designed to boost

green growth start-ups in developing countries12

.

In case the envisaged would need to be replaced, the Commission’s services may select

another replacement entity using the same criteria. If the entity is replaced the decision to

replace it needs to be justified.

Scope of geographical eligibility for procurement and grants 5.5

The geographical eligibility in terms of place of establishment for participating in

procurement and grant award procedures and in terms of origin of supplies purchased as

established in the basic act and set out in the relevant contractual documents shall apply.

The Commission’s authorising officer responsible may extend the geographical eligibility on

the basis of urgency or of unavailability of products and services in the markets of the

countries concerned, or in other duly substantiated cases where the eligibility rules would

make the realisation of this action impossible or exceedingly difficult.

12 http://gggi.org/greenpreneurs/

[19]

Indicative budget 5.6

EU

contribution

(amount

in EUR)

Indicative

third party

contribution

(amount

in EUR)

5.3 Budget support 121 000 000 N.A.

5.4.1 Grants (direct management) 3 500 000 N.A.

5.4.2 Procurement (direct management): EU-Viet Nam

Sustainable Energy Transition Facility

7 500 000 N.A.

5.4.3 Indirect management with UNIDO 6 500 000 N.A.

5.4.4 Indirect management with GGGI 2 500 000 53 752

5.9 Evaluation and 5.10 Audit 500 000 N.A.

5.11 Communication and visibility* 500 000 N.A.

Total 142 000 000 53 752

* Will be integrated in the EU–Viet Nam Sustainable Energy Transition Facility.

Organisational set-up and responsibilities 5.7

The Ministry of Industry and Trade (MOIT), on behalf of the Government of Viet Nam, holds

the overall responsibility for the implementation of this programme. In particular, this

concerns the preparation and transmission of the request for disbursements and the

compliance with the general eligibility criteria of the Sector Reform Performance Contract,

including budget transparency, PFM reform and macroeconomic stability.

The Electricity and Renewable Energy Authority (EREA) and the Department of Energy

Efficiency and Sustainable Development (DEESD) will cooperate with the entrusted entities

identified in section 3.4 and the EU to develop the complementary support measures'

implementation plans in a manner satisfactory to MOIT. The detailed implementation

modalities and approval mechanisms will be further defined during the inception phase of the

complementary support measures.

A steering committee will supervise the entire action. It will be co-chaired by MOIT and EU

and tentatively include representatives of EREA, DEESD and entrusted entities identified in

section 3.4.

As part of its prerogative of budget implementation and to safeguard the financial interests of

the Union, the Commission may participate in the above governance structures set up for

governing the implementation of the action.

Performance and Results monitoring and reporting 5.8

The day-to-day technical and financial monitoring of the implementation of this action will be

a continuous process, and part of the implementing partner’s responsibilities. To this aim, the

implementing partner shall establish a permanent internal, technical and financial monitoring

system for the action and elaborate regular progress reports (not less than annual) and final

reports. Every report shall provide an accurate account of implementation of the action,

difficulties encountered, changes introduced, as well as the degree of achievement of its

results (outputs and direct outcomes) as measured by corresponding indicators, using as

[20]

reference the Logframe matrix (for project modality) or the partner’s strategy, policy or

reform action plan list (for budget support).

SDGs indicators and, if applicable, any jointly agreed indicators as for instance per Joint

Programming document should be taken into account.

The Commission may undertake additional project monitoring visits both through its own

staff and through independent consultants recruited directly by the Commission for

independent monitoring reviews (or recruited by the responsible agent contracted by the

Commission for implementing such reviews).

Evaluation 5.9

Having regard to the importance of the action, mid-term & final evaluations will be carried

out for this action or its components via independent consultants contracted by the

Commission.

The mid-term evaluation will be carried out for learning purposes, in particular with respect to

the effectiveness and sustainability of the action and will offer recommendations for

improvement.

The final evaluation will be carried out for accountability and learning purposes at various

levels (including for policy revision), taking into account in particular the fact that this action

will provide substantial support for the achievement of Viet Nam's NDCs which need to

reported to the UNFCCC Secretariat.

The evaluation of this action may be performed individually or through a joint strategic

evaluation of budget support operations carried out with the partner country, other budget

support providers and relevant stakeholders.

The Commission shall inform the implementing partner at least one month in advance of the

dates foreseen for the evaluation missions. The implementing partner shall collaborate

efficiently and effectively with the evaluation experts, and inter alia provide them with all

necessary information and documentation, as well as access to the project premises and

activities.

The evaluation reports shall be shared with the partner country and other key stakeholders.

The implementing partner and the Commission shall analyse the conclusions and

recommendations of the evaluations and, where appropriate, in agreement with the partner

country, jointly decide on the follow-up actions to be taken and any adjustments necessary,

including, if indicated, the reorientation of the project.

Evaluation services may be contracted under a framework contract.

Audit 5.10

Without prejudice to the obligations applicable to contracts concluded for the implementation

of this action, the Commission may, on the basis of a risk assessment, contract independent

audits or expenditure verification assignments for one or several contracts or agreements.

It is foreseen that audit services may be contracted under a framework contract.

Communication and visibility 5.11

Communication and visibility of the EU is a legal obligation for all external actions funded by

the EU.

[21]

This action shall contain communication and visibility measures which shall be based on a

specific Communication and Visibility Plan of the Action, to be elaborated at the start of

implementation.

For the purpose of enhancing the visibility of the EU and its contribution to this action, the

Commission may sign or enter into joint declarations or statements, as part of its prerogative

of budget implementation and to safeguard the financial interests of the Union.

In terms of legal obligations on communication and visibility, the measures shall be

implemented by the Commission, the partner country, contractors, grant beneficiaries and/or

entrusted entities. Appropriate contractual obligations shall be included in, respectively, the

financing agreement, procurement and grant contracts, and contribution agreements.

The Communication and Visibility Requirements for European Union External Action (or any

succeeding document) shall be used to establish the Communication and Visibility Plan of the

Action and the appropriate contractual obligations.

[22]

6 APPENDIX – INTERVENTION LOGIC TABLE (FOR BUDGET SUPPORT)

Results chain Indicators

(max. 15)

Baselines

(year)

Targets by the end of the

budget support contract

(year)

Sources of data

Expected

impact of

the policy

(Overall

objective)

To contribute to a sustainable energy transition in

Viet Nam

1.1 Primary Energy Intensity (Energy

consumption converted to standard oil

kilogramme to produce 1 economic value unit

- kgOE/USD)

1.2 Share of renewable energy in total

electricity generated

1.1 270 kgOE/USD 1000

in 2015

1.2 5.37% in 2015

1.1 Minus 1-1.5% per year

1.2 12.5% by 2025

21% by 2030

1.1. VNEEP3

implementation report

1.2 PDP 7 revised /

PDP8 / MOIT

implementation report

Expected

outcomes of

the policy

(Specific

objective(s)

1. Improved energy efficiency (VNEEP3)

2. Larger share of renewable energy in the energy

mix (REDS)

3. Improved performance of the Viet Nam Energy

Information System (VEIS)

1.1 Percentage of power losses

1.2 Percentage of key energy users applying

the energy management system as regulated

1.3 Percentage of national energy

consumption saved

2.1 Status of the mechanism for Direct Power

Purchase Agreement (DPPA)

2.2 Status of the auctioning scheme for RE

3.1 Status of Energy Data & statistics

1.1 6.83 % in 2018

1.2 Not yet available

1.3 4.30% (4.90 mil.

TOE) in period of 2006-

10; 5.65% (11.2 mil.

TOE) in period of 2010 -

15

2.1 DPPA is not yet in

place (2019)

2.2 auctioning scheme for

RE under consideration in

2019

3.1 Sheet balancing

manufacturing / import /

export and energy

consumption are not

available (2018)

1.1 <6.5% by 2025

1.2 100% by 2025

1.3 5.0 -7.0% by 2025

2.1 DPPA template is released

by 2021

2.2 auctioning is in place by

2022

3.1 Sheet balancing

manufacturing / import / export

and energy consumption are

released by 2024

1.1 VNEEP3

implementation report

1.2 VNEEP3

implementation report

1.3 VNEEP3

implementation report

2.1 PDP 7 revised /

PDP8 / MOIT

implementation report

2.2 PDP 7 revised /

PDP8 / MOIT

implementation report

3.1 VEIS action plans in

2018 and 2024

[23]

Induced

outputs

1.1. Legal & technical frameworks on economical

and efficient use of energy are amended and/or

supplemented

1.2. Network of energy efficiency and cleaner

production units is expanded

1.3. Average energy consumption for the industrial

sectors/sub-sectors is reduced

1.4. Key energy users apply Energy Management

System

1.1. Status of Legal documents and

technical standards & guidelines

1.2. Status of the network

1.3.1. Percentage of energy consumption

reduction in steel industry;

1.3.2. Percentage of energy consumption

reduction in the chemical industry

1.3.3. Percentage of energy consumption

reduction in the cement industry

1.3.4. Percentage of energy consumption

reduction in textile and garment

industry

1.4. Status of Energy Management

System

1.1 5 issued Circulars by

the year of 2018

1.2 Some EE units under

DOITs (2019)

1.3.1 8.09% by the year of

2015 in comparison with

the year of 2011

1.3.2. 6.33% by the year

of 2015 in comparison

with the year of 2011

1.3.3. 7.32% by the year

of 2015 in comparison

with the year of 2011

1.3.4. not yet available

1.4. not yet available

1.1. 10 legal documents

(including the energy

efficiency benchmark) on

energy efficiency and

energy conservation are

reviewed &/or

supplemented (2025).

1.2. At least 50 centrally-

affiliated cities and

provinces (2025)

1.3.1. 3 to 10 % depending on

the type of products and

production technologies

(2025)

1.3.2. Min. 7% (2025)

1.3.3. Min. 7.5% (2025)

1.3.4. Min. 5% (2025)

1.4. 100% applied EMS by

2025

1.1 VNEEP3

implementation report

Other MOIT reports

1.2 VNEEP3

implementation report

Other MOIT reports

1.3. VNEEP3

implementation report

Other MOIT reports

1.4. VNEEP3

implementation report

Other MOIT reports

Induced

outputs

2.1. Existing mechanisms to encourage investment in

developing RE power generation (i.e. FIT) are

revised

2.1.1. FIT for waste to energy (W2E)

2.1.2. FIT for biomass

2.1.3. Status of the Auction mechanism

2.1.1. 10.06 USc/kWh for

W2E

2.1.2. 5.8 USc/kWh for

biomass co-generation;

7.46 USc/kWh biomass –

electricity

2.1.3. Auction mechanism

is not in place (2019)

2.1.1. FIT for waste to energy is

revised (2021)

2.1.2. FIT for biomass is

revised (2021)

2.1.3. Auction mechanism is

applied (2022)

2.1.1. & 2.1.2 PM's

decisions and

subsequent MOIT

implementation

circulars

2.1.3. Approved

mechanism by the

relevant authority

[24]

2.2. Direct Power Purchase Agreements (DPPA) are

allowed and the electricity market is

progressively adjusted to allow for an optimised

generation and uptake of renewable energy

2.3. On-site renewable or hybrid energy supply for

remote, deep-lying and offshore areas are

supported

3.1. Legal framework set up and prepared for

information infrastructure investment

3.2. VEIS organisational capacity and infrastructure

are strengthened

2.2. a) Status of DPPA regulation

b) Status of Electricity Reform

Roadmap

2.3. Status of off-grid systems operating in

remote offshore islands

3.1. Status of VEIS investment project

3.2. Status of Staff

2.2. a) DPPA is not

available (2019)

b) Electricity

Wholesale Market

operation phase is

ongoing (2019)

2.3. 3 islands are supplied

by fuel generators (2019)

3.1. Not yet available

(2019)

3.2. To be recruited

(2019)

2.2. a) DPPA regulation is

applied (2021)

b) Electricity Wholesale

Market is fully

operational in 2021.

Electricity Retail Market

pilot operation is

concluded in 2023.

2.3. 3 islands are provided

with cleaner solutions

(2025)

3.1. VEIS investment project

is approved (2021)

3.2. Staff is assigned and

trained (2022)

2.2. MOIT

implementation report

2.3. MOIT

implementation report

3.1. MOIT

implementation report

3.2 MOIT

implementation report

Direct

outputs

1. Additional fiscal space created by the transfer of

funds and increased predictability of funds

2. Continued high-level policy dialogue with the

Government, jointly with other development

partners, on the energy transition in Viet Nam

3. Strengthened capacities of and coordination among

key stakeholders in the energy sector, like

Government, private sector and Social Organisations

1.1 Amount of external assistance made

available through the national budget

2.1 Status of Policy dialogue and

recommendations in the context of VEPG

3.1 Provision of ad-hoc TA on a demand-

driven basis to the institutional stakeholders

involved in the energy sector

1.1 € 100 million (2018-

2020)

2.1 40 policy

recommendations

endorsed (Nov 2018)

3.1 Ongoing EU-Viet

Nam Energy Facility

1.1 Extra €121 million by 2025

2.1 VEPG meetings at high

level follow-up on policy

recommendations at least once

a year

3.1 Approximatively 4,500

person days of short-term TA

are provided by the EU through

the EU-Viet Nam Sustainable

Energy Transition Facility in

2025

1.1 Disbursement files

submitted to the BSSC

2.1 VEPG minutes and

proceedings

3.1 Implementation

report of the

implementing partners