DECISION

APPROVING THE PILOT MECHANISM FOR DOMESTIC DESIGN AND PRODUCTION OF EQUIPMENT FOR THERMO-ELECTRIC PLANTS IN THE PERIOD FROM 2012 TO 2025

THE PRIME MINISTER

Pursuant to the Law on Government organization dated December 25, 2001;

Pursuant to the Decree No. 12/2009/ND-CP dated December 02, 2009 by the Government on management of investment projects on the construction of works;

At the proposal of the Minister of Industry and Trade,

DECIDES:

Article 1. To approve a pilot mechanism for domestic design and production of equipment of thermo-electric plants (hereinafter referred to as the Mechanism) which are established and put into operation in the period from 2012 to 2025 containing the following contents:

1. Objectives

a) General objective:

Enable domestic mechanical engineering enterprises to improve their capacity to own the technology of design and production of equipment for thermo-electric plants, promote the development of domestic mechanical engineering industry.

b) Specific objectives:

Initiate the pilot mechanism for domestic design and production of auxiliary equipment systems (including all of equipment integrated with main equipment containing boilers, turbines and electric generators) of 03 thermo-electric plant projects: Quang Trach 1, Song Hau 1 and Quynh Lap 1, with the objectives:

- Ensure the ratio of value of consultation of design and production and technical services conducted by domestic consultancy units is not under 40% for the first project (Quang Trach 1), not under 60% for the second project (Song Hau 1) and not under 80% for the third project (Quynh Lap 1) and the later ones.

- Ensure the ratio of value of equipment designed and produced by domestic mechanical engineering enterprises is not under 50% for the first and second projects (Quang Trach 1 and Song Hau 1) and not under 70% for the third project (Quynh Lap 1) and the later ones.

2. Mechanism

a) Regarding the allocation of contract packages and the selection of contractors:

- For state-invested thermo-electric plant projects, contract packages shall be allocated as follows:

+ Contract for consultation of formulation of investment projects;

+ Contract for consultation of project design and management of the investor;

+ Contract for main equipment (boilers, turbines, and electric generators);

+ Contracts for auxiliary equipment (equipment items specified in clause 3 of this Article);

+ Construction contracts and contracts for other auxiliary work.

Before approving for implementation, the investor shall formulate and send a project bidding plan to the Ministry of Industry and Trade for considering adopting.

- The investor of the first project may appoint a joint-venture consultant, comprising a prestige and expert foreign consultancy unit as the main consultant and a number of domestic consultancy units as supportive consultants, to provide consultation for the investor during the project design and management. The investor of the second and third projects may appoint a joint-venture consultant, comprising a prestige and expert foreign consultancy unit as the main consultant and a number of domestic consultancy units as supportive consultants (no more than one of which is a foreign consultancy unit), to provide consultation for the investor during the project design and management. The selection of consultants to assist the investor with the project design and management shall be carried out through bidding.

- On the basis of the proposals of the investor and the National Research Institute of Mechanical Engineering, the Ministry of Industry and Trade shall appoint a joint-venture entity comprising mechanical engineering enterprises specified in clause 5 of this Article to sign with the investor a contract on design and production of one or a number of items of auxiliary equipment of the three first projects. For other projects, the selection of engineering contractor for auxiliary equipment of thermo-electric plants shall be conducted, in principle, via competitive bidding.

- For direct contract packages, the ratio of the contract on domestic design and production of equipment shall be less than 5% of the estimated value of the contract. For special cases, the Prime Minister shall consider approving the reduce of value rate.

- Mechanical engineering enterprises appointed to carry out the contracts on equipment design and production for 3 first projects may import some materials and equipment of the auxiliary equipment item which cannot be produced in Vietnam to ensure the conformity with the designs and specifications of equipment. The import of such materials and equipment shall be conducted in form of direct contracting with the condition of transferring of necessary engineering technologies and designs.

- The unit price for the design and production of auxiliary equipment items shall be conformable to the unit price prescribed by the Ministry of Industry and Trade.

- The investor of the thermo-electric plant projects applying this mechanism shall request the contractor supplying main equipment (boilers, turbines and generators) to establish technical and technological requirements for auxiliary equipment items to be sent to domestic enterprises as the basis for the design/production. The consultants assisting the investor in the design and management of the project shall be responsible for the connecting interface between main equipment and auxiliary equipment which is domestically produced to ensure the consistence of the power plants.

b) Products in the contract on domestic design and production of equipment for thermo-electric plants may apply policies specified in clauses 1, 3 and 4 Article 1 of Decision No. 10/2009/QD-TTg dated January 16, 2009 by the Prime Minister.

3. List of auxiliary equipment items of thermo-electric plants which is domestically designed and produced:

- Coal handling system.

- Ash handling system.

- Electrostatic precipitator.

- Flue gas desulfurization system.

- Water cooling system.

- Fuel oil system.

- Stack.

- Water treatment plant and waste water treatment plant.

- Switchyard and main transformer

- Fire safety system.

- Steel composition of the plant.

4. Domestic consultancy units involving in the implementation of the mechanism:

a) Consultants assisting the project design and management of the investor:

- PV Engineering (PVE).

- The Institute of Energy.

- Power Engineering Consulting Joint Stock Company 1, 2, 3, 4.

b) Consultants on mechanical engineering design and production:

- National Research Institute of Mechanical Engineering (NARIME).

- Engineering consultants of mechanical engineering enterprises involving in the domestic design and production of equipment for thermo-electric plants.

5. Domestic mechanical engineering enterprises involving in the domestic design and production of equipment for thermo-electric plants:

- National Research Institute of Mechanical Engineering (NARIME).

- LILAMA Corporation (LILAMA).

- Machines and Industrial Equipment Corporation (MIE).

- Vietnam Industrial Construction Corporation (VINAINCON).

- Construction Machinery Corporation (COMA).

- Dong Anh Electrical Equipment Corporation (EEMC).

- Mechanization Electrification Construction Corporation (AGRIMECO).

- PetrolVietnam Construction JSC (PVC).

- PetroVietnam Technical Services Corporation (PTSC).

- Doosan Vina limited liability companies.

Such units may form a joint-venture with Ha Noi University of Science and Technology, Ho Chi Minh City University of Technology, Da Nang University of Technology and other capable universities to conduct the domestic design and production of equipment specified in clause 3 of this Article.

6. Thermo-electric plant projects applying the mechanism:

- Such mechanism is applies in pilot form to 3 thermo-electric plant project: Song Hau 1, Quang Trach 1 and Quynh Lap 1. The application of such mechanism (including the extension of the list of domestically produced equipment) to other thermo-electric projects shall be consider and decide by the Prime Minister.

- Thermo-electric projects invested by other economic sectors are encouraged to apply this Mechanism to promote the development of mechanical engineering industry in Vietnam.

Article 2. Implementation

1. The Ministry of Industry and Trade:

a) Establish and promulgate Operation regulation of the interdisciplinary steering committee for production of thermo-electric plant equipment (hereinafter referred to as the Steering committee) whose Head is the Minister of Industry and Trade to direct the implementation of thermo-electric plant projects applying such Mechanism. The Steering committee shall comprise heads of the Ministry of Industry and Trade, the Ministry of Planning and Investment, the Ministry of Finance, the Ministry of Science and Technology, the Vietnam Development Bank, Vietnam Association of Mechanical Industry; National Research Institute of Mechanical Engineering.

b) Formulate and promulgate unit prices for the domestic design and production of auxiliary equipment items for thermo-electric plants.

c) Detail the procedures for formulation, inspection and approval of contracts on domestic design and production of auxiliary equipment for thermo-electric plants.

d) Grant approval for plans on bidding for thermo-electric projects applying this Mechanism.

dd) Consider and decide the supplementation of equipment other than those on the list specified in Clause 3 Article 1 at the request of the investor; consider supplementing capable mechanical engineering enterprises other than those specified in Clause 5 Article 1.

e) Propose and send to the Prime Minister thermo-electric plant projects applying this Mechanism for supplementation.

g) Preside over and cooperate with relevant Ministries and regulatory bodies to promptly resolve difficulties arising during the implementation of pilot projects; propose necessary supplementation and send to the Prime Minister for decision.

2. The Ministry of Science and Technology:

Provide funding from the state budget to domestic consultants of mechanical engineering for the implementation of research project on the technologies of design and production of equipment of thermo-electric plants and assist the purchase of the copyrights of designs and software, receive equipment design and production technology transfers specified in Point b Clause 2 Article 1.

3. The Vietnam Development Bank

Grant development investment credit loans for investors of projects containing contracts of thermo-electric plant equipment  design and production to carry out contracts on domestic design and production of thermo-electric plant equipment items under this Decision.

4. National Research Institute of Mechanical Engineering (NARIME):

- Preside over and cooperate with mechanical engineering enterprises in receiving technology transfers and carrying out the design/production of thermo-electric plant equipment.

- Select foreign consultants in form of direct contracting to provide consultation in the receipt of technology transfers and purchase of copyrights of designs for necessary equipment items; assist the transfer of design and production technologies of domestic consultancy units.

- Assist the steering committee in inspecting and supervising the selection of technology and equipment for contracts on domestic design and production of thermo-electric plant equipment.

- Quarterly report to the steering committee the conduct of domestic design and production of enterprises.

Article 3. This Decision takes effect from the day it is signed.

Article 4. Ministries, Heads of ministerial-level agencies, Heads of Governmental agencies, President of the Member assembly, General Directors of Corporations, State-owned general companies being the investors of thermo-electric projects, General Directors of mechanical engineering enterprises shall be responsible for implementing this Decision./.