Scenario: while reviewing the model PPA with EVN, an investor’s CFO asks bluntly: if EVN pays late, who guarantees EVN? The answer surprises many investors — and changes how they structure the entire project’s risk.
The truth: the PPA contains no “EVN payment guarantee”
The model power purchase agreement (issued with Circular 57/2020/TT-BCT) obliges EVN (the buyer) to pay for delivered power at agreed volumes and prices, with late-payment interest penalties. But that is a contractual payment obligation, not an independent payment guarantee issued by a third party backing EVN’s obligation. In short: the standard PPA has no “guarantor for the buyer”.
Does the Government guarantee?
No, for ordinary projects. The Vietnamese Government issues no government guarantee for EVN’s PPA payment obligations — only a very few special BOT projects in the past had bespoke guarantee arrangements under specific Government commitments. Investors must distinguish clearly: “EVN commits to buy and pay” is very different from “EVN’s payment obligation is guaranteed”.
How is payment risk managed, then?
- Contract terms: late-payment interest, suspension rights in certain cases, dispute resolution (negotiation, arbitration). Fully legally valid, though real-world effectiveness depends on enforceability.
- Credit assessment: EVN is the state-owned monopoly transmission operator and the system’s main power buyer — its payment risk tracks the financial health of the power sector as a whole, not that of an ordinary commercial counterparty.
- The DPPA channel: Decree 57/2025/ND-CP (effective 3 March 2025) opens direct power purchase between renewable generators and large electricity users — via private lines or the national grid. This diversifies buyers and reduces single-counterparty dependence. In private-line DPPAs, parties can negotiate payment security (e.g., buyer bank guarantees) more flexibly than under the model PPA.
The 2024 Electricity Law and the long view
Electricity Law 61/2024/QH15 (effective 1 February 2025) orients toward competitive power markets at all levels (generation, wholesale, eventually retail). Long term, more sales channels mean better bargaining power and payment-risk diversification for generators — but during the transition, EVN PPAs remain dominant, and investors must price the “no guarantee” risk into financial models.
Frequently asked questions
1. Does EVN provide a payment guarantee in the PPA?
No independent payment guarantee exists. The model PPA only sets EVN’s payment obligation with late-payment interest — a contractual duty, not third-party backing for EVN.
2. Does the Vietnamese Government guarantee PPAs?
No, for ordinary projects. Only a handful of special past BOT projects had bespoke guarantee arrangements under specific Government commitments.
3. What can a generator do if EVN pays late?
Invoke PPA late-payment interest, seek negotiation, and resolve disputes per the contract’s mechanism (arbitration). Effectiveness depends on real-world enforceability.
4. Can DPPA replace a PPA with EVN?
DPPA under Decree 57/2025/ND-CP is a supplementary channel for qualifying large users, diversifying buyers with potentially more flexible payment security. But not every project can access suitable large customers.
5. How to mitigate payment risk in power investment?
Scrutinize PPA payment and late-penalty clauses; assess sector financial health; consider DPPA to diversify offtake; and price the “no guarantee” risk into the financial model from day one instead of assuming EVN always pays on time.
This article has been quality-reviewed by the FLAW AI Legal Council.