Guidelines on accessing the funds, loans and tax incentives supporting energy efficiency investment projects industrial boiler efficiency improvement in Vietnam
The enterprises which are planning to implement the energy efficiency investment projects or replace the old equipment/technology using the fossil fuel to new equipment/technology using renewable energy (for example the replacement of coal (or oil, gas) fired boilers by biomass fired boilers, can access two potential financial sources: Vietnam Environmental Protection Fund (VEPF) (long-term) and Vietnam Energy Efficiency for Industrial Enterprises Project VEEIE (until July 2022).
The following section presents the guidelines on accessing the tax incentives and two potential financial sources supporting energy efficiency investment projects (EEIPs) including the industrial boiler efficiency improvements.
Industrial enterprises can access two types of supports from VEPF when implementing EE investment such as the biomass-fired boiler investment (i.e. projects using renewable energy); or EEIPs of eco-label enterprises or investment in producing environmentally friendly products that receive Green Label issued by Ministry of Natural Resources and Environment (MONRE):
- Preferential loans:
- The common principle for determining annual loan interest rate is: equal to 50% of the basic interest rate set by the Government (In 2019, interest rate for projects in its priority list or with bank guarantee is 2.6% and for the other projects 3.6%) and fixed during the term of loan (up to 10 years) and 2-year grace period. The interest rate of overdue debt will be 150% of this rate;
- Maximum loan amount for a project is up to VND 50 billion (5% of VEPF’s charter capital), but not over 70% of total investment, loan amount per investor must not exceed 10% of VEPF’s Charter capital.
- Maximum loan amount is only equal to 70% of collateral value. With loan guarantee from commercial banks or saving books, investors can borrow 100% of the guaranteed amount.
- Post-investment interest rate support: 4% per year from 2018.
Preferential loan interest rate and post-investment interest rate support are announced annually by VEPF’s Management Council. In case enterprises apply for support and VEPF has not yet issued preferential interest rates for that year, the preferential interest rate or post-investment interest rate support of previous year shall be applied.
Eligible projects are those “investing in environmentally friendly technology, environmentally friendly products and renewable energy”, namely:
- Using renewable energy such as biomass boilers or producing EE products or high-efficiency boilers, it is necessary to have the Green Label by MONRE to be qualified as an environmentally friendly product;
- Production and business activities or services of environmentally-friendly business units certified with Vietnam Eco-label issued by MONRE;
- If an enterprise simultaneously invests in waste treatment, wastewater treatment with the EE solutions and use of renewable energy, new energy, there’s a higher possibility to receive support since it matches many criteria in the Priority List.
Step 1: Prepare an application for soft loan
Upon having an idea for EEIP, enterprises can access VEPF website https://www.vepf.vn and then the menu “Customer Guide” to download the template of loan application documents.
- Guidelines on detailed loan documents;
- Guidelines on loan with preferential interest rates, post-investment interest rate support from VEPF.
Accordingly, Guidance on loan with preferential interest rates, post-investment interest rate incentives are VEPF’s regulations on loan and post-investment interest rate incentives conditions.
Enterprises need to prepare the following documents (the more detailed the better, but minimum requirements are presented below) for submission through mail or online to the address listed in Step 3.
To continue to follow the instructions, please download the full version at the link below:
Project Management Unit.