The Government has agreed to the Vietnam Coal and Mineral Industries (Vinacomin) request to raise coal price by 47 percent, commencing March 1, 2010.

Major players in coal import discussions

 

Nguyen Van Hai, Deputy General Director of Vinacomin, confirmed the price increase on March 3.

Hai said that Vinacomin and Electricity of Vietnam (EVN) agreed after a February 17 working session.  The new coal price will be applied to power producers under EVN.

There are four kinds of coal to increase in price, including 4b coal which will increase by 47 percent to 648,000 dong per ton, No. 5 coal by 28 percent to 520,000 dong per ton, while 6a and 6b coal will have new rates of 450,000 and 395,000 dong per ton.

Vinacomin may not really be happy with the modest price increases.

Hai said that even though the coal price has been raised, the price is still lower than what Vinacomin charges cement, paper and chemical producers. The new coal price is just equal to 70 percent of the market and export price.

Vinacomin’s price is just equal to 50-60 percent of the export price and 70-80 percent of the coal production cost.

The Government has ordered that coal prices not be raised for power producers more than twice a year. Hai revealed that Vinacomin still wants to adjust the coal price once more in 2010, possibly at the end of the year to make the coal price closer to the market price.

Regarding coal imports, Hai responded that by 2013, Vietnam must import coal to run domestic thermo-power plants. He said in peak years, Vietnam may have to import 10-20 million tons and it will not be easy to negotiate coal supply and price. Vietnam will have to manage foreign currencies to pay for coal imports.

Three powerful conglomerates, Vietnam Coal and Mineral Industries Group (Vinacomin), PetroVietnam and Electricity of Vietnam (EVN) are considering the measures to import coal.

Economists believe that Vietnam should export high quality coal, which it does not use at this time, and sell it for double the price of normal coal and to import coal for use at domestic thermo-power plants.

In 2009, Vietnam produced 40 million tons of merchandise coal and consumed 43 million tons