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MoIT proposes raising price of coal sold to power plants

Update: September, 06/2012 - 10:34


Coal mining in the northern province of Quang Ninh. Power plants will face higher coal prices from the fourth quarter of this year. — VNA/VNS Photo Nguyen Dan
HA NOI — The Ministry of Industry and Trade has asked the Government to increase the price of coal sold to power producers from the fourth quarter this year to reduce losses for coal producers.

Under the proposal, coal prices sold to power producers will be made equal to 2011 market prices from the fourth quarter this year and then will fully follow the market price from next year.

Deputy general director of the Viet Nam Coal and Mineral Industries Group (Vinacomin) Bui Van Khich said that the Government had so far still required Vinacomin to sell its product to power producers at below market price to stabilise the economy. The price was equal to only roughly 65 per cent of the coal production price.

Vinacomin currently supplies roughly 60 per cent of its total output to Electricity of Viet Nam (EVN).

Khich said that even though higher prices for coal paid by EVN in the wake of a coal price hike in July could add VND300 billion (US$14.28 million) to its earnings this year, his group still made an estimated loss of roughly VND8.5 trillion ($404.76 million) this year because the price of coal sold to power producers was still much lower than market price.

Under the proposal, the ministry also suggested the Government reduce the export tax on coal from 20 per cent to 10 per cent to ensure Vinacomin has a sufficient profit margin for necessary investments and expansion of coal mines.

Vinacomin said that the mining industry faced difficulties due to steep decreases in both domestic demand and exports, which caused coal producers to have nearly 10 million tonnes of coal in inventory.

Meanwhile, Vinacomin said coal exports have also faced fierce competition from other countries as demand has slowed, resulting in sharp price declines. — VNS

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