VINACHEM

The ministries of industry-trade and finance are considering another increase in the price of coal sold to power plants to match the coal production cost in 2013, said Minister of Industry and Trade Vu Huy Hoang

The Prime Minister earlier told relevant ministries and Vietnam National Coal and Mineral Industries Group (Vinacomin) to adjust prices of coal sold to power producers, said Hoang in a report sent to the National Assembly (NA) last weekend. Thus, prices of coal sold to the power sector were increased on April 20.

The new price is able to cover the cost of producing coal in 2011. Prior to the price hike, the price of coal sold to power plants stood at 71-73% of the production cost in 2011.

However, the new coal price is still equal to only 85-87% of the production cost in 2013. If coal prices were not raised further, revenue from coal sales to the power sector would be some VND6 trillion lower than the total production cost in 2013, said Nguyen Van Bien, deputy general director of Vinacomin.

Previously, the amount of coal sold to power producers accounted for only 10-15% of the total output. However, it has surged in the last two years.

In 2012, coal sold to the power sector made up 30% of the total output. In the first quarter of 2013, over 50% of coal output was sold to power plants.

The situation now is not as favorable as in 2011 or before that, when coal exports generated large revenue, offsetting the losses at home, Bien noted. Due to the global economic downturn, coal prices have dropped 30% against late 2011.

In the report to the NA, the trade ministry said it and the finance ministry would consider an appropriate time for a coal price hike. The rise in coal prices will be carefully calculated to avoid pushing up the power production cost, said the trade ministry.

The trade ministry is collecting opinions on its draft regulations on power price management and adjustment. The draft says EVN can raise power prices if input costs pick up 2-5%.