Coal sector wants price increase
Industry and Trade Deputy Minister Le Duong Quang spoke with Dau Tu (Investment) newspaper about Viet Nam National Coal-Mineral Industries Group's request to increase coal prices next year.
Viet Nam National Coal-Mineral Industries Group recently asked the Government to allow it to increase the coal price from the beginning of next year. In justification, it said it was currently selling coal 40 per cent lower than the price of imported coal of the same quality. What is your opinion on this?
The Viet Nam National Coal-Mineral Industries Group has strictly obeyed the Government Office and the Ministry of Finance's instruction to sell coal in accordance with market rules to ensure there is a reasonable difference between export and domestic prices. The aim is to save coal, update technology and prevent fraud and smuggling of coal.
Coal sold to domestic consumers (with the exception of the electricity sector) can be lower than the export price but the difference must be no more than 10 per cent.
Since the last adjustment in the coal price in the cement, paper and fertiliser sectors nearly one year ago, the difference in domestic and export prices has increased as a result of increased world and regional prices.
It would be difficult to manage coal resources if domestic prices were much lower than export prices.
But if coal prices increase it will force up the price of dependent commodities. Is that not so?
According to the Viet Nam National Coal-Mineral Industries Group, most cement companies are making high profits from buying coal at the current price. Joint venture companies are earning even greater profits. They are all willing to adjust input material prices according to the market.
Viet Nam currently exports clinker and cement, mainly due to its competitive price. The low coal price has contributed greatly to high profits earned by cement companies.
Foreign clinker and cement importers have also indirectly benefited from the low coal price and that is not fair.
In our opinion, it is possible to adjust the coal price every six months according to the market.
We can do it every quarter once the market accustoms itself to the adjustment.
What is Viet Nam National Coal-Mineral Industries Group's role when it comes to stabilising market prices?
The Government has instructed the group not to raise coal prices to ensure market price stability. That is also the reason why the price of coal sold to the cement, paper and fertiliser sectors has not been adjusted this year.
I think Viet Nam National Coal-Mineral Industries Group's request is in line with the common policy on price controls in the energy sector. It will depend on the Government when price adjustments should be implemented so as not to harm the economy. — VNS