VINACHEM

Thermal power plant investors have warned of further price hikes as their costs increase, noting that coal prices have gone up 4-10 percent from the beginning of this year.

Nguyen Van Bien, deputy general director of Vietnam National Coal and Mineral Industries Group (Vinacomin) said the increase, allowed by the government upon their request, would help cover their losses, for now.

However, when they have to excavate coal from deeper layers in the future, the costs will rise further, he said.

A Wednesday report by Thoi bao Kinh te Saigon Online cited many thermal power plant representatives as saying their operating costs are rising, especially during dry season when they have to run at full capacity, necessitating higher purchases of coal.

Ha Quang Gioi, deputy general director of Hai Phong Thermal Power Plant, said coal accounted for around half of their cost as they operated at their 1,200 megawatt capacity limit because hydropower plants lacked water in their reservoirs.

Gioi said his plant is using nearly 10,000 tons of coal to generate around 22 million kilowatt-hours a day.

“Coal makes up a very large part of the cost of power production, so an increase in coal prices will affect power prices… Surely power prices will have to increase in the coming time, but following a route.”

Do Huu Hai, deputy general director of Quang Ninh Thermal Power Plant in the northern coal province of Quang Ninh, said it uses around three million tons a year and right now is having to run at its maximum capacity of 1,200 megawatts.

Hai estimated that the plant won’t make a profit in the first quarter, given the price situation.

For the past couple of years, Vinacomin has asked the government many times for permission to increase prices citing losses, but economists have blamed the group for using its state-owned privileges to increase its profit. Some have said the group is using outdated technologies that increase expenses.

The group reported a VND3 trillion (US$142.32 million) profit for 2013, up around 20 percent from the previous year.

National power utility Electricity of Vietnam (EVN) has said it had to pay an additional VND6 trillion for coal in 2013, when power prices were hiked around 5 percent in August to an average of VND1,508.85 a kilowatt-hour.

Dang Hoang An, deputy general director of EVN, said the company doesn’t have plans to raise prices yet.

But general director Pham Le Thanh told the newspaper in January that power prices largely depend on coal prices.

Thanh also said the hike in coal prices would necessitate an increase in power prices, but this would be done slowly so as to soften the blow for consumers.

He promised EVN would be transparent this year about its operating costs including wages.