Power likely to mark up in line with coal
Another power price hike is in sight since Vietnam National Coal and Mineral Industries Group (Vinacomin) has proposed increasing the prices of coal sold to power generators.
Coal-fired thermoelectric plants are now running at full capacity to deal with hydropower shortage due to drought. However, Vinacomin wants to raise coal prices to make up for high production costs, said Nguyen Van Bien, deputy general director of Vinacomin, adding that the prices of coal sold to power plants in 2012 was just 63% of the production costs.
On September 15, coal prices were raised by 28-42%. From then to the end of 2012, Vietnam Electricity Group (EVN) paid an additional VND890 billion for coal.
Representative of a thermoelectric plant running on coal supplied by Vinacomin told the Daily that coal prices made up 50-70% of power production costs. Therefore, if coal prices picked up, power prices would certainly follow suit to avoid losses.
Ha Quang Gioi, deputy general director of Haiphong Thermal Power Joint Stock Company, said the two generators of Haiphong 1 Thermal Power Plant were now operating at full capacity of 600 MW. Meanwhile, Haiphong 2 Thermal Power Plant with the same capacity will start operation late this year with coal provided by Vinacomin.
Haiphong 1 Thermal Power Plant every day generates 14 million kWh of electricity and consumes around 5,600 tons of coal. As coal prices account for over 50% of power production costs, power price hike would be a must if coal prices went up, he said.
Similarly, Do Huu Tai, deputy general director of Quang Ninh Thermal Power Joint Stock Company, said all the three generators of Quang Ninh Thermal Power Plant, with a capacity of 300 MW each, were running at full capacity. Every day, the plant buys over 3,000 tons of coal from Vinacomin.
Power production costs are made up by two components, fixed costs (equipment repair and depreciation) and variable costs (fuel input). When input costs fluctuate, production costs will change accordingly and power prices must be raised.
Duong Thuy Duc, deputy general director of Ninh Binh Thermal Power Joint Stock Company, stated: “When coal prices change, power prices must also change because coal prices make up nearly 70% of power production costs.”
In a talk with the Daily in January, Pham Le Thanh, general director of EVN, said the prices of coal sold to the power sector would increase in 2013. Therefore, EVN this year will have to spend an additional VND6 trillion for the coal price spike.
As such, with rising costs and an accumulated loss of some VND34 trillion incurred by EVN in the past years, power prices will inevitably rise further this year.
Coal-fired thermoelectric plants are now running at full capacity to deal with hydropower shortage due to drought. However, Vinacomin wants to raise coal prices to make up for high production costs, said Nguyen Van Bien, deputy general director of Vinacomin, adding that the prices of coal sold to power plants in 2012 was just 63% of the production costs.
On September 15, coal prices were raised by 28-42%. From then to the end of 2012, Vietnam Electricity Group (EVN) paid an additional VND890 billion for coal.
Representative of a thermoelectric plant running on coal supplied by Vinacomin told the Daily that coal prices made up 50-70% of power production costs. Therefore, if coal prices picked up, power prices would certainly follow suit to avoid losses.
Ha Quang Gioi, deputy general director of Haiphong Thermal Power Joint Stock Company, said the two generators of Haiphong 1 Thermal Power Plant were now operating at full capacity of 600 MW. Meanwhile, Haiphong 2 Thermal Power Plant with the same capacity will start operation late this year with coal provided by Vinacomin.
Haiphong 1 Thermal Power Plant every day generates 14 million kWh of electricity and consumes around 5,600 tons of coal. As coal prices account for over 50% of power production costs, power price hike would be a must if coal prices went up, he said.
Similarly, Do Huu Tai, deputy general director of Quang Ninh Thermal Power Joint Stock Company, said all the three generators of Quang Ninh Thermal Power Plant, with a capacity of 300 MW each, were running at full capacity. Every day, the plant buys over 3,000 tons of coal from Vinacomin.
Power production costs are made up by two components, fixed costs (equipment repair and depreciation) and variable costs (fuel input). When input costs fluctuate, production costs will change accordingly and power prices must be raised.
Duong Thuy Duc, deputy general director of Ninh Binh Thermal Power Joint Stock Company, stated: “When coal prices change, power prices must also change because coal prices make up nearly 70% of power production costs.”
In a talk with the Daily in January, Pham Le Thanh, general director of EVN, said the prices of coal sold to the power sector would increase in 2013. Therefore, EVN this year will have to spend an additional VND6 trillion for the coal price spike.
As such, with rising costs and an accumulated loss of some VND34 trillion incurred by EVN in the past years, power prices will inevitably rise further this year.
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