EVN shocked at proposed new coal price

December 25, 2009

VietNamNet Bridge – Vinacomin asked for permission to raise coal prices applied to EVN from January 1, 2010.

Under the proposal, the price of coal to be sold to EVN would be 10 percent lower than the export price.


If the proposal is accepted, the new coal sale price would be 1.1 million dong per tonne for 4b coal dust, which is equal to 149 percent of the current price level (442,000 dong per tonne), and 960,000 dong per tonne for 5 coal dust, an increase of 137 percent in comparison with the current price (405,500 dong per tonne).


An official from the Ministry of Industry and Trade, who asked to be anonymous, said that the sale price applied to EVN at 10 percent lower than the export price could not be considered a reasonable pricing scheme to ensure energy security.


Currently, coal sold for electricity production is bad quality coal, while coal for export is of a higher quality. In fact, export prices always fluctuate, depending on demand and supply across the world.


Analysts have also pointed out that if Vinacomin can sell coal to domestic consumers at the price of 10 percent lower than export prices, the group will make a great deal of profit. They said profits on 4b coal dust represents some 70 percent of the production cost, while profits on 5 coal dust is 85 percent, and 6a coal is 100 percent.


The analysts have also pointed out that if the proposed coal prices are accepted, electricity production costs in 2010 will increase considerably.  The average electricity price would rise from 948.5 dong per KWH in 2009 to 1,110.8 dong in 2010, or 17.11 percent higher.


This price increase is believed to be too sharp, with some saying it would badly affect both the national economy and society as a whole.



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