The Ministry of Industry and Trade made a proposal the government to raise price of coal sold for power producers from September 1, following closely on the heels of the last one on July 1.
Under the proposal, coal sold to power producers will be made equal to last year’s market prices beginning in the fourth quarter this year and would be raised to current market prices next year.
Despite July’s price hike, Vietnam National Coal and Mineral Industries Group (Vinacomin) still complained that it expects to take losses of VND8.5 trillion (USD404.7 million) this year.
The ministry is also seeking the government’s approval for slashing the pit-coal export tariff to 10 percent to mitigate losses for Vinacomin.
Vinacomin said the current pit-coal export tariff of 20 percent is too high, meanwhile the world coal prices have dropped 25-40 percent from the levels of late 2011. After deducting export tariff, Vinacomin will not be able to cover its costs, slowing down exports.
In July 1, when electricity prices increased, coal price also went up by 10-11.5 percent, but Vinacomin said they continue incurring losses because their prices are lower than that of the global market.
They said that, due to lower export prices, the company has already seen a losses of VND4 trillion (USD190.4 million) in revenues.
Meanwhile, companies that buy most of the coal from still owe Vinacomin a combined total of VND2 trillion (USD95.23 million). Electricity of Vietnam (EVN) accounted for half of the total debt.