The country’s sole energy producer Electricity of Vietnam (EVN) has proposed reducing its coal consumption for its thermo-power plants this year, which has raised concerns with coal producer Vinacomin about the possibility of major job losses.
Under the proposal, EVN plans to cut coal consumption by 2 million tonnes to 17.92 million tonnes from 19.92 million tonnes this year.
Workers at a coal mine of Vinacomin
Vinacomin Chairman Le Minh Chuan said that by late June this year, the group’s coal inventory reached 9.3 million tonnes, higher than planned.
Meanwhile, Prime Minister Nguyen Xuan Phuc instructed Vinacomin to raise productivity by 2 million tonnes in 2017 to contribute to the country’s GDP growth of 6.7% in the year.
If EVN cuts its coal purchases by 2 million tonnes from Vinacomin, around 4,000 Vinacomin miners will face the risk of losing their jobs or one coal mine could be closed, Chuan added.
He has asked the government to instruct EVN and PetroVietnam not to reduce their coal purchase from Vinacomin this year so that the group can stabilise its production activities and contribute to the country’s GDP growth target. From next year, Vinacomin will have a specific plan for its coal consumption if EVN and PetroVietnam slash their coal purchase.
According to Chuan, Vinacomin has signed contracts with many partners to hire mining machinery and equipment, so EVN’s move would cause great losses. He suggested priority should be given to domestically-produced coal.
Deputy Minister of Finance Do Hoang Anh Tuan agreed with Chuan’s recommendation about the priority for the domestically-produced coal consumption. He, however, said that domestically-produced coal prices must be equal to or cheaper than imported coal prices.
In reality, Vietnam’s coal prices are higher by VND1.5 (USD68)-2 million per tonne compared to imported coal, so it is quite difficult for domestic coal firms to compete with imported coal.
Minister-Chairman of the Government Office Mai Tien Dung urged the Ministry of Industry and Trade to seek ways to reduce production costs for cheaper coal prices and boost the equitisation of Vinacomin affiliates. The ministry also needs to take measures to deal with Vinacomin’s coal inventory and work on the case of EVN’s proposal to cut coal purchases from Vinacomin.