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Paradox: Vietnam running short of coal, but pushing exports
A southern business newspaper believes a looming energy crisis will be exacerbated by Vinacomin’s eagerness to export coal.
According to calculations by Vinacomin, the sprawling state-controlled ‘Vietnam Coal and Minerals Group,’ Vietnam will need to import coal to supply domestic power plants beginning in 2013. Demand for coal will rise to 94 million tonnes by 2015. Coal-fired power plants alone will consume 67 million tonnes. Coal production, however, is forecast to be 60 million tonnes at maximum.
By 2020, Vinacomin expects, Vietnam’s demand for coal will reach 184 million tonnes. By then, annual consumption of coal by power plants will be 150 million tonnes, and, according to Vinacomin, domestic coal production will be 70 million tonnes.
Projecting to 2025, coal demand will be 308 million tonnes. Power plants will consume 268 million tonnes and industries that use coal in production, e.g. steel, glass, cement, fertilizer and chemicals, will use the rest.
Staff of the national electric power company, EVN, and the national oil and gas company, Petrovietnam, have travelled abroad to investigate sources of coal imports. Their conclusion, suggests Saigon Tiep Thi, is that it will be difficult to secure adequate supplies, even if Vietnam is prepared to pay three or four times more the price Vietnam’s coal is now fetching in foreign markets.
No contracts were signed during the recent trips. “We had nearly reached agreements with foreign partners when Thai and Chinese businesses jumped and grabbed our contracts,” said an official. “It seems that the Thai and Chinese are ready to purchase coal at any price”.
In the face of the prospect that demand for coal will be very big, activities to push up coal exports continue. Vinacomin says that in the first seven months of 2009, the group’s member companies have exported 13.586 million tonnes of coal, a seven percent increase over the same period of 2007.
In March 2009, Minister of Industry and Trade authorized the cross-border export of three million tonnes of low quality coal from Quang Ninh to the adjacent Chinese province, Quang Tay. And in February, according to VNS, the Finance Ministry agreed to reduce a surcharge on coal exports from twenty to ten percent in order to spur the economy.
While conceding that coal exports have made a substantial contribution to Vietnam’s GDP growth, Saigon Tiep Thi views Vinacomin efforts to push up coal export as a threat to national energy security. It points to a resurgence in smuggling.
Puzzled by Saigon Tiep Thi’s argument, VietNamNet Bridge did some research. In a VNS article dating from February , we found that when Vinacomin sold coal to the national electricity company, it received only 55 percent of what it could realize from exporting that same coal. VNS quotes Vinacomin: “Thanks to the Government’s intervention to regulate prices and stabilise the market; cement, fertiliser and paper companies have all benefited from artificially low coal prices. The price now paid by the companies is half the coal export price.”
In short, Vinacomin seems to have an overwhelming incentive to export as much coal as it can from its mines in the northeast coastal province of Quang Ninh.
In addition to coal exports through official channels, clandestine exports seem to have revived as well following a 2007-2008 crackdown. At a meeting in late July 2009, according to Saigon Tiep Thi, Quang Ninh Province Party leaders said that Vinacomin subsidiaries are the chief source of illegally exported coal. The Vinacomin companies are said to have covered these shipments to China by obtaining false invoices showing sales to Vietnamese domestic consumers. sold coal to the dealers who then export the goal illegally to China.
Vinacomin has acknowledged that illegal coal exploitation and export continues and shows signs of getting out of control again. In a number of northern provinces and cities, dealers are organizing clandestine export of coal to China. TKV itself has had to discipline many dozens of cadre and staff, including some senior managers of component companies like Mao Khe Coal and Dong Vong Coal and in a TKV commercial investment and services enterprise.
From all this, Saigon Tiep Thi concludes that it is high time for Vietnam to cease exporting coal, not simply to stop its illegal exploitation but also to ensure the nation’s energy self-sufficience in years ahead. However, the newspaper says, it is clear that Vinacomin is still infatuated with the notion of coal exports. It notes that in a recent report, TKV said in 2010, it expects to produce 45 million tonnes of coal so, therefore, if the domestic coal demand is 25-26 million tonnes, Vinacomin will be able to export 20 million tonnes of coal in that year.
Vinacomin says it intends to decrease coal exports to only five million tonnes in 2012. By then, however, remarks Saigon Tiep Thi, a real energy crisis may already have begun.
vietnamnet, sgtt
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