The Vietnam National Coal and Mineral Industries Group (Vinacomin) has once again submitted a proposal to raise coal prices as the cost of exploiting and processing in the first six months of this year increased 7 per cent against the same period last year, said the group.
The group argued that it was necessary to raise the price of coal to cover the increasing costs.
The proposal, which was first put forward early last year for the same reason, is being considered by the relevant State agencies and economic experts, it added.
Although information on Vinacomin's proposed price hike has not been officially released, it has created worries for the sectors using coal for their production, including the cement, electrical, chemical industries.
Economic experts fear the great impact that a coal price increase would have on the economy.
It is necessary to be cautious with any proposal to increase coal prices as it is a significant input material for many of the country's key production sectors, said Pham Chi Lan, a member of the Government Research Group.
The coal industry has to carefully consider a suitable coal price level and avoid negative impacts on enterprises that use coal for production, Lan said.
Vinacomin said that the cost of exploiting and processing coal in the first six months of this year had increased 7 per cent over the corresponding period last year. The group argued that it was necessary to raise the price of coal to cover the increasing costs.
Sharing this opinion, Pham Dang Tuat, director of the Industrial Policies and Strategies Institute said that coal prices needed to be adjusted to meet the costs of processing in the coal industry.
A proposal to ratchet up coal prices was appropriate, said Tuat, adding that strong exports were a good impetus for further investment in coal exploitation.
Revenues from the coal industry in the first half of the year were more than VND8 trillion (over US$500 million), of which US$417 million came from exports. So, income from exports would provide investment capital for the industry's growth, he said.
Lan warned that the high export volume of coal could lead to a drain of the country's natural resources in the future.
In the first six months of this year, the industry exported more than 13 million tons of coal, up 63.6 per cent over the same period last year, but revenues of US$417 million represented only a modest increase of 35 per cent.
Domestic coal consumption during the period was only around 7 million tons, Tuat noted.
Therefore, he said, we need to research and accurately survey the current volume of coal reserves in the country to establish suitable coal volumes for export and avoid draining off natural resources.
Domestic coal consumption is also expected to increase substantially as the nation opens more coal-fired power plants to meet skyrocketing demand for electricity nationwide.
The electricity sector is expected to account for 25 per cent of the country's total coal consumption in the coming years.
The Government has estimated the nation would need 10.2 million tons of coal per year by 2010 to fire existing and planned coal-burning power plants.
VNS, VNN
Vietnamese
