Trading Prices of Thermo-electricity Put in Question

Phung Dinh Thuc, Vice General Director of PetroVietnam, said that prices of thermo-electricity generated from imported coal will surely be higher than prices of thermo-electricity generated from local coal. If so, coal plants using imported coal will surely meet various difficulties when offering prices in the competitive electricity generation market.

 

Currently, PetroVietnam is assigned by the Government to be an investor of three coal thermo-electricity projects, which will be operational from 2013-2016.

 

At present, the coal price sold for electricity plants is US$30 a ton, which remains lower than the market price under the government's instructions.

 

Mr Thuc analysed that if electricity prices are not settled thoroughly, the Electricity Plan 6 will hardly be completed. Under the Electricity Plan 6, the number of thermo-electricity plants account for the majority among electricity plants. Non-EVN investors may not hastily sign coal buying contracts and develop their projects as planned because they are unsure about coal prices.

 

EVN is now buying local coal from Vinacomin to generate electricity at only US$30 a tonne. This price is far lower than that of imported coal. For example, coal imported from Indonesia last year was up to US$120 a tonne, four times as much as the local coal price.

Normally, coal thermo-electricity price is always higher than hydro-electricity price. Thus, in the future, if thermo-electricity plants use imported coal, the coal thermo-electricity price will not be as cheap as the current price will be far higher.

 

EVN is hard to negotiate reasonable trading prices with investors. Of course, it is impossible to buy electricity at high prices but sell it at low prices. We want to negotiate cheap trading prices. Meanwhile, EVN is now the only corporation that is responsible for buying electricity from electricity plants to supply to the whole society while selling prices are regulated by the government.

 

EVN warned that more and more non-EVN businesses are involved in thermo-electricity using imported coal. If a special policy on negotiation of trading prices for thermo-electricity using imported coal is not considered soon, it would result in various difficulties.

Such a worry is absolutely reasonable. Currently, coal thermo-electricity plants are still using local coal and many problems happen during price negotiations.

 

For instance, Vinacomin and EVN were recently unable to agree on the electricity price of the Son Dong Thermo-electricity Plant when Vinacomin wanted to sell electricity at 710 dong a kWh but EVN could buy electricity at VND678.4 a kWh.

 

Tran Xuan Hoa, Vice General Director of Vinacomin, said that in 2010, both electricity price and coal price sold for electricity plants will follow market prices. It is expected that the local coal price sold to electricity plants will increase by not less than 90 percent compared with export coal price. This means that prices of local coal or foreign coal will be the same in the future. The three corporations said that the trade and industry ministry should work as a conductor regarding negotiations of coal thermo-electricity prices.

Recent experiences showed that negotiations of electricity trading prices among non-EVN investors often got stuck and prolonged, particularly among Vinacomin, PetroVietnam with EVN.

In the next five years, coal thermo-electricity will account for a large proportion in electricity generation structure of Vietnam. EVN said that in 2010, the electricity productivity from coal thermo-electricity will be 12.144 billion kWh, making up over 19 percent of the country's electricity productivity.

 

In 2011, total thermo-electricity will reach 16.606 billion kWh, accounting for 22 percent of the country's electricity productivity. Similarly, the coal thermo-electricity will make up 24 percent of total electricity of the country in 2012, 29 percent in 2013, 34 percent in 2014 and 34 percent in 2015.

 

Meanwhile, from 2012, Vietnam will have to import coal to serve domestic demand. This means that most coal thermo-electricity plants of Vietnam, which operate from 2012, will have to use mainly imported coal.

 

Regarding the possible increase in local coal prices, Ta Van Huong, Director of the Energy Department under Industry and Trade Ministry, said that the Department always warned investors that local coal prices would follow the market price so that they could consider and make investment decisions.

 

Responding to the request on the mechanism for negotiating electricity trading prices, Huong said that the government instructed that the price negotiation will be made by not only EVN but also the trade and industry ministry. In the future, the Ministry will set up an electricity price negotiating team to settle this issue.