Vinacomin has raised various coal prices to a record high of 28% to nearly 40% depending on the quality for local electricity procurers.
Under the government’s approval to adjust power sector coal prices during the 2012-2013 period, the price increase applied since September 15 is expected to bring Vinacomin an additional VND600 billion (USD28.5 million) in revenue this year.
Coal prices for the power sector just cover less than half of Vinacomin’s production costs, therefore the new price levels will help to cover 70% of Vinacomin’s current losses.
This is the second coal price increase for the power sector after prices were raised 10-11.5% on July 1. The rise is also the highest level so far compared to the average rate of around 10% in previous years.
Despite the two price hikes earlier this year, Vinacomin still required VND7.4 trillion (USD352.3 million) in subsidies due to the losses incurred when selling coal to power producers.
Vinacomin plans to continue increasing coal prices sold to the power sector in 2013 to ensure that the prices align with retail coal prices for other sectors. However, the decision will only be taken by the Prime Minister and be based on the electricity price increase roadmap.
