In 2023, Việt Nam imported about 2.2 million tonnes of coal from Laos with a value of about US$159 million. — VNA/VNS Photo

To promote coal import from Laos, corporations and coal-using firms need to actively negotiate with partners, and propose solutions removing existing obstacles in this import activity.

Minister of Industry and Trade Nguyễn Hồng Diên made these requests at a conference on promoting cooperation in purchasing coal with Laos held in Hà Nội last week.

The conference attracted representatives of units under the Ministry of Industry and Trade (MoIT); the Việt Nam National Coal and Mineral Industries Group (TKV); Vietnam Oil and Gas Group (PVN); Vietnam Electricity Group (EVN); Đông Bắc Corporation; and PetroVietnam Power Corporation (PV Power).

Trịnh Đức Duy, deputy director of the MoIT's Department of Petroleum and Coal, said that implementing a Memorandum of Understanding (MoU) on cooperation in the coal sector, signed between Việt Nam and Laos in July 2023, the MoIT has encouraged thermal power plant investors and coal suppliers to prioritise purchase of Lao coal for electricity production.

According to Việt Nam's General Department of Customs, in 2023, Việt Nam imported about 2.2 million tonnes of coal from Laos with a value of about US$159 million. 

The import in the first six months of 2024 was about 1.17 million tonnes with a value of $75.8 million.

However, Duy said, there are still many difficulties and challenges to achieve the goal set by the MoU of importing 20 million tonnes of coal from Laos to Việt Nam each year.

The biggest obstacle is transportation of coal from Laos to Việt Nam on a road with a distance of more than 300km with disadvantages in terrain and weather factors. High transportation cost makes import price of imported coal from Laos up even though low purchase price at the mine. That leads to imported coal from Laos to not compete with domestically produced coal as well as coal imported from other markets such as Australia and Indonesia that are transported by sea.

Other obstacles include the lack of a mechanism on signing directly long-term contracts of purchasing coal between Vietnamese State-owned corporations and coal mine owners in Laos, and limited customs clearance capacity in Laos.

The Department of Oil, Gas and Coal proposes that coal production firms and coal mine owners in Laos need to have solutions to reduce costs, contributing to increasing competitiveness of coal imported from Laos against other markets.

In addition, the Lao Government is studying spending money to upgrade roads transporting coal from Laos to Việt Nam and looking at supportive policies for exporting coal, including abolishment of 10-per-cent export tax on coal exported to Việt Nam.

Meanwhile, Việt Nam needs also to upgrade the routes to synchronise with the upgraded route system in Laos, and promote building of conveyor belts for coal from Laos to Việt Nam, along with speeding up the construction of coal warehouses in the two countries to ensure the smooth transport of coal to Việt Nam. 

Diên said that promoting the cooperation in trading coal with Laos is very important to meet the demand of coal for electricity and production in Việt Nam, as well as to support Laos in overcoming the difficult economic period.

On the occasion, the minister spoke highly of the corporations and companies for their efforts to import coal from Laos according to the Vietnam - Laos Intergovernmental Agreement.

However, the coal import from Laos is still facing some problems, including uncompetitive import price; the unreasonable coal purchasing mechanism, no long-term coal trading mechanism; unsuitable quality; and unsynchronous warehouse systems between Việt Nam and Laos.

To resolve the above difficulties, corporations and companies are requested to strengthen effective coordination and strictly implement the commitments in the signed contracts on purchasing coal for power production.

Việt Nam National Coal and Mineral Industries Group (Vinacomin) is asked to ensure stable supply of coal to consumers according to the signed coal purchase contracts, avoiding any disruption in supply.

Vinacomin needs to have a reasonable production plan, effectively exploit domestic coal supply; and proactively set up and implement a coal import plan.

The minister assigned the Department of Oil, Gas and Coal to coordinate with the Electricity Regulatory Authority to review the coal supply for power production every quarter. 

The department is also asked to propose a mechanism for the corporations and companies to sign directly long-term coal purchase contracts with Lao suppliers to the Government for approval.

The Asia - Africa Market Department coordinates with relevant units and Quảng Trị Province to urge investors to implement the investment in conveyor belts for coal. — VNS