VietNamNet Bridge - The government has set up a steering committee to deal with state-owned enterprises’ (SOEs) unprofitable multi-billion dong projects. The projects will be dealt with market rules instead of preferences. 

Meanwhile, other state-owned corporations continue to ask for preferential treatment.

The managers of Vinacomin, the national mining group, can sigh with relief as they did not find Vinacomin’s projects on the list of the 12 projects incurring big losses put under the Ministry of Industry and Trade’s (MOIT) control. 

However, Vinacomin, like in previous years, still has shouted for help. Vinacomin’s chair Le Minh Chuan at a MOIT conference held days ago, once again asked for investment incentives, including preferential export tariffs, natural resource tax cuts and preferential loans.

It also asked the government to instruct thermal power plants, which signed contracts with Vinacomin before, to buy coal domestically. 

The government has set up a steering committee to deal with state-owned enterprises’ (SOEs) unprofitable multi-billion dong projects. The projects will be dealt with market rules instead of preferences.

Meanwhile, the biggest coal consumers in the national economy, including steel mills and electricity generators, don’t want to buy coal domestically from Vinacomin. An official report showed that enterprises imported about 10 million tons of coal in 2016.

The director of an enterprise pointed out that Vinacomin, on one hand, complained that its coal cannot be sold and the inventory volume is high, but on the other hand, continues to import coal. The miner mixes import coal with its coal for sale, or sells the import coal for profit.

Since coal is now cheap in the world market, electricity plants and steel mills tend to import coal instead of buying coal from Vinacomin.

The Vung Ang Power Plant, belonging to PV Power, for example, only bought 11.5 percent of coal output in the first four months of the year under a contract signed with Vinacomin.

Regarding the proposed preferential taxes and fees, the Ministry of Finance (MOF) said the natural resource tax must not be lower than 10-12 percent.

In an effort to help Vinacomin ease difficulties, MOF suggested granting bigger coal export quotas to Vinacomin, which would be allowed to export 3-4 million tons a year instead of 2 million tons. However, the export extension did not help in the first half of 2016, because Vietnam’s export price was higher than the world’s price.

Analysts commented that the key problem of Vinacomin lies in the high production cost, and that no special policy can save Vinacomin if it continues exploiting coal at such high cost. 

Deputy PM Trinh Dinh Dung in the third quarter of 2016 requested Vinacomin to reconsider its exploitation technology, increase the productivity and minimize loss instead of relying on the state’s support. If it cannot do this, even the modest profit of VND800 billion gained in 2016 would be unattainable in the next years.

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