The Vietnam Coal and Mineral Industries Group (Vinacomin) has recently sent documents to relevant agencies repeatedly, proposing to lower the coal export tariff. The agencies still keep silent, while experts have voiced their disagreement.

 Vinacomin proposal to cut export tariff faces strong opposition

Vinacomin moaning about difficulties

'Thoi bao Kinh te Vietnam' several days ago reported that in a document sent to the Prime Minister in mid July 2012, Vinacomin proposed to lower the export tariff from 20 percent to 10 percent. They reasoned that the world’s coal price decreases and the difficult production of the group, which has led to the high inventory volume, 8.5 million tonnes by the end of June.

However, according to Tuoi tre, a Vinacomin’s report about the business performance in the first six months of the year showed that the total inventory volume had reached 8.9 million tonnes by the end of June.

The amount includes only 5.9 million tonnes of finished products, while the other 3 million tonnes were crude or semi-finished products. As such, the gap between the inventory volume in the report and the figure in the document to the Prime Minister was 2.6 million tonnes.

Nguyen Chan, former Minister of Mining and Coal, also said that it is unreasonable to count on crude coal when calculating inventories, because crude coal is still under the production process and it would still have to experience many other stages before becoming finished products.

Dr Nguyen Thanh Son, Director of the Board of Management of the coal projects in Red River Delta, an arm of Vinacomin, has pointed out that of the inventory volume, 1.2 million tonnes, just can meet basic standards. This also means that a part of the inventories has low quality cannot be sold, while the unsalability should not be blamed on the high tax.

Pham Quang Tu, Deputy Head of the Institute for Development Consultancy, has also noted that the reports by Vinacomin recently prove to be not credible, because of the lack of the monitoring of other organisations.

Tu went on to say that Vinacomin should make public the input costs and the coal production costs, at least once before the group raises the sale prices applied to power generation plants.

Vinacomin told to rescue itself before asking for tariff cuts

When asked to make comment about the proposal for tariff cuts, Son, on one hand, admitted that Vinacomin is facing big difficulties and it may not make profit in 2012, on the other hand, does not think that tax should be cut.

Also according to Son, Vinacomin now can enjoy a lot of preferences. It does not have to pay for materials, while it only has to pay for fuel and labor force. Meanwhile, the environment fee is low, just VND10,000 per tonne, and the environment protection tax VND20,000 per tonne.

Meanwhile, Tu has affirmed that the tax cut proposal should be refused, because Vietnam does not encourage exporting raw minerals. If the export tariff is cut, Vinacomin would boost exports. Meanwhile, Vietnam has been warned that it would have to import coal from 2015.

“If all Vietnamese enterprises follow Vinacomin and ask for tax cuts to help ease difficulties, the state budget would be empty and Vietnam would not have money to pay for healthcare or education,” Tu said, adding that what Vinacomin should do is to cut down expenses to reduce the production costs, rather than expecting tax cuts.

Thoi bao Kinh te Saigon has reported that Vinacomin, due to its big difficulties, has laid off workers since the beginning of the third quarter. At some mines, workers only work 20 days instead of 20.