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Soaring energy prices put burden on VN businesses



Skyrocketing prices of petrol and coal in recent days have put great pressure on businesses whose inputs are mainly these products.

Soaring energy prices put burden on VN businesses
Coal mining dumps of Cua Ong Coal Selection Company, a member of Vietnam National Coal-Mineral Industries Holding Corporation Limited. Vietnam’s imported coal output accounts for about 20-25 per cent of coal supplied to power plants annually. —VNA/VNS Photo Minh Duc

Along with the price of oil, the price of gas in the global market is increasing rapidly. For the first time in history, the price of European gas has reached US$3,600 per 1,000cu.m, according to data from the ICE Commodity Exchange in London, UK, on March 7, 2022. The price of gas futures for April delivery at the TTF hub in the Netherlands also increased to $3,639.1 per 1,000cu.m.

According to SSI Research, for companies using oil and gas as input materials, an increase in oil and gas prices will increase product costs. Gas-fired power plants are less competitive and the current situation also negatively affects the share of output offered in the power generation market.

The profit margin of enterprises may narrow if the cost of gas does not decrease. For example, at Nhơn Trạch 2 Petroleum Power Joint Stock Company (NT2), although in 2021, net revenue reached VND5.47 trillion ($239 million), a slight increase compared to the previous year, but this growth rate was slower than the increase in cost price (gas price), so gross profit margin decreased by 24 per cent in the period. As a result, the company reported profit after tax of VND534 billion, down about 15 per cent compared to 2020.

Not only oil prices, gas and coal prices on the world market also increased sharply due to the influence of the conflict between Russia and Ukraine. Russia is an important coal exporter in the world, thus when the supply of coal and oil from Russia is blocked by sanctions from the US and EU, while demand increases, pressure rises on oil and coal prices.

On March 3, 2022, the FOB Newcastle price for 5,500 kcal/kg NAR thermalcoal with 20-per cent ash, according to FOB Newcastle, reached $205.25 per tonne, up $25.65 per tonne compared to the previous session.

Indonesia’s coal 5,900 GAR was quoted by S&P Global at $200 per tonne in the same session, up $45.1 per tonne, while thermal coal 5,750 NAR in Northeast Asia increased by $28.23 per tonne to $248.63 per tonne.

Vietnam’s imported coal output accounts for about 20-25 per cent of coal supplied to coal power plants annually. Therefore, coal price fluctuations will greatly affect domestic coal power plants.

Power Generation Corporation 1 (EVNGENCO1) said that coal supply in the first two months of the year encountered some difficulties, mainly due to the high prices of coal. The corporation has worked with major coal suppliers to find solutions to supplement coal sources to ensure enough coal for operation and closely follow the actual situation to develop an appropriate operating plan.

At the conference to review the work in 2021 and implement the 2022 plan of Power Generation Corporation 3 (EVNGENCO3) under Vietnam Electricity (EVN), Chairman of the Board of Directors of EVN Duong Quang Thanh asked the business to proactively take measures to ensure coal sources for power production in the current situation.

In 2021, coal prices saw continuous surges, causing the gross profits of coal-fired power enterprises to drop sharply. The gross profit margin of Hai Phong Thermal Power Joint Stock Company (HND) was only 7.1 per cent, down sharply from 17.5 per cent in 2020. Meanwhile, Pha Lai Thermal Power Joint Stock Company (PPC) suffered a gross loss of VND112.3 billion.

The sharp increase in input costs can be seen as a double difficulty for coal power enterprises when international organisations no longer support loans to develop coal power projects due to concerns about environmental pollution. This will hinder businesses that are planning to invest in new power plant projects. 

Difficult transport

Crude oil price remains at nearly $110 per barrel and is forecast to stay at a high level as the energy demand of the global economy continues to increase.

In the domestic market, the inter-Ministry of Finance-Industry and Trade has adjusted petrol prices from March 11, 2022 with an increase of nearly VND3,000 per litre of petrol and nearly VND4,000 per litre for kerosene and oil diesel. Accordingly, the price of RON 95 petrol has approached VND30,000 per litre, while the price of 0.05S diesel oil is VND25,268 per litre.

According to HCM City Goods Transport Association, the price of petrol has soared to the highest level in the past seven years and may increase further, causing transportation enterprises to face many difficulties. Fuel costs are accounting for about 35-40 per cent for container trucks and heavy trucks; and other vehicles account for about 25 per cent on average. Businesses also have to pay many other costs such as wharf, road maintenance and BOT fees.

Many businesses have overcome the damage caused by COVID-19 that has lasted for the past two years, and the whole industry now continued to face difficulties from the increase in petrol prices.

Hoang Ha Joint Stock Company (HHG) said that the COVID-19 pandemic has severely affected the business’s operations. From August to October 2021, all intercity vehicles of the company must stop working.

Last year, HHG recorded net revenue of VND94.3 billion, down 16 per cent compared to the previous year; and a post-tax loss of VND68.6 billion. HHG has suffered continuous losses since the third quarter of 2019.

Anh Duong Group Joint Stock Company-Vinasun Taxi (VNS) recorded net revenue in 2021 down 52 per cent compared to 2020, to VND485 billion and a net loss of nearly VND277.6 billion, in 2020 the loss was VND210.6 billion.

According to Ta Long Hy, Deputy General Director of VNS, from the beginning of 2022, the price of petrol has increased sharply, causing taxi businesses to choose between increasing fares or accepting losses. Vinasun had to increase freight rates to solve the problem. 

Source: Vietnam News 



Owners of condotels, officetels get title deeds



Buyers of condotels, officetels and resort villas can have ownership certificates from May 20 under a new decree guiding the implementation of the Land Law.

On April 3, 2023, the Government issued Decree No.10 on amending and supplementing several decrees guiding the implementation of the Land Law from May 20.

The ownership term of the condotel depends on the purpose of land use following current regulations but not exceeding 50 years of the ownership term for land allocated or leased by the State for commercial or service use.

Buyers may only own land and apartments during the remaining land use period, not for long-term use as residential land.

According to experts, the Government’s decree will remove legal bottlenecks for investors and buyers of condotels, officetels and resort villas.

Experts said that if legal problems in the condotel, officetels and resort villa market are resolved, it can restore nearly 239 frozen projects nationwide, with a total value of about 30 billion USD./.


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Vietnam invests over 316 million USD abroad in five months



Vietnam invested nearly 316.4 million USD abroad in the first five months of this year, equivalent to 93.5% of the figure recorded in the same period last year, according to the Foreign Investment Agency under the Ministry of Planning and Investment.

Vietnam invests over 316 million USD abroad in five months hinh anh 1Illustrative image (Source: VNA)

Hanoi – Vietnam invested nearly 316.4 million USD abroad in the first five months of this year, equivalent to 93.5% of the figure recorded in the same period last year, according to the Foreign Investment Agency under the Ministry of Planning and Investment.

Of the total, 142.7 million USD was poured into 47 new projects, or 48.6% of the figure in the same period in 2022 while 173.7 million was added to 16 underway ones, a year-on-year increase of 3.9 times.

Vietnamese investors abroad invested in 13 sectors, especially retail and wholesale, information and communications, finance, banking, agro-forestry-fisheries.

In the January-May period, Vietnamese investments landed in 20 countries and territories, led by Canada with one new and one expanded project worth over 150.2 million USD. It was followed by Singapore, Laos, and Cuba.

The agency said that as of May 20, Vietnam had operated 1,648 valid projects abroad with combined investment of nearly 22.1 billion USD, including 141 by State-owned enterprises worth 11.67 billion USD, accounting for 52.8% of the country’s total.

Vietnamese investment abroad is mostly in mining (31.5%) and agro-forestry-fisheries (15.6%).

Leading destinations for Vietnamese investors are Laos (24.4%), Cambodia (13.3%), and Venezuela (8.3%)./.


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Electricity imports from Laos, China account for just a small part: ministry



Electricity imports from Laos and China accounted for just a modest part of the total electricity demand of Vietnam, Deputy Minister of Industry and Trade Dang Hoang An.

Electricity imports from Laos, China account for just a small part: ministry hinh anh 1Workers of Vietnam Electricity check the transmission system. (Photo: VNA)

Hanoi –
Electricity imports from Laos and China
accounted for just a modest part of the total electricity demand of Vietnam,
Deputy Minister of Industry and Trade Dang Hoang An.

An made the statement in response to National Assembly deputies’ question
about why Vietnam had not connected domestic renewable energy projects with a
total capacity of 4,600 MW to the national power grid but increased imports
from Laos and China.

NA deputy Ta Thi Yen said at a meeting late last week that while the
negotiations of pricing to connect renewable energy projects to the national
power grid faced roadblocks, Vietnam was forced to increase the import from
Laos and China to make up for the shortage. This was a huge waste when hundreds
of solar and wind power energy projects could not generate power for
consumption while the economy was facing a severe shortage of electricity, she

In response, An said that Vietnam imported electricity not because of the
shortage. The country has been buying from China since 2005 via transmission
lines in Lao Cai and Ha Giang provinces and from Laos, mostly hydroelectricity,
following an intergovernmental cooperation agreement in 2019.

The electricity import from Laos was around 7 million kWh per day and 4 million
kWh from China, very modest compared to the daily consumption demand, estimated
at around 445-450 million kWh in the northern region.

An said that the purchase was under cooperation agreements with countries in
the Greater Mekong sub-region, which would enable the connection of the power
grid with other countries in the region. In addition, the electricity master
plan No 8 also set out the target of exporting renewable energy to neighbouring

Vietnam had 220 kV line linking with Laos and 110 kV with China. Under the
commitments with Laos, Vietnam would import at least 3,000 MW from this country
by 2025 and 5,000 by 2030.

An pointed out that the electricity import from Laos and China increased this
year because of a shortage of supply caused by extreme weather and drought in
the dry season.

The electricity import price was lower than some domestic sources, according to
the ministry.

For example, it was around 6.5 cent or 1,540 VND per kWh from
China and 6.9 cent from Laos. Statistics of Vietnam Electricity (EVN) showed
that the average electricity purchasing price was around 1,845-2,200 VND per
kWh in the first three months of this year, meaning that the prices from Laos
and China were lower than some domestic sources.

Bui Van Thinh, President of the Binh Dinh Wind Power Association, said that
power shortage was mainly in the northern region while renewable energy
projects were concentrated in the central and southern regions, creating
pressure on the North–South 500 kV transmission network.

Buying electricity from China and Laos is reasonable, he said.

Regarding the roadblocks to the connection of more than 4,600 MW of renewable
energy to the national power grid, An said that many projects had not met legal
procedures due to violations of regulations about planning, land and
construction investment.

He said that removing the roadblocks for renewable energy projects was being
hastened based on the harmonisation of all sides’ benefits.

EVN’s statistics showed that there were 52 wind and solar power projects with a
total capacity of 3,155 MW which had applied for negotiations. Of them, 42 with
a total capacity of nearly 2,259 MW completed pricing negotiations with EVN. About
33 projects with a total capacity of 1,581 MW had not applied for negotiations.

The Ministry of Industry and Trade approved temporary prices for
19 projects with a total capacity of 1,347 MW. As of May 26, five projects with
a total capacity of 303 MW were eligible for commercial operation, meaning that
the power system would have an additional supply source of more than 300 MW
from these plants in the next few days./.


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