Vietnam Boosts Coal Imports to Assure Investors of No Power Cuts

Vietnam’s coal imports have nearly doubled from the same period of 2023, according to customs data, as the government strives to reassure foreign investors that factories will not face a repeat of last year’s power shortages.

The country, which hosts large manufacturing operations of multinational companies like South Korea’s Samsung Electronics, Taiwan’s Foxconn and Japan’s Canon, is facing increasing pressure after it could not guarantee continuous power supplies during a prolonged heatwave last summer. Some factories were forced to temporarily suspend production.

During a meeting with foreign investors last week, Prime Minister Pham Minh Chinh vowed there will be no more electricity shortages, state media reported.

Two foreign officials in attendance, who were not authorised to speak publicly, said Chinh’s commitments were reassuring but vague on measures to achieve that goal.

The prime minister’s office did not respond to requests for comment.

Vietnam’s limited capacity to use renewable energy and commitments to avoiding new power cuts makes it “imperative” to import more coal, said Phan Xuan Dung, a researcher on Vietnam at the Singapore-based Iseas think tank.

Coal imports, mostly from Australia and Indonesia, were up by roughly 88% as of March 15 compared with the same period last year, customs data showed.

In the first two months of the year output also rose 3.3% from domestic mines, which usually cover about half of Vietnam’s demand, according to official estimates.

That came after Vietnam’s 61% increase in imports of the inexpensive fuel last year as coal-fired power plants resumed full production, in line with rising use by Indonesia, Malaysia and other regional peers.

Coal imports are projected to rise further in the second half of the year, a Vietnam-based trader said, when steelmakers and other energy-intensive industries are expected to boost production.

No breakdown on power generation is yet available for this year, but on Monday coal-fired plants accounted for about 60% of total output, according to Vietnam’s power network operator.

The combination of imports and domestic output shows coal supply exceeded eight million tonnes per month in the usually quieter January to February period, nearly 9% higher than the monthly average over the last two years.

Vietnam, which is among the world’s top 20 coal users by volume, wants to cut its reliance on the fuel but still expects peak use will not be reached this decade.

As plans to boost renewable energy and gas face delays, the government wants to complete by June a transmission line to transfer electricity from the country’s centre to its industrialised north. — Reuters

March 27, 2024