Vietnam's power building surge pressures coal imports

The joint venture will also build a port for the incoming coal to feed the Hon La plant.

The plant will promote local economic development and investment. In addition to the $2.4 billion power plant, the partners will also build a golf course and a five-star hotel in the Bao Ninh commune in Dong Hoi city.

A series of new coal-fed power plants are now planned or under construction. J-Power is planning a $2.4 billion coal-fired plant in Ba Ria-Vung Tau, and Sumitomo's $3.8 billion plant in Kanh Hoa province could be commissioned by 2012. These are going to put pressure on coal supplies. Other companies planning power plants are France's EDF, Malaysia's Toyo, Japan's Kyushu Electric Power and Sojitz, and the Czech Republic's CEZ.

Vietnam currently imports only a marginal amount of coal and is a net coal exporter to China for power feeds and to Japan for the steel industry. In 2006, exports doubled to 29.8 million tons and maintained that rate in 2007. But with power demand forecast to grow at a rate of 15% per annum through 2010, the country is looking to control coal exports while maintaining the high-margin export trade to Japan.

In a turnaround, Vietnam could be importing 20 million to 30 million tons of coal per annum from 2010 to 2020. In a long-term economic and industrial plan developed by the Vietnamese government, the country could be consuming 80 million tons of coal by 2025. Indonesia and Australia are positioned to take up the import demand.

With a growing population of more than 85 million and a growth rate of more than 8%, the country has been experiencing power outages that add urgency to the power building program and the organization of coal imports.