Vietnamese fuel subsidies threatened

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Vietnam: Vietnamese cement producers are facing calls to end subsidies on buying electricity. According to Minister of Finance Vuong Dinh Hue, cement and steel producers enjoyed subsidies of US$120m in 2010, with foreign investors netting US$24m of this total.

Hue raised the issue at the latest National Assembly whilst explaining the loss incurred by Vietnam Electricity (EVN). Citing the auditing results in 2010, Hue said that the cement and steel industries consumed 11% of the total commercial electricity output (982Mkwh). The problem was that the producers only had to pay US$0.04/kwh used, while the electricity production cost was

US$0.06/kwh in 2010, according to the Ministry of Industry and Trade. Naturally foreign investment has flocked to Vietnam, turning the country into a production base for export.

"We need to settle the problem when regulating the pricing mechanisms," Hue said before the National Assembly.

Member of the National Assembly's Finance & Budget Committee Nguyen Huu Quang, who once worked for the Vietnam Cement Corporation, said that EVN now has to pay US$0.06/kwh for electricity it buys from China, but that it has to sell at less than US$0.05/kwh to cement producers.

"I asked many times to restrict the export of cement and clinker, because the export prices are lower than the domestic prices. In exporting, enterprises can earn profits, but the State cannot, while the subjects for subsidisation in the society, also cannot enjoy any benefits from this," Quang said.


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