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NEWS UPDATES 27 September 2010

Power use sparks Vietnam steel debate

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The argument between the power and steel sectors flared up last week with the chairman of Electricity of Viet Nam, Dao Van Hung, saying steel firms have taken advantage of the low electricity prices in Viet Nam.

Though steel supply exceeds demand in Vietnam, many foreign firms still seek to invest in the country, hoping to export their products for higher profits, Hung has been quoted as saying. They pay just over US4.7 cents per kWh, much lower than in Indonesia (6.7c), Thailand (8.1c), and Singapore (14c).

Steelmakers use up to 1,900MW while cement plants consume 1,200 to 1,500MW, together adding up to 18 per cent of EVN's total output.

Their huge consumption is causing power shortages from which all people and economic sectors suffer, according to Hung.

Hung's statements came two weeks after the chairman of the Viet Nam Steel Association, Pham Chi Cuong, opposed an EVN recommendation to the Vietnamese government that steel plants making more than 100,000 tonnes a year should build their own power plants.

Cuong said the proposal was "not reasonable."

"If steel refineries have to build power plants and cement plants have to produce coal for themselves... why is EVN present?" he asked.

Generating their own power would make costs prohibitive, he said, pointing out it took the country decades to attract foreign investment in the steel sector.

The industry was the "backbone" of other industries like automobile manufacture, transport, and ship-building, he said.

"Without investment in steel, we would have to import steel and it will lead to a huge trade deficit."

According to the Ministry of Industry and Trade, 65 steel plants with an annual capacity of 100,000 tonnes or more, including seven foreign, are operating in the country.

Half of them were licensed by provincial authorities and have never been approved by the Government.

Many of them used obsolete technologies that need 500-600 kWh to produce a tonne of steel billet compared with the 350-400 kWh for Japanese plants.

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