Vietnam promotes trade in coal with Laos

Present at the conference were Deputy Minister of Industry and Trade Nguyen Hoang Long and representatives from the ministry’s Asia-Africa Market Department, the Oil, Gas and Coal Department, the Electricity Regulatory Authority of Vietnam, the Electricity and Renewable Energy Authority, and the Ministry’s Office, in addition to the Vietnam National Coal and Mineral Industries Group (Vinacomin), Vietnam Oil and Gas Group (PVN), and Dong Bac Corporation, among others.

In recent years, the Vietnamese-Lao coal cooperation has seen a promising start. A highlight of this cooperation is the Memorandum of Understanding (MoU) on coal cooperation signed by Vietnamese Minister of Industry and Trade Nguyen Hong Dien and Lao Minister of Energy and Mines Phosay Sayasone on July 20, 2023. According to the MoU, both countries will further enhance cooperation and investment in coal mining, processing and export. Laos is expected to transport approximately 20 million tonnes of coal annually to Vietnam, depending on market demands and actual conditions.

Additionally, Vietnam will facilitate the trade in coal between enterprises of the two countries while enhancing the sharing of experiences in building coal mining and processing capacity. This event not only marks a new milestone in bilateral energy cooperation but also contributes to ensuring national energy security and promoting Vietnam's energy transition in line with international commitments.

The July-25 conference assessed the MoU’s implementation and discussed measures to further promote coal cooperation with Laos.

Reporting on the situation of Vietnam’s trade in coal with Laos in recent times, the leader of the Oil, Gas and Coal Department stated that the department has advised the MoIT’s leadership to direct and urge investors of thermal power plants and related units to prioritize purchasing coal from Laos for electricity production in accordance with the Prime Minister’s directive in Document 745/TTg-CN dated August 15, 2023.

According to data from the General Department of Vietnam Customs, in 2023, Vietnam imported 2.239 million tonnes of coal worth US$159.4 million from Laos. In the first six months of 2024, the import volume and value reached 1.171 million tonnes and US$75.8 million, respectively.

Nevertheless, Vietnam’s trade in coal with Laos still faces difficulties, primarily related to infrastructure. Customs clearance for Vietnam’s coal imports from Laos is mainly done through the international border gate pair of La Lay (Quang Tri) and La Lay (Salavan). Due to its high price, coal imported from Laos is less competitive than domestically produced coal or coal imported from other countries.

In the short term, the leader of the Oil, Gas and Coal Department proposed that Laos should consider reducing the export price of coal by implementing measures to reduce production costs and minimize intermediaries to enhance the competitiveness of Lao coal compared with Vietnam’s coal imports from other countries. Additionally, Laos should invest in upgrading and expanding roads to improve transportation conditions and capacity.

In the long term, Vietnam requested Laos not to apply the 10 percent tax rate to coal exports to Vietnam. Meanwhile, units of the Vietnamese coal sector are urged to invest in coal exploration and extraction in Laos to meet domestic demand.

By Hoang Giang & Can Dung