Cement firms accuse coal monopoly of unfair practices

Cement companies have filed complaints against the state-owned coal monopoly, saying it is earning undue profits by charging much higher transportation fees than warranted.

Barges used to transport coal dock at Viet Tri Port.

Nguyen Van Kien, board chairman of Cement X18 Factory in the northern province of Lang Son, told Thanh Nien that fees for transporting coal to the factory charged by the Vietnam Coal and Minerals Group (TKV) was three times higher than they should be.

For the same distance, the factory paid just one-third of the fees (charged by TKV) for transporting their cement products, Kien said.

Agreeing with Kien, Nguyen Van Thien, chairman of Vietnam Cement Association, said the coal usually used in cement production, for example, was estimated to cost VND50,000 (US$2.7) per ton for being transported from Quang Ninh Province in the north – TKV’s major mining site – to seaports in other localities.

If VND20,000 per ton was added for transporting the coal from the seaports to cement factories and value-added-tax applied, the total fees should be less than VND1.3 million ($70.4), yet TKV forced the factories to pay VND1.4 million ($75.8), Thien said.

As all cement factories produce 50 million tons a year in total and consume around 3.5 million tons of coal, they were suffering combined losses of VND350 billion ($18.9 million) per year because of the high transportation fees, Thien said.

Pham Duy Vinh, vice director of Viet Trung Cement Factory, accused TKV of forcing factories to agree to their transportation methods.

Vinh said it was unreasonable for TKV to argue that they had to transport coal to the factories from seaports because they were afraid that family-run businesses could buy the coal subsidized by the government and sell it at higher prices.

The cement factories also accused TKV of selling them coal with higher humidity content than regulated.

Kien said the coal’s humidity was always 3 percent higher than the regulated 8.5 percent, meaning that his factory had to pay for an additional 300 tons of extra coal for every 10,000 tons they bought from TKV.

In total, the cement industry lost another VND100 billion ($5.4 million) due to the high humidity, Kien estimated.

While they have been aware of the unreasonable fees and tricks, cement factories said they had not dared to complain for many years, as TKV would “punish” them.

“If coal arrives one day later than the deadline, the factory will lose several billions of dong,” said a representative of the Viet Trung Cement Factory.

Nguyen Thi Yen, chairwoman of Huu Nghi Cement Joint-stock Company in the northern province of Phu Tho, said when her company changed its coal supplier, TKV punished them by asking them to pay off the debt of VND15 billion ($812,347) within one week.

When Huu Nghi managed to pay it off, TKV asked for interest at the rate of 97 percent a year, Yen added.

“The fact that TKV has used its monopoly to force companies to accept its higher transportation fees has lasted for many years,” Thien said.

In 2008 the association had filed a similar complaint to the Ministry of Industry and Trade, the Ministry of Finance and other related agencies, but no action has been taken so far.

VietNamNet/TN

Tags: Vietnam cement industry