Coal import rights of coal-fired power producers in Vietnam.

In Official Letter 2719 in October 2016, the Generate Directorate of Energy (GDE) notifies the General Department of Customs that coal-fired power producers who want to directly import coal must obtain an approval by the Prime Minister. The GDE’s notification relies on two grounds:

·        coal trading is conditional business under the investment regulations; and

·        an instruction of the Prime Minister contained in Notice 346 of the Government Office issued in June 2014. In the Notice 346, the Prime Minister also suggested that coal-fired power producers should import coal via Vietnam Mining Group or another State-owned company.

There are flaws in both grounds. On the first ground, the GDE seems to misunderstand coal import as part of production process (i.e. import coal as input material for power production) and coal as part of a trading process (i.e. import coal for reselling to other). The investment regulations are intended to regulate the second activity not the first activity.

On the second ground, the instruction that coal-fired power producers must use coal import services from certain specified SOEs appears to be contrary to Article 10.1 of the Investment Law 2014 which provides that “the State shall not require investors to purchase or use compulsorily goods from a domestic producer or services from a domestic service provider”.