Southern cities and provinces are ready to switch from the RON92 grade petrol to E5 biofuel starting next year, but concerns remain over its pricing and consumer preference.

Bikers purchase E5 fuel at a petrol station on Tran Hung Dao Street, Hoan Kiem District, Ha Noi. 

Local authorities and petrol traders said at a meeting on Saturday they are all set to sell the E5 biofuel from January 1, 2018.

Nguyen Phuong Dong, deputy director of the HCM City Department of Industry and Trade, said all 534 petrol stations in the city will sell E5 bio-fuel on a regular basis next year.

Some of the petrol stations are prepared to sell from December 15, he said, adding that about 45 per cent have already started selling the E5 biofuel.

“To ensure sufficient supply of the E5 fuel, the department will inspect all 534 gas stations on December 15,” Dong said.

The trading and sale of RON92 petrol will stop on December 31, 2017 and be replaced by the E5 biofuel on January 1, 2018 under the Prime Mnister’s Announcement 255/TB-VPCP on June 6.

According to the Department of Science and Technology under the Ministry of Industry and Trade, E5 fuel has completely replaced RON92 petrol in four cities and provinces – Da Nang, Quang Nam, Quang Ngai and Can Tho.

But authorities in southern localities have also said they have encountered some difficulties in switching from RON92 petrol to E5 bio-fuel, particularly product price and consumer preference.

While sellers are not encouraged by the current price mechanism, consumers are not convinced by the product’s quality standards, which have mostly remained undisclosed to the public.

Sellers are also concerned that the new product would not be attractive enough as it is only VND1,000-1,200 (4.4-5.3 US cents) per litre cheaper than RON95 petrol. This might see market demand for RON95 petrol rise strongly, especially if consumers’ awareness over the quality of E5 biofuel is not raised.

“Petrol stations in the southern region have also raised questions about how they would deal with the remaining amount of RON92 petrol not sold out by January 1, and about how much financing they would get because the input cost for selling E5 fuel is still high,” Dong said.

Across the country, a number of companies have been prepared to sell the new product on December 15, including Nam Song Hau Trading Investing Petroleum JSC and PetroVietnam Oil Corporation.

The Hau Giang-based Nam Song Hau Trading Investing Petroleum JSC has three factories with daily capacities of 400, 800 and 1,500 cubic metres, four subsidiaries, and 77 petrol stations.

The company will subsidise sellers by purchasing the remaining amount of RON92 fuel at the distributed price.

Meanwhile, PetroVietnam Oil Corp (PV Oil) has completed all preparations for the new product, according to general director Cao Hoai Duong.

Duong said that PV Oil has invested in maintaining, improving and upgrading its infrastructure to make sure the supply of E5 fuel is sufficient and product quality meets national standards. He estimated the preparation costs for the company at VND100 billion ($4.44 million).

Nguyen Minh Toai, director of the Can Tho Department of Industry and Trade, acknowledged that the main difficulties in regular sale of the E5 fuel are consumer awareness and sellers’ doubts on input costs.

He said local authorities need to improve consumers’ awareness of E5 bio-fuel and develop proper plans to support traders in making the switch.

Deputy Minister of Industry and Trade Hoang Quoc Vuong said at a conference on Saturday that there has been no complaint on the quality of E5 fuel from consumers since it was piloted in seven provinces and cities in late 2014.

Its quality and safety standards have been confirmed by the Ministry of Science and Technology, he added.

The deputy minister also said that the Finance and Industry and Trade ministries have been working on tax rates and selling prices to make E5 more attractive to consumers.

It is important to put E5 fuel into use nationwide as it will improve the country’s energy security situation, protect the environment and further develop the Vietnamese energy industry, Vuong said. — VNS