VietNamNet Bridge - The high price of input materials to produce ethanol and the policies on restricting imports to protect local production have made E5 petrol prices unattractive to consumers.

Vietnamese people are encouraged to use biofuel

At a working session between the PM’s working team and Petrolimex, which holds nearly 60 percent of the petrol market share, Petrolimex’s representative reported that E5 sales accounted for 44 percent of the group’s total sales. 

Meanwhile, other petroleum distributors had lower E5 sales. 

Vietnam has had 11 years to prepare for the national plan on popularizing biofuel which aims to help ease pollution and encourage the use of green energy. However, thorough preparation still has not brought the designed effects.

The development of ethanol production enterprises has failed. Tung Lam remains the only company which can make ethanol which is used to create E5. 

The supply of 200,000 cubic meters a year by Tung Lam is large enough to generate 5 million cubic meters of E5. 

Meanwhile, the other ethanol production projects developed by state-owned groups located in Dung Quat, Binh Phuoc and Phu Tho now stand still because of different reasons.

The ethanol price has been increasing since the day biofuel hit the market to replace RON92 petrol. On October 5, when the latest petrol price adjustment was announced, the ethanol price was VND15,458 per liter.

The Ministry of Industry and Trade (MOIT) reported at the National Assembly’s session in May 2018 that the projects still cannot be restarted and the plan to have additional ethanol supply since late 2017 has failed.

The ethanol price has been increasing since the day biofuel hit the market to replace RON92 petrol. On October 5, when the latest petrol price adjustment was announced, the ethanol price was VND15,458 per liter. 

If Vietnam needs at least 267,850 cubic meters of ethanol to mix biofuel, the modest increase of some hundred of dong per liter would be high enough to affect enterprises’ profits.

Currently, cassava is the only input material used to make ethanol in Vietnam. However, this is also the input material of other industries and is an important export of Vietnam.

The sliced cassava price has been increasing since the beginning of the year because of the demand surged from Chinese alcohol and ethanol plants.

According to MOIT, in the first six months of the year, Vietnam exported 1.47 million tons of cassava, worth $543 million, of which 90 percent went to China. 

With the average export price increasing by 80 percent, the export volume decreased by 26.4 percent, but the export turnover increased by 8.9 percent compared with the same period last year.

Will the ethanol price decrease in the future help force the E5 price down? 

This depends on two factors. First, If Vietnam can find any other materials with output large enough and prices low enough to make ethanol. Second, if ethanol plants can create in a competitive environment.

US$1=VND22,000

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