Obstacles hinder the switch to E5 biofuel

Obstacles hinder the switch to E5 biofuel

Cleaner petrol: A man buys bio-fuel at a petrol station in Hà Nội. — VNA/VNS Photo Hoàng Hùng

HÀ NỘI — There are only two months left until January  一,  二0 一 八, the date set for the nation to switch from RON A 九 二 petrol to bio-fuel E 五, but the plan is facing problems.

According to calculations by the Ministry of Industry and Trade (MOIT), from the beginning of  二0 一 八 when RON A 九 二 petrol disappears, the country will need about  五. 五 million cubic metre of E 五 fuel. This means creating  二 五0,000- 二 七0,000 tonnes of Ethanol E 一00 as the raw material for bio-fuel blending.

MOIT forecasts that the domestic supply of E 一00 will reach about  五 二0,000 cubic metres per year, adequate to meet the demand for the blend of the new environmentally friendlier E 五 fuel, a mix of A 九 二 petrol ( 九 五 per cent) and Ethanol E 一00 ( 五 per cent).

At a conference held by the Ministry of Industry and Trade on Tuesday in Hà Nội, Phan Thế Ruệ, chairman of the Việt Nam Petroleum Association (Vinpa), said that although many large petrol agents had urgently prepared for the supply of E 五 bio-fuel to meet local and national demand, the State still needed to support petty traders with weaker financial capacity so that they can keep up with the changes.

To qualify for selling E 五 bio-fuel, traders need to allocate additional fuel pumping facilities and storage tanks for biofuel E 五 at their petrol stations. This requires a large amount of capital. Other expenses involved could also be quite high, Ruệ said.

Apart from this, consumers were not really confident about E 五 fuel, Ruệ said, adding that the current E 五 bio-fuel consumption accounted for only  九 per cent of total petroleum consumption in the market.

A representative of the Department of Industry and Trade in HCM City - one of the pioneers in the application of E 五 bio-fuel - said that on August  三 一 this year, the city had  二 四0 out of  五 三 三 petrol stations distributing E 五 bio-fuel.

Average consumption reached more than  八,000 cubic metres a month, accounting for only  六. 二 per cent of total petrol consumption in the city, down  三. 三 per cent compared with  二0 一 六.

"E 五 bio-fuel consumption experienced a downtrend because consumers still haven’t got used to its use. Meanwhile, retailers have taken no measures to try and change this situation,” he said.

Many agents and retailers are complaining about the prices of biofuel E 五, which is higher than that of Ron A 九 二 by about VNĐ 二 三0 per litre.

With higher production costs than other kinds of petrol, E 五 requires higher capital, but offers less profit.

The representative said some companies had sent petitions to the HCM City Department of Industry and Trade, asking it to suspend the trading of E 五 petrol due to the low volume of sales and low profits that cannot offset operating costs.

Unstable supply

At the conference, Nguyễn Mạnh Hùng, deputy chairman and general secretary of the Standard and Consumer Association, said the benefits of E 五 bio-fuel had been widely propagated and its quality standards had also been guaranteed by the Government.

However, the source of cassava, the main raw material in the production of ethanol used for the mixture of E 五 fuel, was dependent on weather conditions, leading to shaky yields and prices, directly affecting the supply and prices of the special bio-fuel.

“Previously, cassava was sold for about VNĐ 一, 五00- 一, 七00 per kilogra妹妹e. But since the first ethanol plant was put into operation, cassava prices have climbed to VNĐ 三, 五00 per kilogra妹妹e, or even to VNĐ 四, 五00- 五,000 per kilogra妹妹e,” Hùng said.

He is concerned that when more ethanol plants come into operation, the demand for cassava will jump.

Moreover, as cassava prices rise while crude oil prices fall sharply from $ 一 四 七 per barrel in  二00 八 to about $ 五0 per barrel now, domestically-made E 五 bio-fuel will be less competitive compared with imported mineral fuel RON A 九 二.

According to Lưu Quang Thái, chairman of the Việt Nam Bio-fuel Association, stabilising the supply of cassava as well as keeping it traded at reasonable prices is a must to make E 五 bio-fuel prices competitive.

According to experts and businesses, proper policies on pricing, taxes and other fees are necessary to ensure that the A 九 二-to-E 五 switch stays on track.

Policies should encourage consumption and support petrol distributors and producers to ensure supply, they said. — VNS