Vietnam encourages more use of bio-fuel

Bio-fuel will be sold in all localities in Vietnam in 2015, local Vietnam News daily reported on Thursday, quoting sources from the Ministry of Industry and Trade (MoIT).
According to the ministry, large petrol dealers, including the Vietnam National Petroleum Group (Petrolimex) and PVOil, have prepared facilities for selling 5 percent bio-ethanol (E5) fuel in seven provinces and cities beginning in 2014.
These areas include capital Hanoi, southern Ho Chi Minh City, northern Hai Phong city, central Da Nang city and Quang Ngai province, and southern Can Tho and Ba Ria-Vung Tau provinces.
Petrolimex said it will sell biofuel E5 RON 92 in the central province of Quang Ngai as of September 1 of this year, three months earlier than in other provinces and cities.
Vietnam selected seven cities and provinces to begin using E5 as of 2013, but the initial schedule was delayed one year because of consumer habits and the demand for bio-fuel on the domestic markets being low.
Besides, bio-fuel plants have not operated efficiently and have not actively invested in obtaining materials, and the state has no mechanisms to encourage enterprises to enter the domestic bio-fuel market.
To date, three out of 10 petrol dealers are selling bio-fuel products at 169 petrol stations, out of 13,000 petrol stations throughout the country. Consumption of bio-fuel is estimated to be one-eighth of the consumption of traditional fuel products.
Insiders said one of the main difficulties that have prevented enterprises from investing in bio-fuel stations is the high investment for converting petrol stations to selling bio-fuel products.
According to the MoIT, production costs of E5 bio-fuel are not lower than production costs of traditional petrol, because of the high investment for petrol stations selling bio-fuel.
But, over a long period, bio-fuel could compete with traditional petrol products because of the low price of cassava, which is the material used in processing bio-fuel, and preferential policies on tax and fees by the government.
Vietnam has six plants producing bio-fuel, with a capacity of 535 million litres of ethanol per year. Based upon this capacity, the plants could meet the nation's demand for bio-fuel by 2015. Currently, the price of E5 RON 92 is the same as the price for traditional RON 92, based on market rules, the ministry said.