Nov 30, 2012

Vietnam - Vietnam to start mandatory use of bio-fuel in end-2014

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HCMC – Petrol with 5% bio-ethanol content, or E5 petrol, will be officially sold in major cities and provinces by December 2014, giving ethanol producers and cassava growers hope for strong future sales.

The Prime Minister last week passed the schedule for sales of mixtures of biological and fossil fuels. As per this schedule, E5 petrol will be sold in Hanoi, Haiphong, HCMC, Can Tho, Danang, Ba Ria-Vung Tau and Quang Ngai from December 1, 2014 and available nationwide from December 1, 2015.

Meanwhile, gasoline blended with 10% bio-ethanol (E10 petrol) will go on sale in the aforesaid localities from December 1, 2016 and be sold across the country from December 1, 2017.

Nguyen Anh Toan, deputy general director of PetroVietnam Oil Corporation (PV Oil), said two of the three ethanol plants developed by PV Oil in Quang Ngai and Binh Phuoc had begun production in the second quarter. However, only 10% of the products are consumed locally.

In August 2010, PV Oil launched E5 petrol into the market for trial sale. So far, the sales volume has been modest.

PV Oil forecasts around 200,000 liters of E5 petrol will be sold this year, while the annual capacity of each plant that PV Oil invests in is 100 million liters.

According to a previous plan, five ethanol plants would have begun operations by 2012. However, given the trivial market share of E5 petrol, some plants are still on a trial run, leading to a huge volume of cassava being unsold or sold on the cheap.

Dang Quoc Dung, deputy general director of PetroVietnam Central Bio-fuels Joint Stock Company (PCB), said that when E5 petrol is brought into mandatory use in 2014, bio-petrol producers will have a better chance of good sales in the local market. At present, they mainly export products given poor consumption at home.

Similarly, cassava, material for bio-fuel, is being exported en masse, but the situation will change in late 2014. Local ethanol producers will compete with traders in the purchase of dried sliced cassava, Dung forecast.

Cassava growers in the provinces where ethanol plants are located like Phu Tho, Binh Phuoc and Quang Ngai hoped for stronger sales as these plants annually need nearly 800,000 tons of dried sliced cassava for production.

However, several plants are suffering low consumption of bio-petrol because of many reasons, including investment incentives still being studied.

Typical ethanol plants in Vietnam are Ethanol Phu Tho, Bio-ethanol Dung Quat and Bio-ethanol Binh Phuoc, each of which has a capacity of 100 million liters and a demand for 240,000 tons of sliced cassava per year. Each of these plants has an investment capital of VND1.6 trillion.

In addition, Ethanol Dai Tan plant has an annual capacity of 125 million liters, produced from 300,000 tons of cassava, and Ethanol Tung Lam can produce 60 million liters every year.

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