Removing RON 92 petrol, the consumption of E5 bio-fuel will be sharply increase

RON 92 petrol will be replaced by E5 biofuel from January 1st, 2018. Photo: Hong Van

The roadmap to replace RON 92 petrol with E5 biofuel from January 1st, 2018 has been adopted and cannot be delayed. Thus, the Ministry of Industry and Trade promptly discussed with enterprises to issue measures in accordance with the Prime Minister’s request.

A report from the Ministry of Industry and Trade showed that total consumption of petrol nationwide in 2016 reached about 7.4 million m3; of which E5 biofuel was about 590,000 m3, accounting for 8% of the total consumption of petrol on the market; mineral petrol was about 6.81 million m3, accounting for 92%.

If the RON 92 petrol will be completely replaced by E5 biofuel from 2018, the total consumption of E5 biofuel is expected to reach over 5.3 million m3. The total demand of E100 fuel in 2016 accounted about 29,500 m3. From 2018, when replacing by E5 biofuel, the E100 fuel for the mixture is estimated at over 267,000 m3.

The fact that, the supply of ethanol fuel for E5 blends is mainly from two ethanol plants of Tung Lam Co., Ltd with a total capacity of 200,000 m3 per year, which is enough to mix 3.9 million m3 of E5 biofuel per year. In 2016, Tung Lam Company sold about 2,000 m3 of ethanol per month.

Besides two plants of Tung Lam company, Vietnam has two ethanol factories with a capacity of 100,000 m3 per year in Dung Quat and Binh Phuoc, they are halting production due to lack of consumer markets. These plants are urgently developing and implementing plans to re-operate, it is expected to restart at the end of 2017.

Along with that, in the implementation of the E5 blending system, the Ministry of Industry and Trade also said that among the 26 petroleum business units, five units which have an E5 blending system in operation are: Vietnam National Oil and Gas Group, Petro Vietnam Oil Corporation, The Ho Chi Minh City One-Member Limited Liability Oil & Gas Company, Military Petroleum Corporation, Nam Song Hau Trading Investing Petroleum Joint Stock Company.

In addition, two key units which have deployed the E5 blending stations but have not yet been put it into operation are Dong Thap Petroleum Trading Import Export Company Limited - PETIMEX and Thanh Le General Import - Export Trading Corporation with the total capacity of 2 units of about 750,000-800,000 m3 per year.

Thus, the total capacity of E5 blending stations from the above 7 key units can reach 6.2-6.7 million m3 per year.

From this implementation situation, the Ministry of Industry and Trade absolutely believes that the supply of E5 biofuel can meet the market demand when replacing completely RON 92 petrol from January 1st, 2018.

However, some businesses said that there were still many difficulties in the implementation process and solutions to support enterprises need to be issued. Mr. Pham Duc Thang, Deputy General Director of Vietnam National Petroleum Corporation (Petrolimex) said that the consumption of E5 biofuel in the recent times had not reached the expectation of businesses. The main reason was that the policies and mechanisms were not drastic and production met difficulties.

Mr. Thang said: "In order to be able to synchronously deploy the selling of E5 biofuel in early 2018, the State should have more incentive mechanisms and policies for enterprises, of which the price should be put on the top priority because business enterprises must be associated with efficiency. For consumers, the difference between E5 and other types of petrol must be attractive.

Besides, Petrolimex also said that the price of E5 was still higher than the mineral petrol of150 dong per liter. Meanwhile, E100 (ethanol – biofuel for mixture) only produces 200,000 m3 per year.

Therefore, it is necessary to stabilize the source of raw fuels and adjust import tax for E100 for domestic businesses not to be monopoly units and ensure the imports for business stability when the domestic market met problems.