The E5 grade bio-fuel, which comprises 5% ethanol and 95% petrol, was scheduled to replace RON 92 petrol at all petrol stations in eight major provinces and cities on June 1, 2016, including Hanoi, Haiphong, Đanang and Quang Nam, as well as Quang Ngai, Ho Chi Minh City, Can Tho and Ba Ria Vung Tau. Meanwhile, 50% of the petrol stations in other centrally-controlled cities and provinces will sell E5 petrol.
Recently, the Ministry of Finance produced a draft resolution on amending and adding some regulations to Circular 39/2014/TTLT-BCT-CTC on using the petrol stabilisation fund and managing petrol prices on the local market. The draft has proposed a specific calculation for the selling price of E5 petrol, with a lower input price than that of other kinds of petrol, to create favourable conditions for selling that petrol on the market.
However, Phan The Rue, chairman of the association, said enterprises producing and distributing E5 petrol still face many difficulties in trading the bio petrol, noting that they needed more support from the state to successfully increase the market share of bio-petrol.
To achieve this target, the state must re-organise the ethanol production system to reduce production costs and meet the demand for ethanol from bio-petrol processors, Rue said. At present, Vietnam has 10 factories that produce ethanol and mix E5 petrol, but many of them have halted or temporarily stopped production.
He said the state should have policies in place to resume the development of regions that grow cassava, a raw material used to produce ethanol, to meet the demand for ethanol.
In addition, the state should adopt a policy to further reduce the price of E5 petrol to encourage local consumers to buy it, he said. At present, the price of E5 petrol is VND500 per litre lower than the price of RON 92, but the gap should increase from VND500 to VND900-VND1,000, reported vietnamplus.vn.
Meanwhile, to sell E5 petrol, the traders must absorb high costs in building the infrastructure to store and sell petrol, such as petrol tanks and pumps, leading to increased production and land allotments, he said. The increased real estate needed for selling petrol is a problem in large cities.
Thus, to successfully sell E5 petrol on the local market, the state should support enterprises in building facilities for mixing and selling bio-petrol and petrol stations for selling E5 petrol and should create favourable conditions for them to acquire land to build the necessary infrastructure, he said.