(Vietnam.net) Common ethanol fuel mixture (E5 RON 92 gasoline) has been receiving many incentives from the State. However, high prices of materials for ethanol production and relevant materials plus the high tariff levied on imported ethanol have significantly eroded E5 gasoline’s advantages.
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Up to the moment of speaking, it can be said that the intention to develop ethanol production establishments has failed. Tung Lam, a private business in Quang Ngai Province, is now the only domestic entity to produce ethanol to sell it to mixture facilities. Designed to produce 200,000 cubic meters of ethanol per year, this enterprise’s products are enough for turning out more than five million cubic meters of E5 gasoline. However, similar projects to be developed by State-owned companies and corporations in Dung Quat, Binh Phuoc and Phu Tho are still inert at the moment for various reasons. A report prepared by the Ministry of Industry and Trade (MIT) and presented to lawmakers in May this year said the three problem-ridden projects had yet to re-start. In other words, the plan to supply additional sources of ethanol as of the end of 2017 has remained simply on paper.
Since the common ethanol fuel mixture E5 RON 92 was introduced to replace RON 92 gasoline, the price of ethanol has never been stable as it has been constantly on the rise. During the hike of fuel prices on October 5, material ethanol sold for VND15,458 per liter, excluding value-added tax. According to a report released by the MIT in July 2017, Vietnam needed at least 267,850 cubic meters of ethanol for mixing E5 gasoline. A price fluctuation worth several hundred dong a liter of ethanol would seriously affect profit of enterprises.
Another problem relates to the supplies of materials for ethanol production in Vietnam. Currently, cassava is the only material in use. Yet cassava is also the input material of other industries as well as an export of Vietnam.
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All the above-mentioned measures have been in force to support E5 gasoline. Should consumers therefore hope that the price of material ethanol will be lowered to cut the price of E5 gasoline?
Such a hope will become reality only when the production costs of domestic ethanol become lower to be equal to those on the international marketplace.
This scenario will play out if two conditions are met. First, it depends upon whether Vietnam is able to find other sources of materials sufficient and cheap enough for the production of ethanol—at least equal to the prices offered by key players in the world. Secondly, more ethanol production plants must be set up in Vietnam for the sake of a healthier competition environment. READ MORE
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