A PVOil station sells bio-ethanol (E5) fuel in Ha Noi. Bio-fuel E5 will be sold in other areas of Viet Nam next year. — VNA/VNS Photo Hoang Lam

HA NOI (Biz Hub) — Bio-fuel will be sold in all cities and provinces of Viet Nam next year, though it has been difficult meeting the government's schedule, said a Ministry of Industry and Trade (MoIT) official.

During an online dialogue on promoting consumption and the use of bio-fuel E5, Deputy Minister of Industry and Trade Cao Quoc Hung said large petrol dealers, including Petrolimex and PVOil, have prepared facilities for selling 5 per cent bio-ethanol (E5) fuel in seven provinces and cities beginning in 2014.

These areas include Ha Noi, HCM City, Hai Phong, Da Nang, Can Tho, Quang Ngai and Ba Ria Vung Tau. Further, the Viet Nam National Petroleum Group (Petrolimex) will begin selling biofuel E5 RON 92 in the central province of Quang Ngai as of September 1 this year, three months earlier than in other provinces and cities.

E5 RON 92, which is made up of unleaded gasoline and 4 to 5 per cent ethanol, will replace the traditional Mogas 92, as all petrol stations in Quang Ngai will sell E5 RON 92 and Mogas RON 95.

Based upon the draft from 2012, compiled by the MoIT to submit to the Government, the selected seven cities and provinces were to sell E5 as of 2013, though the initial schedule was delayed one year because of consumer habits and due to demand for bio-fuel on the domestic market being low, he said.

Additionally, bio-fuel plants have not operated efficiently and had not actively invested in obtaining materials, said Hung, adding that the state has not had 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. Further, consumption of bio-fuel is estimated to be one-eighth of the consumption of traditional fuel products.

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, said Nguyen Sinh Khang, deputy director of National Oil and Gas Group (PetrolVietnam). So, the price of bio-fuel remains a few hundreds Vietnamese dong per litre higher than the price of traditional petrol products.

Therefore, Khang said the Government and the MoIT should have long-term policies for enterprises investing in selling bio-fuel, including exemption of import taxes for equipment and material that domestic enterprises have not yet produced.

The state should also consider exempting environmental taxes and fees for petrol, when used to process E5 bio-fuel products and reduce special consumption taxes for bio-fuel when selling it on the domestic market, Khang said.

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.

Regarding the ability of producing bio-fuel, the ministry said the nation 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, though the Government would consider support though taxes and fees for bio-fuel, Hung said. — VNS