Bio-fuel project fails as cheaper options prevail

The Binh Phuoc Ethanol Plant in the Central Highlands province of Binh Phuoc, the other, tried to export its products to China and the Philippines at prices of $650 – 700 per tonne, but that effort soon fizzled out. —VNA/VNS Photo Ha Thai

HCM CITY (Biz Hub) — The lack of incentives, costs, and people's lack of awareness of environmental protection are thought to be the reasons for the failure of the national bio-fuel project.

The bio-fuel development project for until 2015, which was approved by the Government in 2007, expected to produce 150,000 tonnes in 2011-15, meeting 0.1 per cent of the country's total fuel demand. By 2025 the production was expected to be ramped up to 1.8 million tonnes, meeting 5 per cent of the demand.

Bio-fuel was expected to replace fossil fuels to ensure national energy security and protect the environment, but things have not turned out as good as expected.

Only eight provinces and cities out of the 63 sell the fuel. The Government has only recommended that all 63 should do so.

Meanwhile, the price of cassava, from which bio-fuel is produced, has nearly doubled to VND3,400 per kilogramme, taking the production cost to VND15,000 a litre, VND2,000 higher than the current petrol price.

Despite this, against the 2025 bio-fuel target of 1.8 million tonnes, the Viet Nam Oil and gas Group (PVN) has built three plants at a cost of US$80 – 84 million each with a total capacity of six million tonnes.

Two of them have already closed down and the third remains unfinished.

"Right now, current demand for bio-fuel in Viet Nam is only around 2,000 tonnes per year, while only my plant has a capacity of 100,000 tonnes," Pham Van Vuong, director of the Central Biological Oil and Gas Company, a member of PVN, the investor of Dung Quat Bio-ethanol Plant was quoted as saying in the Tuoi Tre (Youth) newspaper.

The plant is among the two shut down.

"The plant has been closed for a long time but we have not received any reports," an employee of the province's Department of Industry and Trade said.

"We would like to provide support, but the enterprise has not provided any reason and so we cannot help."

In an official letter, the Ministry of Industry and Trade admitted that Vietnamese bio-fuel cannot be exported because of high prices.

Work on PVN's third plant in the northern province of Phu Tho has not finished yet.

The public has not been educated about the environmental benefits of bio-fuel. Besides the bio-fuel is not available everywhere and its price is nearly the same as the popular RON 92 petrol, which means it is hard to persuade consumers to buy it.

Nguyen Thi Hoai Giang of HCM City's Binh Thanh District said: "I am familiar with RON 92 petroleum. I have heard that bio-fuel is better for the environment.

"But since its price is nearly the same as RON 92 petrol, I prefer RON 92."

However, in Thailand, bio-fuel consumption shot up from 7 per cent of total fuel use in 2012 to 13 per cent last year. It is expected to rise to 24 per cent by 2026.

This is thanks to the many efforts made by its Government, such as assuring consumers that bio-fuel prices will not rise in future, making the fuel widely available, educating people through the media, increasing the manufacture of vehicles that can run on bio-fuel and promoting efficiency in production and distribution of the fuel. — VNS