Bio-ethanol product tanks at the Bio Ethanol Dung Quất Plant. — Photo cafef.vn

HA NOI (Bizhub) — The Bio Ethanol Dung Quat Plant was closed for defaulting on the VND1.3 trillion debt it owed the banks, the State Bank of Viet Nam's Quang Ngai Province branch said.

The branch confirmed the information in its Report No. 06/BC-QNg1, issued this month.

The report said the E5 bio fuel products of the plant had not been consumed, so the plant was not able to repay the debt of VND1.3 trillion to banks in the province. The banks considered the plant's debt to be a bad debt.

The Bio Ethanol Dung Quat Plant was built in 2009, with a total investment of VND2.02 trillion and a designed capacity of 100 million litres of ethanol per year for mixing with petrol to form a bio fuel product, Vietnam News Agency reported.

The plant started commercial operations in 2012, and so far, it has not gained a significant hold on the market, leading to heavy losses.

The Bio Ethanol Dung Quat Plant is one of seven eligible plants producing ethanol for E5 bio fuel products, for which 5 per cent of ethanol is mixed with A92 petrol. Four other plants have been forced to shut their doors or suffer losses as well.

The remaining two plants under Tung Lam Ltd, Company, have produced moderate amounts of ethanol due to low demand.

Meanwhile, the State has asked eight large provinces and cities, including Ha Noi and HCM City, to sell their E5 bio fuel reserves from June 1, 2016.

So far, according to the HCM City Industry and Trade Department, consumers in HCM City have continued using A92 petrol because the price of E5 petrol was not much cheaper than A92 petrol, reported Sai Gon Giai Phong newspaper.

The department expected the State to create a new plan to promote the consumption of bio fuel in the future.

Recently, the prime minister directed the Ministry of Industry and Trade and related ministries to host a programme encouraging the use of bio fuel, including providing tax incentives and expanding the distribution system for bio fuel products. — VNS