The ethanol plants of Vietnam Oil and Gas Group (PVN) are facing numerous difficulties due to slow consumption of the bio-petrol E5 at home and poor ethanol export prices.
Nguyen Anh Toan, deputy general director of PetroVietnam Oil Corporation (PV Oil), a PVN subsidiary, said three ethanol plants of PV Oil in Binh Phuoc, Quang Ngai and Phu Tho with total capacity of 300 million liters a year were operating perfunctorily because of high production costs and volatile cassava prices.
While ethanol sales in the local market are poor, ethanol export prices are now around VND15,000 per liter, leading to huge losses.
With 150 outlets for E5 petrol in Ba Ria-Vung Tau and Quang Ngai, PV Oil each month sells only about 2,500 cubic meters of E5 petrol, relatively small compared to the total production capacity of its three ethanol plants.
As per a schedule approved by the Government, E5 petrol (petrol with 5% bio-ethanol content) will be officially sold from late 2014 in Hanoi, Haiphong, HCMC, Can Tho, Danang, Ba Ria-Vung Tau and Quang Ngai. From December 1, 2015, it will be available across the country.
Then, it is forecast that ethanol producers will enjoy better sales and farmers will no longer suffer huge volume of unsold cassava. However, from now to late 2014 will be two years full of hardships for ethanol plants nationwide.
Ethanol plants in the country are in trouble since the State has not introduced any preferential policy for investment in ethanol production projects, said Toan.
Loan interest rates for investment in ethanol plants remain high, approximately 18-20% per annum, making ethanol production unprofitable. Meanwhile, in other countries, ethanol producers receive a lot of incentives because it is a clean fuel.
Vu Thanh Ha, an expert in the field of bio-fuel production, former general director of a petrochemicals and bio-fuels company under PVN, said: “The ethanol production program is dying.”
Farmers cultivating cassava near ethanol plants in Phu Tho, Binh Phuoc and Quang Ngai used to hope that they would achieve strong sales because the three ethanol plants nearby need a total of 800,000 tons of dried cassava every year.
However, a number of ethanol plants are struggling with poor consumption. Ethanol, in fact, has been sold since 2009, but its consumption is still modest for many reasons.
