All filling stations in the central province of Quang Ngai on Monday began selling E5 RON 92, a biofuel intended to replace the commonly used RON 92 gasoline, three months ahead of schedule. Six other cities and provinces are required to follow suit.
Quang Ngai has become the first locality where E5 RON 92 gasoline, a blend of 5 percent ethanol and 95 percent gasoline, is widely sold.
Seven localities, including Hanoi, Ho Chi Minh City, Da Nang City, Hai Phong City, Can Tho City, Ba Ria – Vung Tau Province and Quang Ngai Province, are required to sell the biofuel at all local gas stations starting on December 1, 2014, under a government plan to boost consumption of the fuel, which is believed to be better for the environment.
E5 RON 92 gasoline is currently being sold at only a few gas stations in these areas under a pilot program. The biofuel now sells at VND23,740 (US$1.12) a liter, equal to RON 92 gasoline.
But all 150 petrol stations in Quang Ngai now sell the new fuel, with facility owners saying it has been welcomed by consumers.
Six out of ten customers fill their bikes with E5 RON 92, while the remainder chooses RON 95 gasoline.
Nguyen Thanh Tung, of Quang Ngai City, the capital of the province, said he has been using the biofuel for a week, and his motorbike functions no differently. Another customer, Ho Nguyen Thuy, also said the E5 gasoline is “normal and safe.”
Nguyen Hung Ho, director of the Quang Ngai branch of Petrolimex, the country’s largest fuel wholesaler, said 23 Petrolimex stores and dozens of its dealerships are selling the biofuel.
“What surprised me is that E5 RON 92 accounts for as much as 60 percent of sales,” he said.
Petrol stations currently receive a VND350 commission on every liter of E5 RON 92 gasoline they sell under an incentive granted by the PetroVietnam Central Biofuels JSC.
“The program only runs from now to November 30, and will end when the biofuel becomes widely sold in the other six localities,” company deputy director Dang Quoc Dung said.
Production below capacity
In 2007, Vietnam’s government approved a plan to develop biofuels until 2015.
State-run oil and gas giant PetroVietnam (PVN) then invested in building three ethanol plants in northern Phu Tho Province, southern Binh Phuoc Province, and Quang Ngai. The three facilities can produce a combined 300,000 cubic meters of ethanol a year.
“This amount of ethanol is enough to blend into six million cubic meters of E5 RON 92, or 94 percent of the total consumption countrywide in 2014,” Le Xuan Trinh, deputy director of PV Oil, a PVN subsidiary, said.
However, the ethanol plants have been operating below full capacity, as E5 gasoline is not widely distributed.
The ethanol plant in Quang Ngai even had to export its products at a loss.
“The cost price of a liter of ethanol is VND15,000, but the plant had to export at VND13,000 a liter,” former PVN chairman Phung Dinh Thuc said.
In Ho Chi Minh City, E5 RON 92 also enjoys strong sales.
“Taxi drivers and people who have a good knowledge of biofuels are the biggest consumers of the E5 gasoline,” Dang Vinh Sang, general director of Saigon Petro, said.
Sang said Saigon Petro will follow the government roadmap to widely distribute the biofuel in the last month of this year.