Lack of demand for bio fuel has caused factories to lower production, leaving thousands of cassava farmers in a quandary.
|A gas station selling E5 bio fuel|
E5 bio fuel, which is gasoline mixed with 5 percent ethanol, did not have sufficient demand to have its own filling stations but was distributed through gasoline retail outlets.
The Department of Agro-Forestry Processing and Salt Industry, under the Ministry of Agriculture and Rural Development, was approved by the government in 2010 for the production and consumption of E5 bio fuel. As a result bio fuel began to be sold commercially in August 2010 but few people have been using it since.
Meanwhile six factories have been operating at a total capacity of 550 million liters a year, in places where farmers plant cassava, such as the central provinces of Quang Ngai and Quang Nam; the southern provinces of Binh Phuoc and Dong Nai; the highland province of Dak Nong; and the northern province of Phu Tho.
Scientists were convinced that when natural fuel becomes prohibitably expensive and scarce then E5 bio fuel would be its replacement as an eco-friendly substitute.
However, as much as 90 percent of production of E5 bio fuel is exported, as the domestic market shows no interest in bio fuels although 10 oil enterprises have agreed to sell the bio fuels. Petro Vietnam Oil (PVN) has been selling E5 bio fuel since August 2010 through its 106 stations countrywide.
E5 bio fuel is currently VND200 a liter cheaper than A92 gasoline, and it would help the country save hundreds of millions of dollars on fuel imports. Moreover, the greatest benefit is that bio fuels could help reduce 30 percent of CO2 emissions.
Yet, until now, total E5 bio fuel consumption in the country is just 35,000 cubic meters while three factories have been designed to produce 300,000 cubic meters ethanol, enough to make six million cubic meters of bio fuel or 94 percent of consumption demand in the country by 2014.
Phung Dinh Thuc, chairman of PVN, said that even PV Oil could sell only 15,000 cubic meters in the first nine months of this year, very little compared to consumption of petrol of 1.2 million liters per month. Low demand for bio fuel has caused factories to scale down their operations.
Experts said poor consumption of bio fuel is because people still know little about E5 or E10, which has 10 percent ethanol, and consumers are confused between ethanol and methanol - antifreeze solvent fuel which recently was blamed for bike fires as gasoline was mixed with methanol causing the fires.
Another reason was that very few people knew about bio fuel, which is why retailers are reluctant to spend money on new storage facilities because they have to spend large sums on building infrastructure for mixing ethanol with gasoline. Accordingly, among 12,000 petrol filling stations in the country, only 155 stations agreed to sell bio fuel.
The consequence of poor consumption of bio fuel is that thousands of cassava farmers are in despair as their product cannot be sold. Massive growing of the tree lowered prices to VND1,400 a kilogram, causing losses of VND600,000 (US$28.7) per ton.
The Ministry of Agriculture and Rural Development said farm area for growing cassava in the country is very large. For years, people exported cassava to China; however, exports are not stable so the ministry does not encourage expansion of land area but demands existing areas to provide material for starch processing factories and ethanol manufacturing. Enterprises say the government should sell bio fuel to secure cassava farmers.
The Ministry of Industry and Trade is adopting a road map to use bio fuels in an effort to promote production. According to the ministry’s proposal, the use of E5 bio fuel will become mandatory from December 1, 2014, especially for vehicles in big cities and provinces such as Hanoi, Ho Chi Minh City, the northern port of Hai Phong, the central city of Da Nang and central province of Quang Ngai and the southern city of Can Tho and southern province of Ba Ria – Vung Tau.