Discontinuing Ron 92 gasoline, will gasoline prices be cheaper?

From January 1, 2018, R92 gasoline will be completely replaced with E5 gasoline, and from 2019, it will be completely replaced with E10 gasoline. The Ministry of Finance has proposed to reduce the import tax on bioethanol. If approved, gasoline prices will be cheaper.

The Ministry of Finance is seeking opinions on import tax on E100 bioethanol used to blend E5 biofuel (E100 accounts for 5% in E5 gasoline) and E10 (E100 accounts for 10% in E10 gasoline).

The Ministry of Finance said: If from January 1, 2018, R92 gasoline is completely replaced with E5 gasoline and from 2019 onwards, it is completely replaced with E10 gasoline, then the demand for E5 gasoline in 2018 is equivalent to 6.2 million m3/year, the demand for E10 gasoline in 2019 is 6.6 million m3/year and in 2020 is 7.1 million m3/year.

This makes the Ministry of Finance worry that the shortage of E100 to blend E5 and E10 gasoline is real.

Currently, the supply of E100 for blending E5 biofuel mainly comes from two Biofuel Plants of Tung Lam Company Limited. But in reality, these two plants are only running at 30% capacity, while the two ethanol plants in Dung Quat and Binh Phuoc are both shut down.

The Ministry of Finance wants to reduce the import tax on E100 from 20% to 17%.

If by January 1, 2018, the two factories in Dung Quat and Binh Phuoc can return to full capacity and the two factories of Tung Lam Company also operate at full capacity, the supply of E100 for E5 gasoline in 2018 will be sufficient. However, in 2019, it is expected that there will be a shortage of about 200,000 m3 and in 2020, a shortage of about 300,000 m3.

In case by January 1, 2018, the two factories in Dung Quat and Binh Phuoc have not yet come into operation, the domestic E100 supply will only be able to meet a maximum of 200,000 m3/year, so in 2018 there will be a shortage of 111,370 m3 of E100.

The current domestic demand for E100 is not high, so businesses have not imported E100. In case from 2018 onwards, it is necessary to import E100 to blend E5 and E10 gasoline, the main import source is expected to be from the US or Brazil with an import tax of 20% because there is no supply from Asia such as Thailand and China (E100 from these countries is used up for domestic demand, not for export).

With the current situation that domestic E100 factories are not able to supply enough E100 to blend E5 gasoline in 2018 and will certainly lack E10 after January 1, 2019, the Ministry of Finance plans to consider adjusting the MFN tax rate for E100 to a moderate level.

Specifically, the Ministry of Finance wants to reduce the import tax on E100 from 20% to 17%.

According to the Ministry of Finance's calculations, with this tax rate plus the Environmental Protection tax rate for E5 and E10 which may be reduced from July 1, 2018, the price of E5 gasoline will be lower than the price of R95 gasoline from 1,345 VND to 1,495 VND/liter; the price of E10 gasoline will be lower than the price of R95 gasoline from 1,484 VND to 1,634 VND/liter (depending on the standard of RON95 gasoline level 2, level 3 or level 4).

Ron95 gasoline is currently selling for between 18,180 and 18,380 VND/liter.

According to VNN