Some businesses have suggested temporarily suspending the sale of E5 gasoline.

Following government directives, from January 1st, RON 92 gasoline will be phased out and completely replaced by E5 bioethanol. However, over the past month, both consumers and retailers have shown little interest in this product.

Why is E5 gasoline unattractive to consumers and gas stations? Most opinions suggest that the most important reason is the uncompetitive price of E5 gasoline, and the profit margin from selling E5 is not much greater than that of conventional gasoline, so businesses are hesitant to boost its consumption.

The Ho Chi Minh City Department of Industry and Trade cited that the price difference between E5 bioethanol gasoline and RON 92 gasoline is only about 230 VND/liter. The discount rate that businesses receive for E5 gasoline is 1,000 - 1,600 VND/liter, also 280 VND/liter lower than for conventional gasoline. Sales volume at E5 gasoline retailers is slow, inventory remains high for many days, and losses are very high, affecting profitability.

Several businesses have requested a temporary suspension of E5 gasoline sales due to low sales volume and insufficient profit margins to cover store costs. The Ho Chi Minh City Department of Industry and Trade even stated that, over the past year, global oil prices have been stable and trending downwards, leading many gasoline businesses to increase imports and stockpile RON 92 and RON 95 gasoline, which is more profitable than selling E5 gasoline.

Meanwhile, public understanding of E5 gasoline remains limited, making a change in habits a challenge. Many consumers are concerned about whether E5 gasoline is harmful to engines and causes unwanted side effects... And if we don't promote and clearly explain the advantages of using E5 gasoline, consumers will continue to use RON 95 gasoline, which is entirely possible. This means another sound policy has failed to be implemented.

What is currently causing public dissatisfaction is the significantly higher price of RON 95 gasoline compared to E5 gasoline, especially since the base price of RON 95 gasoline is not publicly announced. Accordingly, through the first two price adjustments of the year, the price of RON 95 gasoline has consistently been around 1,800 VND/liter higher than E5 gasoline – a considerable difference.

The main reason is that E5 gasoline is subsidized by the Price Stabilization Fund (BOG), while RON 95 gasoline is regulated by the market and does not use the BOG. ​​This method of price regulation is clearly unsustainable. The BOG is stipulated to be used in cases of significant fluctuations in gasoline prices, requiring support to prevent excessive volatility.

Therefore, releasing funds for one product but not for another, resulting in a difference of nearly 2,000 VND/liter, is unreasonable. This somewhat ambiguous action by the regulatory agency has led the public to question whether there is "collusion in the monopolistic distribution of ethanol?"

According to the formula, E5 gasoline consists of 5% bioethanol mixed with 95% RON 92 gasoline. With the price of RON 92 gasoline remaining stable, E5 gasoline is entirely dependent on the cost of ethanol. To implement the government's policy, in 2018 the whole country needed approximately 5.5 million m3 of E5 gasoline, equivalent to 275,000 m3 of E100 for blending.

Currently, only the Tung Lam Company Limited's plant produces ethanol with an output of 200,000 m3/year. Meanwhile, the cost of ethanol production in Vietnam is nearly one and a half times higher than in many countries such as the United States and Brazil. Furthermore, while many countries with developed biofuel industries choose sugarcane, corn, or wood to produce ethanol, Vietnam has chosen cassava, a multi-purpose crop (used in pharmaceutical processing, animal feed, and bioethanol production) with more instability in terms of supply and price.

Compared to the beginning of last year, cassava prices have doubled, bringing the cost of ethanol production in Vietnam to currently $570/ton, $200/ton higher than in the United States. And to implement the plan to switch to E5 bioethanol, consumers will have to bear this price difference.

The policy of using E5 bioethanol is entirely correct, bringing many practical benefits, minimizing environmental pollution and reducing the greenhouse effect. The issue is, in the context of encouraging bioethanol, preferential policies for this product to keep its price lower than RON 95 gasoline are necessary.

However, due to the lack of a competitive petroleum market, price controls remain necessary for all products, including RON 95 and E5 gasoline. The burden of taxes and fees on gasoline prices needs careful consideration and a balance between domestic revenue targets and ensuring socio-economic stability.

• Biofuels

  Biofuels are fuels formed from compounds of animal and plant origin (biological) such as animal fats, coconut oil, grains (wheat, corn, soybeans, etc.), agricultural waste (straw), and industrial waste (sawdust, waste wood, etc.). Biofuels can be classified into three types: biodiesel, biogas, and biogas. The outstanding advantage of biofuels compared to traditional fuels is that they are environmentally friendly and are a renewable energy source.

  In Vietnam, biofuel E5 gasoline will replace mineral gasoline A92 starting from January 1, 2018.