Some businesses propose to temporarily stop selling E5 gasoline

According to the Government’s directive, from January 1, RON 92 gasoline will be “eliminated” and completely replaced by E5 biofuel. However, over the past month, reality shows that both consumers and retailers are not interested in this product.

Why is E5 gasoline not attractive to consumers and gasoline dealers? Most opinions agree that the most important reason is that the price of E5 gasoline is less competitive, and the profit from E5 business is not greater than that of mineral gasoline, so businesses hesitate to promote consumption.

The Ho Chi Minh City Department of Industry and Trade cited that the difference in selling price between E5 biofuel and RON 92 is only about 230 VND/liter lower than that of RON 92. The discount rate that businesses enjoy with E5 gasoline is 1,000 - 1,600 VND/liter, also 280 VND/liter lower than that of mineral gasoline. The consumption of E5 gasoline stores is slow, inventory is many days, the loss rate is very high, affecting profits.

Currently, some units have proposed to temporarily stop selling E5 gasoline due to low sales volume, low discount rate, not covering the cost of the store. Even the Department of Industry and Trade of Ho Chi Minh City said that for nearly a year, the price of gasoline in the world has been stable and has a downward trend, many gasoline businesses have increased imports, reserves, and exported RON 92 and RON 95 gasoline to consume more effectively than consuming E5 gasoline.

Meanwhile, people's understanding of E5 gasoline is still limited, so changing habits is a challenge. Many consumers wonder if E5 gasoline is harmful to the engine and causes unwanted effects... And if we do not promote and clearly explain the advantages of using E5 gasoline, consumers will only use RON 95 gasoline, which is entirely possible. This means that another correct policy cannot be implemented.

What makes people dissatisfied now is that the price of RON 95 gasoline is significantly higher than that of E5 gasoline, especially when the base price of RON 95 gasoline is not announced. Accordingly, through the first two price management periods of the year, the price of RON 95 gasoline has always been higher than that of E5 gasoline by about 1,800 VND/liter - a not small difference.

The main reason is that E5 gasoline is supported by using the Price Stabilization Fund (BOG), while the price of RON 95 gasoline is managed by the market, without using the BOG Fund. This way of managing prices is clearly not stable. Because the BOG Fund is regulated to be used in cases where gasoline prices fluctuate strongly, and support is needed to avoid too much fluctuation.

Therefore, the fund release for this item but not for the other item, causing a difference of nearly 2,000 VND/liter, is unreasonable. And this somewhat ambiguous action of the management agency has made the public question whether there is "group interest in monopolizing ethanol consumption?".

According to the formula, E5 gasoline includes 5% bio-alcohol (ethanol) mixed with 95% RON 92 gasoline. With the formula for calculating the price of RON 92 gasoline without fluctuations, E5 gasoline completely depends on the price of ethanol. To implement the Government's policy, in 2018, the whole country needs about 5.5 million m3 of E5 gasoline, equivalent to 275,000 m3 of E100 for mixing.

Currently, only Tung Lam Company Limited's factory 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, Brazil... Furthermore, while many countries with developed biofuel production industries choose sugarcane, corn or wood to make alcohol, Vietnam chooses cassava, a multi-purpose crop (pharmaceutical processing, animal feed and bioethanol production) with more instability in supply and price.

Compared to the beginning of last year, the price of cassava has doubled, causing the cost of ethanol production in Vietnam to now be at 570 USD/ton, 200 USD/ton higher than in the United States. And to implement the plan to switch to E5 biofuel, consumers must bear this difference.

The policy of using E5 bio-fuel is completely correct, bringing many practical benefits, minimizing environmental pollution and reducing the greenhouse effect. The problem is, in the context of the orientation to encourage bio-fuel, preferential policies for this product to have a lower price than RON 95 gasoline are necessary.

However, due to the lack of a competitive petroleum market, it is still necessary to control the prices of all products, including RON 95 and E5 gasoline. The burden of taxes and fees on gasoline prices needs to be calculated and balanced between the domestic revenue target and the target of ensuring stable economic and social life.

• Biofuels

  Biofuel is a fuel formed from compounds of animal and plant origin (biological) such as animal fat, coconut oil, cereals (wheat, corn, soybeans, etc.), agricultural waste (straw), industrial waste (sawdust, waste wood, etc.). Biofuel can be divided into 3 types: biodiesel, biogasoline, biogas. The outstanding advantage of biofuel compared to traditional fuels is that it is environmentally friendly and is a renewable fuel source.

  In Vietnam, biofuel E5 gasoline will replace mineral gasoline A 92 from January 1, 2018.