Itochu looks to run from ethanol project

PetroVietnam chairman Phung Dinh Thuc explained that the absence of regulations on using ethanol gasoline and related products in Vietnam had hindered the factory from selling its products on the domestic market, resulting in Itochu’s divestment decision.

Itochu’s representative office in Hanoi did not respond to VIR’s enquiry by the end of last week.
In July this year, Itochu already complained to the Minister of Planning and Investment about market difficulties facing the Binh Phuoc factory.

Starting production early this year after 30 months of construction, the factory is invested by Orient Bio Fuels Company, a joint venture between Itochu and two Vietnamese partners, with PV Oil  which is wholly-owned by PetroVietnam holding a 29 per cent stake and Licogi 16 holding 22 per cent.

The factory is designed to use cassava to produce around 100,000 kilolitres of ethanol per year.
Itochu has been the only foreign investor in an ethanol factory in Vietnam so far. It has built similar factories in Brazil, Thailand and the Philippines.

Meanwhile, PetroVietnam has invested in three ethanol factories with a total capacity of 300,000 cubic metres per year.

The Quang Ngai and Binh Phuoc factories started production at the beginning of 2012 but have been operating unstably due to up-and-down sales.

Specifically, PV Oil sold only 750 cubic metres of ethanol in Vietnam in the first nine months of this year.

PV Oil deputy general director Le Xuan Trinh said after two years selling ethanol gasoline in Vietnam, the company could only market the product via 136 pumping stations. The country has about 13,000 stations available.

Vietnam has planned to build 13 ethanol factories, with six being operational or under construction.