Ethanol plant struggles to fire up

Construction of northern Phu Tho province’s ethanol factory began in 2000 and was expected to come online late last year. However, due to a lack of capital, the $80 million project re-scheduled its commissioning time although 90 per cent of the work volume and equipment installment was completed.

The cash is needed to get the main project contractor PetroVietnam Construction Joint Stock Corporation (PVC) over the finishing line. According to Bio-Petroleum and Petrochemical Joint Stock Company’s (PVB) - a subsidiary of state-run PetroVietnam, the factory is expected to produce 100,000 tonnes of ethanol per year from locally-sourced cassava and sugarcane.

The project’s investor claims its products will not only be environmentally friendly by reducing carbon dioxide emissions, but also contribute to reducing poverty among cassava and sugarcane farmers in Phu Tho. PVC representative Nguyen Huy Hoa said PVC had poured $49 million into the project and was paid by PVB with about $29.3 million.

In 2010 PetroVietnam Finance Joint Stock Corp (PVFC) and SeABank signed a credit funding contract to arrange capital for the Phu Tho-based ethanol factory with  PVB. PVFC and SeABank were committed to offering a $40 million loan package for carrying out the project, in which PVFC would arrange 30 per cent of the total contract value.

Hoa said SeABank would provide a major part in the credit funding contract  but the lender had not yet disbursed the loan to PVB. Recently, the Ministry of Industry and Trade urged Phu Tho provincial authorities, PVB and SeABank to sort out the impasse. The Phu Tho-based ethanol factory is among key projects of PetroVietnam, which is determined to finish its three ethanol production facilities this year.

PetroVietnam said between 2011-2015, these projects would have a total production capacity of over 300,000 tonnes of ethanol per year, in which over 200,000 tonnes would be earmarked for making gasoline, meeting 25 per cent of the whole country’s ethanol-based gasoline consumption. The remaining 100,000 tonnes would be exported.

Vietnam currently has only one operating ethanol plant, the Dong Xanh in central Quang Nam’s Dai Loc district which started production in 2009. The $30 million plant uses 300,000 tonnes of cassava and produces 100,000 tonnes of ethanol annually, as a biofuel alternative to petrol.