Ministry moots ethanol import tax cut

A view of ethanol production plant of Tung Lam Joint Stock Company in the southern province of Dong Nai, Xuan Loc District. - Photo laodongdongnai.vn

Viet Nam will replace RON 92 petrol with E5 bio-fuel from the beginning of 2018, and with E10 after 2019. E5 petrol is a mix of A92 petrol (95 per cent) and bio-fuel ethanol (5 per cent).

The ministry has gathered suggestions on import tax imposed on bio-fuel ethanol to create E5 petrol as it is worried that the country will face ethanol shortage.

Statistics from the ministry show that the E5 demand in 2018 will be 6.2 million cu.m after the bio-fuel petrol replaces RON 92 petrol completely at the start of the year. The demand for E10 is expected to be 6.6 million cu.m in 2019, and 7.1 million cu.m in 2020.

Currently, the supply of bio-fuel ethanol for E5 petrol comes mainly from two plants owned by Tung Lam Joint Stock Company that have a total annual capacity of 200,000 cu.m, which can be used to produce 3.9 million cu.m of E5 a year. The two plants have been operating at 30 per cent of their designed capacity, while there are two other plants in Dung Quat and Binh Phuoc that have halted operations temporarily.

If the two ethanol production plants in Dung Quat and Binh Phuoc resume operations, the total ethanol supplies of the four plants would be sufficient to cater to the E5 petrol demand in 2018. However, it is expected that the country will fall short of 200,000 cu.m of ethanol in 2019 and 300,000 cu.m in 2020.

If the two plants don’t resume operations by the beginning of 2018, the country’s ethanol supply will be a maximum of only 200,000 cu.m a year, making for a shortfall of 111,370 cu.m in 2018.

Local firms have not been importing ethanol because currently the demand for it is low as RON 92 petrol and E5 bio-fuel will co-exist until December 31 this year.

If Viet Nam needs to import ethanol from 2018 to produce E5 petrol, it will have to import the bio-fuel from the US and Brazil as the E5 supplies of Asian countries such as Thailand and China have been used up owing to local demand.

As per the ministry’s calculations, if the proposed imported tax on ethanol is approved at 17 per cent, along with environmental protection tax, the selling price of E5 petrol will become lower than RON 92 petrol, from VND1,345 to VND1,495 per litre. RON 92 petrol costs VND18,180 to VND18,380 per litre.