Market and product

Sales of E5 biofuel in HCMC are much lower than targeted as just over half of more than 510 filling stations in the city had distributed the fuel by the end of last month.

The city started a pilot scheme to sell E5 at 60 filling stations at the end of 2014 and expected the number to rise to 518 by 2015, the HCMC Department of Industry and Trade said in a report on E5 biofuel distribution in the first four months this year sent to the Ministry of Industry and Trade.

However, with 54% of the filling stations selling E5 as of end-April, consumption had reached 8,170 cubic meters per month, up 20% compared to end-2015, but this volume accounted for a mere 6.3% of total gasoline sales in the city.

In mid-December, the city launched a major campaign to call for consumers to use E5 but the number of E5 biofuel buyers has remained modest. Filling stations bemoaned that their E5 sales are much lower than those of A92 and A95 gasoline.

Slow consumption has led to high inventories of the biofuel, and losses in the transport and storage stages have made inroads into fuel trading firms.

E5 has remained unattractive to a large number of consumers as its price is not much lower than A92 while consumers fear this fuel might affect the performance of their vehicles’ engines. Currently, the price of E5 is only VND500 a liter lower than A92.

Low consumption has caused seven ethanol plants to stop operation as the production cost of ethanol, the main material for E5 biofuel production, is high. There have not been sufficient support policies from the Government for E5 production and distribution, according to fuel wholesalers.

Moreover, fuel trading firms have boosted A92 and A95 gasoline imports to cash in on low oil prices on global markets.

The city has proposed the Government assign relevant agencies to roll out new policy incentives to help ethanol plants resume operation and cut production cost and encourage more consumers to buy the biofuel.

Currently, nine fuel wholesalers in HCMC have a storage capacity of 1.2 million cubic meters and supply fuels for six general agents and 526 retail outlets. Fuel consumption in the city totals 130,100 cubic meters a month.