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​E5 biofuel gets lukewarm reception in Vietnam

Friday, January 26, 2018, 13:03 GMT+7

Nearly one month after the government mandated the sale of the ethanol-based E5 fuel replace A92 petrol in Vietnam, the biofuel has been received with little more than a halfhearted embrace by local consumers and retailers.

A government mandate called on retailers to fully replace their A92 petrol, the most popular fuel in Vietnam, with E5 by January 1. 

Petrol stations across the country, however, have been slow to make the switch and E5 currently accounts for only 60 percent of total petrol sales countrywide, according to the Ministry of Industry and Trade.

In Ho Chi Minh City, most filling stations dedicate a majority of their pumps to dispensing A95, which sells at higher prices.

Gas stations in Hanoi have chosen to put the E5 pumps in inconvenient locations where they can be easily overlooked by consumers.

Some consumers interviewed by Tuoi Tre (Youth) newspaper said they are not bothered by which petrol they use.

“When I visit a gas station, I just stop at the first available dispenser. It doesn’t matter if it’s E5 or A95,” one commuter said.

However, there are some who refuse to make the switch from A95 fuel for fear that E5 might be of low quality.

An attendant is seen next to an
An attendant is seen next to an "Out of Stock" sign on an E5 petrol pump at a filling station in Ho Chi Minh City. Photo: Tuoi Tre

For A92 and A95 petrol, the number represents the octane rating, which indicates the antiknock properties of a fuel. E5 is a kind of biofuel blended from 5 percent of ethanol and 95 percent of A92 gasoline.

As of Friday noon, A95 and E5 fuels were selling at VND20,580 per liter and VND18,670 per liter, respectively, according to Petrolimex, Vietnam’s biggest fuel wholesaler. (US$1 = VND22,500)

E5 less profitable

Nguyen Xuan Hong, deputy director of the Department of Industry and Trade in Long An, a province neighboring Ho Chi Minh City, said most local consumers still fill their scooters and newer-model cars with A95 petrol.

In the Mekong Delta city of Can Tho, commuters prefer A95, saying that they do not trust E5 quality.

“It is alleged that E5 fuel can easily separate itself into ethanol and gasoline, affecting vehicle engines,” Nguyen Minh Toai, director of the Can Tho Department of Industry and Trade, said.

From the retail viewpoint, Ngo Thanh Nhan, who runs a filling station in an outer commune in Ho Chi Minh City, says stations must earmark up to VND500 million (US$22,026) for a new fuel dispenser and underground tank in order to sell E5 fuel.

“A low sales volume means E5 is stored longer in underground tanks. The problem is that E5 has a very high loss ratio due to evaporation,” he explained.

A commuter refills his motorbike with E5 petrol at a filling station in Hanoi. Photo: Tuoi Tre
A commuter refills his motorbike with E5 petrol at a filling station in Hanoi. Photo: Tuoi Tre

Nhan started selling E5 on January 1, 2017, but still only managed to sell fewer than 300 liters a day. He eventually requested permission to cease sales of the biofuel in August that same year. “I am now again required to sell E5 as requested by the government,” he lamented.

Other petrol station owners say they rake in bigger profit from selling A95, which has a higher commission rate than E5.

However, a Petrolimex representative countered that it is up to filling stations to decide on the number of A95 and E5 dispensers and “commission rates play no role.”

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