Further policies needed for strengthening e5 bio-fuel consumption

One year after the government replaced RON 92 petrol with E5 bio-fuel, a mix of RON 92 (95 percent) and bio-fuel ethanol (5 percent), there has been bright signal for this kind fuel’s consumption in the market, because more and more consumers decided to use this environment-friendly petrol. However, the consumption remains far below expectation of the government and petroleum companies.

Customers buy fuel at a petroleum station at 194 Thai Thinh Street, Dong Da District, Hanoi.

In order to boost E5 bio-fuel consumption, relevant authorities and enterprises need to deploy further investment in education, ensuring enough supply and quality of the product, so that consumers feel more confident with the new gasoline.

Purchasing power remains below expectation

A survey done at some petroleum stations in Hanoi proves that amount of customers purchasing E5 bio-fuel was almost equal to those who prefer traditional fuel. Customers did not have to consider carefully between E5 bio-fuel and Ron 95 as previously.

Phung Ngoc Hai, who turned to E5 bio-fuel, said that his motorbike engine worked well with the fuel and the price was lower than Ron 95. He decided to use this environment-friendly petrol permanently.

Hai added that despite of being considered environment-friendly, not all consumers trust its quality. Therefore, the government and enterprises should have policies to educate and encourage people using it.

Estimating purchasing power in the market, La Minh Chung, head of Petrolimex petroleum station No.1 at 01 Tran Quang Khai Street in Hanoi, said the number of customers filling E5 bio-fuel kept increasing since the government made the replacement decision a year ago.

Every day, this petroleum station sells 90,000 liters of gasoline. E5 bio-fuel accounts for 60% of total fuel sold out.

Despite of satisfactory consumption, E5 bio-fuel sales and consumption still have not met expectation. In the past, sales of Ron 92 accounted for 75% to 80% of total petrol sales. When the new fuel was introduced to the market last year, consumers hesitated using it. Now, more and more people prefer filling it for low price. This is a positive signal from the market.

However, customer classification appears an issue. People who drive cars and luxury motorbikes always request for Ron 95. And those who choose to use E5 bio-fuel are taxi drivers, company cars, buses, and motorbike drivers.

Therefore, government and relevant agencies should educate the public about benefit of the environment-friendly petrol.
Do Quyet Thai, head of a PVOIL’s petroleum station at 194 Thai Thinh Street in Hanoi, said sales for E5 bio-fuel at his retail outlet was pretty good. Every day, the station sells 7,000 to 7,500 liters of E5 bio-fuel, which contributes 40% of total petroleum sales.

Many have not completely felt confident with the fuel quality. The price of E5 bio-fuel is not much cheaper than the traditional RON 95. In order to encourage E5 bio-fuel, the price should be reduced during the upcoming times.

According to representatives from Petrolimex Hanoi, since the replacement was implemented, sales of E5 bio-fuel was recorded as steady, accounting for 60% of total consumption.

Beside advantage on supply, stabled quality, challenge remains since customers prefer high quality product like RON 95. Therefore, some petroleum station only sell E5 bio-fuel, partly due to their facility condition. Customers to these station are not able to buy E5 fuel.

Nguyen Van Diem, head of Red River Trading and Tourism Company’s Petroleum Department, said though people and agencies shifted to E5 bio-fuel recently, sales of this kind of fuel contribute only 40% of total petroleum sale. Previously E5 bio-fuel sales accounted for roughly 30%.

Clients of E5 bio-fuel are owners old vehicles while those who have new cars or motorbikes prefer using Ron 95. In order to expand sale for this fuel, the discounting rate should be kept higher or equivalent to rate for RON 95. With lower price, retailers and consumers can clearly see benefit from using it.

Ensuring enough supply in the market

Statistics from Hanoi Department of Industry and Trade shows that about 1.1 million cubic meters petrol were sold in Hanoi last year. Of the amount, E5 bio-fuel accounts for 45% while RON 95 accounts for 55%. Previously, the rate was reported at 35% and 65% respectively.

According to Nguyen Quang Dung, vice CEO of Petrolimex, one year since the rotation came into life, E5 bio-fuel sales remains steady at 48% of total petrol sales. It is estimated that in 2018, about 3.56 million cubic meters E5 bio-fuel was sold nationwide. The country also used 180.000 cubic meters of bio-fuel ethanol E100 for mixing with RON 92 (95%) to produce E5 bio-fuel.

However, supply of bio-fuel ethanol E100 mainly relies on Tung Lam Limited Company, which has designed capacity of 200 cubic meters each year. There has been concern that if there will be enough ethanol when E5 bio-fuel demand increases.

Answering the question, Vice CEO of Petrolimex Nguyen Quang Dung said that Petrolimex purchased ethanol from local companies. However. It will import it when the demand surges.

Petrolimex will expand its retail system for higher sale volume of E5 fuel. Beside retail expansion, the company is seeking boosting wholesale as well.

Petrolimex suggested the government to strengthen education about quality and benefit of using
E5 fuel to customers and deploy measure for better quality control.

According to Hanoi Department of Industry and Trade leaders, the city has four E5 bio-fuel blending stations, which are: station of Duc Giang Petroleum Warehouse, which belongs to Petrolimex Hanoi has capacity of 15,000 cubic meters per month; station of Military Petroleum in Hai Phong city has capacity of 8,000 cubic meters per month; station of Petrolimex at Dinh Vu Warehouse in Hai Phong city has capacity of 20,000 cubic meters each month and blending station of Ha Son Petroleum Company at Thuong Tin District with capacity of 10.000 cubic meters each month. When needed, the stations will increase capacity to satisfy market demand.

In the future, Hanoi Department of Industry and Trade will strengthen education about benefit of E5 and E10 bio-fuel to encourage people using this kind of environment-friendly fuel. The department will also listen to suggestions from enterprises and report to Ministry of Industry and Trade for sustainable supply of E5 bio-fuel.

The department will also coordinate with relevant agencies and grassroots administrations for inspecting fuel trading activities at retail outlets in the city. Gasoline quality at the petroleum stations will be tested, making sure the product quality meet the national standard and there is no cheating.

Beside the support from enterprises, government, authorities need to intensify educating consumers the benefit of E5 bio-fuel. The authorities also need to instruct all of petroleum station to sell E5, creating favorable condition for popularizing this kind fuel in the market.

Translated from QUYNH CHI article
Source: http://www.nhandan.com.vn