Foreign partner withdraws from biofuel project

VietNamNet Bridge – The Japanese partner in the Ethanol Binh Phuoc project has decided to withdraw from the project on the worry about the slow sale of the biofuel, the Vietnam National Oil and Gas Group (PetroVietnam) President Phung Dinh Thuc has confirmed.


Vietnam, biofuel, national program, investment, PV Oil

Thuc said on VnExpress that some projects on making biofuel E5 developed by PetroVietnam and foreign partners in the provinces of Quang Nam and Binh Phuoc have met big challenges.

“The Japanese partner in the Binh Phuoc project, which sees the slow sales, has sent words intimating that it would quit the project,” Thuc said.

“We have asked the Japanese partner to stay with the project. In case they are determined to leave, they can sell stakes to other partners, while PetroVietnam does not intend to buy more,” Thuc said, adding that PetroVietnam now holds 29 percent of stakes in the project already.

Under a program approved by the Prime Minister, from December 1, 2014, E5 biofuel would be used for the vehicles in 7 provinces and cities of Hanoi, HCM City, Hai Phong, Da Nang, Can Tho, Quang Ngai and Ba Ria – Vung Tau. From December 1, 2015, biofuel would be used all over the country.

The government has encouraged PetroVietnam and other investors to pour their money into biofuel projects to ensure sufficient supply of E5 for vehicles by 2015.

The Binh Phuoc Ethanol which has the estimated investment capital of $80 million, is developed by Japanese Itochu, who holds 49 percent of stakes, Vietnamese PV Oil (29 percent) and Licogi (22 percent). Built in March 2010 and put into operation in early 2012, the plant has met difficulties due to the unsatisfactory sale.

Only three out of the 10 key fuel distributors have been selling E5 at their retail networks, namely PV Oil, Petec and Saigon Petro. PV Oil, the subsidiary of PetroVietnam, which plays the major role in the group’s plan to develop biofuel, has been building 3 ethanol plants with the total capacity of 300,000 cubic meters a year.

It is expected that by 2014, when the three plants become operational, they would put out 6 million cubic meters of E5, which can satisfy 94 percent of the total biofuel demand.

However, PV Oil keeps pessimistic about the biofuel sale, saying that the biofuel sales have been very low if compared with the sale of normal petrol.

Vietnamese don’t have much information about biofuel and E5, therefore, they still feel hesitant to use the new environment friendly fuel.

Thuc also said that biofuel projects would have to experience a difficult period in the immediate time, while the sales would be better later when biofuel is used throughout the country as decided by the Prime Minister.

One year ago, when Hanoi began providing E5 biofuel on the market, the Vietnam Automobile Manufacturers’ Association (VAMA), the association representing most of the auto manufacturers in Vietnam, released a statement that they would not take responsibility for any troubles to occur with their cars that use E5.

The strong statement has prompted car owners to refuse to use biofuel.

However, using biofuel is a must and a growing tendency in the world. Therefore, according to Van Thi Bong, MA, former Lecturer of the HCM City University of Technology, the solution for now is to find out if the materials used by VAMA are “sensitive” to the erosion caused by E5. If the answer is “yes,” the state needs to ask VAMA to use other kinds of materials.

Compiled by C. V

Vietnam, biofuel, national program, investment, PV Oil
 
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