Ethanol prices for monopoly, threatened E5?

Market only two types of E5 and A95, while the A95 is still floating, then E5 being “threatened” when raw material prices are constantly rising ethanol.

People poured E5 on Bach Dang Street, Binh Thanh District, HCM City – Photo: Quang Dinh

E5 price expectations at a low level to create the attraction to consumers is a challenge for both management and production.

Prices continued to increase due to monopoly?

Information about the operating price of petrol by joint Ministry of Finance – Industry and Trade announced in the periodical executive recently revealed that ethanol prices included in base price of petrol E5 has increased 4 times in about 3 months.

If the first half of 2017 the price of ethanol in the range 13700-13800 / liter from March 10-2017 it has continued to increase, surpassing 14,200 VND / liter. Any adjustment to early 2018, ethanol prices have risen to more than 100 copper / liter.

Talking with Tuoi Tre, Pham Duc Thang, General Director of the Vietnam National Petroleum Corporation (Petrolimex), said prices of raw materials for making petrol E5 ethanol has increased over 100 copper / liter.

However, because the ratio of ethanol to produce E5 only 5% of this price increase should not affect production costs E5.

Refuel at a petrol station E5 on Ly Thai To Street, District 10, Ho Chi Minh City 14-1 pm – Photo: Quang Dinh

Mr. Thang said to ensure supply, Petrolimex combined ethanol imported from abroad and imported ethanol prices fairly stable.

Current VN Songlin only company providing ethanol for mixing, as E5. According to Tran Minh Ha – Deputy Director of Oil and Gas Limited HCMC (Saigon Petro), businesses are buying raw materials from the Company primarily ethanol Tung Lam.

Ethanol prices are rising due to Saigon Petro has learn import markets to proactively plan, importation is also quite easy.

In particular, Mr. Ha said today the ethanol import tax of 17%, plus other costs (such as transport, insurance … – PV), the import price of the equivalent ethanol selling price of Tung Lam, even a little cheaper …

raw rise, many intermediaries

Talking with Tuoi Tre on the reasons for price increases ethanol, Vu Kien Chinh, CEO Co. Tung Lam, said the main reason is because the price of cassava (manioc – the only material for ethanol production in Vietnam ) keep going up.

Due to harvest cassava at the beginning of the year and therefore grow only one service, so normally from May onwards the price of cassava will increase, plus the cost of wastage, storage, warehousing, the prices through intermediaries, scarce raw materials in late … have increased the price.

“The cassava has increased by about 30%, plus the cost of intermediation, while 75% of the price of ethanol is cassava. Therefore, if the price of cassava rose 1,000 dong, the price of alcohol to a corresponding increase of 3,000 contract. However, we can not raise prices too high because businesses ethanol gasoline not stand, so the alcohol production process to recover raw materials, reduce rates to keep prices “, he said Panel.

ChIFnh explain the process of circulation dry cassava products in Vietnam through 3-4 intermediation (by planting scattered, now must pass several levels to the collection agency – PV), so the cost of intermediaries when almost equal to the cost of production.

This leads to local firms can hardly compete with imports without mechanisms to improve productivity and reduce intermediation cassava.

According to a number of businesses producing biofuels, dried cassava production in the country each year is 4-5 million tons, mainly for export as animal feed and as raw material used to produce ethanol.

If two ethanol plants in Binh Phuoc and operational Dung Quat, cassava consumed about 600,000 tonnes / year, domestic resource should remain assured. The problem is the price of cassava and transparency in the price of ethanol.

The price of ethanol in gasoline E5 base price (in the operating period MOIT)
Source: Ministry of Trade and Industry – Graphics: Tan Dat

Should reduce import tariffs of ethanol

As representatives of a number of major businesses petroleum business, which increases ethanol prices have not significantly impact the price of E5 by this material only accounted rate of 5% should if up VND1,000 / liter ethanol, gasoline prices rose only 30 E5 / liter.

However, in order to ensure supply, avoid monopoly and price stability ethanol import tariffs should be reduced to now actively import.

Answer Youth, a representative of the Ministry of Industry and Trade reported comments to the Ministry of Finance on the reduction of import duties and taxes ethanol was reduced from 20% to 17% previously.

This has created an opportunity for importers, but also to encourage the consumption of domestically produced ethanol.

But many businesses said that tax rates need to fall further, because ethanol helps protect the environment and are necessary to encourage use E5.

If ethanol prices kept rising to the E5 will be increased, causing obstacles for consumers. The representative also said that the Ministry of Industry and Trade should be calculated to reduce the import tax to ethanol.

Will soon have more supply of ethanol,

according to the Ministry of Industry and Trade, the source of ethanol in water for mixing gasoline E5 is currently provided mainly by two factories biofuels Company Limited Tung Lam with a total capacity of 200,000 m3 / year (200 million liters / year).

Expected in May 1-2018 Factory ethanol biofuel Binh Phuoc (capacity of 100 million liters / year) will be active again in the quarter 1-2018 and biofuels plant bio – Dung Quat ethanol (capacity 100 million liters / year) also works.

Meanwhile, the state will no longer just a supplier of ethanol today.