HÀ NỘI — The Ministry of Industry and Trade has proposed new pricing measures and tax incentives for E10 biofuel as the country prepares for a nationwide rollout from June 1, aiming to make the greener fuel more competitive with conventional petrol and boost consumer demand.
Under a draft resolution submitted to the Government, the ministry proposed that the base price of E10 gasoline should be calculated using global RON95 gasoline prices, ethanol fuel (E100) prices and the costs of blending, transportation and storage.
The Ministry of Finance would determine and announce ethanol fuel prices, while the Ministry of Industry and Trade would set RON95 gasoline prices based on average global prices between two regulatory periods.
Under the proposal, E10RON95-III would become the benchmark product for official fuel price announcements from June 1.
Before September 1, the ministry is expected to announce the most widely consumed biofuel product to apply the benchmark pricing mechanism.
The ministry also called for adjustments to the special consumption tax and environmental protection tax on E10 to create a more attractive price gap between biofuel and fossil fuel products.
It said pricing would be critical to encouraging consumers to switch to E10 amid cautious market sentiment.
According to ministry data, E5 biofuel once accounted for about 40 per cent of retail gasoline sales in Việt Nam. However, its market share has since fallen to between 15 and 20 per cent due to narrowing price differences with fossil fuels and lingering consumer concerns.
Alongside tax incentives, the ministry said further policies were needed to support long-term growth in the biofuel industry and ensure stable consumption of biofuel products.
One of the biggest challenges facing the nationwide rollout remains ethanol supply. The ministry estimated monthly ethanol demand at between 92,000cu.m and 100,000cu.m.
Domestic ethanol production currently totals only around 25,000cu.m per month, with existing plants operating at just 30 to 40 per cent of designed capacity.
As a result, Việt Nam will need to import about 75,000cu.m of ethanol each month for at least the next year to cover shortages, although the ministry acknowledged there could still be a deficit of between 10,000cu.m and 15,000cu.m during the initial rollout phase.
Infrastructure limitations also remain a concern.
At present, only three companies, Petrolimex, PVOIL and Saigon Petro, are licensed to blend E10 fuel, with total blending capacity estimated at around 700,000cu.m per month.
If pending projects are approved, total blending capacity could rise to more than 1.15 million cu.m per month, the ministry said.
Against this backdrop, the ministry said a special resolution was needed to remove technical and supply bottlenecks and prevent blending shortages ahead of the transition to E10 next month.
Under the draft plan, petroleum traders would be required to provide complete and timely data on ethanol prices, blending ratios, transportation, storage and related costs to support the calculation of E10 base prices.
The ministry also proposed allowing petroleum distributors to outsource fuel quality testing to qualified laboratories instead of investing in their own testing facilities, a move intended to reduce costs for businesses.
The Ministry of Construction would review blending infrastructure standards, while the Ministry of Agriculture and Environment would plan raw material zones and publish emissions reduction indicators.
Provincial authorities would support businesses in upgrading infrastructure and strengthening quality inspections, while fuel distributors and biofuel producers would be required to complete preparations for the nationwide transition to E10 before June 1. — VNS
