Phung Dinh Thuc, chairman of PetroVietnam - the developer of three ethanol factories, said that due to unclear regulations relating to the use of ethanol gasoline in Vietnam, PetroVietnam factories could not sell its products.

PetroVietnam and its partners are investing in three ethanol factories located in Binh Phuoc, Quang Ngai and Phu Tho provinces with total capacity of 300,000 cubic metres per year. Of those, Quang Ngai and Binh Phuoc were put into operation from 2012’s second quarter. But with little opportunity to sell ethanol in Vietnam, these factories are manufacturing very little.

“We are now in a very difficult situation that our products cannot be sold and the more we produce, the heavier we lose,” Thuc said.

Meanwhile, Phu Tho Ethanol has been delayed for more than one year, after starting construction in 2009 and was expected to be put into operation in 2011. To date, about 80 per cent of work was finished.

According to Hoang Cong Thuy, vice chairman of Phu Tho province’s People’s Committee, low consumption was upsetting developers. “We thought that the operation of the factory would boost the province’s economy. But we have nothing now, two years after the construction began,” Thuy said.

The delay of Phu Tho factory has brought difficulties for local people because thousands of hectares of cassava - main material for ethanol production planted to supply material for this factory - are left unused.

Japanese Itochu Corporation, the foreign partner behind the factory in Binh Phuoc province, also decried the delays in authorising domestic sales of bio-fuels in Vietnam as damaging to the joint venture.

Vo Tuan Nhan, vice chairman of the National Assembly Committee of Science, Technology and Environment, said that even though the plan and policy to develop ethanol gasoline was approved by the government in 2007, its implementation has encountered many obstacles. “The mandate of using ethanol and draft framework regulating the sale of bio-fuels in Vietnam would be approved by the government later this year,” he said.

“Ethanol gasoline has not disclosed its advantages to people. So, it has not been paid much attention by users,” Nhan added.

Currently, among the ten companies involved in distributing ethanol gasoline in Vietnam, PV Oil, Petect and Saigon Petro are making sales. In order to continue their operation, factories were forced to export the surplus products to the Philippines, Korea and China. However, Vietnamese products lack competitiveness due to high production costs.

In the first nine months of this year, PV Oil could only domestically sell 750 cubic metres of ethanol – equivalent to 2.5-day production capacity only. According to Le Xuan Trinh, general director of PV Oil, after two years turning out the ethanol gasoline to the market, the company’s products were only sold in 136 out of 13,000 stations throughout the country.

Vietnam has 13 factories producing ethanol products, of these six are in operation or under construction.