Tax reductions to boost consumption of E5 bio-fuel

Friday, 2018-04-06 15:15:06
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The MOIT is working to encourage consumers to use more E5 (Illustrative image)
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NDO - The roadmap to bring E5 bio-fuel to the market has reached its intended target and will continue to be promoted in the future, including the proposed reduction of the environmental protection tax on E5, in order to create a price gap and stimulate consumption of this bio-fuel, according to the Ministry of Industry and Trade (MOIT).

The roadmap reaches the set goals

Deputy Minister of Industry and Trade Do Thang Hai said that according to the roadmap outlined by the Government, E5 bio-fuel has been sold nationwide instead of RON92 petrol since January 1, 2018, in a bid to protect the environment.

However, several enterprises have claimed that the consumption of E5 has not been as high as RON92 and recommended that the sale of E5 was suspended.

For instance, Ho Chi Minh City One Member Limited Liability Oil and Gas Company (Saigon Petro) said that the consumption of E5 in the first two months of 2018 accounted for less than 30% of its total petrol consumption, while the consumption of RON92 accounted for over 65%.

Deputy Minister Hai emphasised that the MOIT's purpose is to sell E5 nationwide, however, it is not compulsory for consumers to use this type of product nor has the ministry set detailed targets on achieving specific consumption figures of this bio-fuel. By successfully launching the product to markets in all 63 provinces and cities, the roadmap can be confirmed as successful, Hai added.

According to the latest reports of petrol companies, after two months, approximately 593,000 m3 of E5 was sold, accounting for 42% of the total types of petrol distributed in the market, while the consumption of RON95 made up 58% of total petrol consumption. This figure has risen sharply as the percentage of consumers using E5 was only around 8 - 9% in 2017.

Several petrol companies have posted large consumption of E5, including Thien Minh Duc Petro with an increase of more than 70%; Military Petroleum Corporation, up 64.3%; and Petrolimex, up over 48%.

According to economists, bringing new kinds of commodities to market requires a relatively long period of time to control the market. E5 has been put into service for about three months, therefore, the figures cannot reflect the situation adequately. Requiring this new product to completely replace an old product which had been sold in the market for several decades is impossible.

The most important thing is that the product has been successfully launched to the market and the next task is how to increase its consumption and win consumer trust, Hai noted.

"Giving support" for E5

Agreeing with the policy to put E5 into use, Deputy Director of Hanoi Department of Industry and Trade Tran Thi Phuong Lan said that Hanoi will continue fostering the trading of this type of fuel to promote domestic production and environmental protection. However, one of the problems that should be handled is consumer concerns about the quality of the product and the locations of E5 stations.

"Petrol companies have coordinated with the media to promote the consumption of E5 but people remain worried about the quality and safety of E5. Moreover, several petrol companies have placed E5 pumps in hidden positions, causing difficulties for consumers to observe and buy the product, "Lan said.

Deputy Minister Do Thang Hai noted that after the successful launch of E5, the MOIT is working to implement the next step of the roadmap to encourage consumers to use more E5 to help protect the environment. Accordingly, the MOIT has proposed that the Government reduces the environmental and special consumption tax imposed on E5, thereby creating a price gap to continue stimulating consumers to buy E5.

Deputy Minister Hai added that when a kind of fuel is good for the environment, it is unreasonable to apply the same environmental tax on this fuel as for other types of petrol. This is the basis for the MOIT to ask for a reduction in environmental taxes.

Similarly, E5 is an item that Vietnam is promoting the consumption of, so the government should not impose excessive excise tax on it. When the two types of taxes are reduced, the price gap between the two types of petrol will be expanded, thus stimulating E5 consumption.

In addition, the MOIT has required petrol traders to put E5 pumps in appropriate places for consumers to identify, avoiding blocking the consumer’s view. In particular, it is advisable to promote the dissemination of information for consumers and businesses to have a better understanding about the benefits, features and safety of E5 so that they will feel secure to use this type of fuel.