Businesses delay biodiesel production
Businesses delay biodiesel production
Laos has huge potential to produce and sell bio-diesel but the existing business climate does not favour the commercial success of such an enterprise, according to a company official.
“The production cost of bio-diesel in Laos is still high so it is impossible for it to be competitive against fossil fuel,” Lao Petroleum and Gas Group member Mr Phet Chanthamaly told Vientiane Times last week.
Mr Phet, who is also a manager at Lao State Fuel Enterprise, said a number of companies have put on hold their plans to grow Jatropha, one of the main raw materials used in the production of biodiesel, after realising that the market price of biodiesel was too high to be an attractive competitor in the energy market.
He said that several years ago his company invested a large amount in establishing a Jatropha plantation on 30 hectares of land on the outskirts of Vientiane as part of a pilot project. The project aimed to produce biodiesel for use by the company as fuel for its trucks.
But his and other companies cut their investment in Jatropha when they learnt that the price of fossil fuel had dropped.
Several companies drew up plans to grow Jatropha and other plants as sources of biodiesel, hoping to supply the raw material to refining factories when the price of crude oil climbed to US$250 per barrel several years ago.
The huge increase in the price of fossil fuel appeared to open up a business opportunity in Laos for the production of biodiesel for commercial purposes, especially as the demand for fuel was rising dramatically.
But now the price of crude oil sits at just above US$100 per barrel, making it impossible for biodiesel producers to compete.
Many company staff said they expected to pick up their investment plans when the price of fossil fuel increased in the future, ad ding that they would now focus on testing the production of biodiesel to meet international standards.
Some businesses have asked the government to give them a tax-free fossil fuel quota so they can mix fossil fuel with biodiesel to make B5 and B10 fuel. B5 fuel contains 5 percent biodiesel, while B10 consists of 10 percent bio diesel mixed with fossil fuel.
These companies said mixing biodiesel with fossil fuel would accelerate the use of biodiesel in Laos.
According to a report from the Ministry of Energy and Mines, the government's plan is for biodiesel to comprise 10 percent of vehicle fuel consumption by 2025.
Economists say that although now is not the right time for the commercial production of biodiesel, it is a good time for businesses to find land on which to grow Jatropha and similar oil-producing crops, pointing out that the price of land is set to rise.
They also said the government should help farmers to grow more crops so they will be able to cut the production costs of biodiesel.
At present, Laos imports about one billion litres of fossil fuel a year at a cost of at least US$900 million.
vientiane times
