High-sulfur fuels: Who does the trade ministry look out for?

With its continued support for the sale of high-sulfur fuels, Vietnam’s Trade Ministry seems to have worried more for fuel importers and distributors than consumers or the country.

The government, in its efforts to reduce air pollution, decided in October 2005 that all new cars and motorbikes must conform to Euro II emission standards from July 1, 2007.

To facilitate this, it released a decision in March 2006 to cut the sulfur content in unleaded transport fuels – both gasoline and diesel – to 0.05 percent.

The Ministry of Trade and the Ministry of Science and Technology managed to delay the deadline until January 1, 2007 with the aid of a correspondence from the Government Office in April 2006.

It must be noted that, legally, a government correspondence cannot overrule a government decision if they are both signed by the same authority, in this case the prime minister.

Partial adoption

As the new deadline approached the Trade Ministry again advised the government against the adoption of “a number of specifications,” citing four difficulties.

It was hard to find suppliers of clean fuel, the cost of clean fuels was high, importers had logistical difficulties in handling different fuel grades, and there was the risk of trade fraud, the ministry said in a correspondence dated December 15, 2006.

It said the specifications would be adopted but “there will be a suitable roadmap for the adoption of a number of specifications which should be kept unchanged for now to ensure stable and continued supplies”.

The trade and science and technology ministries and the Directorate for Standards and Quality (STAMEQ) would work with fuel importers to decide on these specifications, it said.

It went on to suggest that the government should issue or let the trade ministry issue a decision on the types of gasoline and diesel oil as follows:

- First, only 92 RON and 95 RON gasoline should be allowed for sale

- Second, diesel should be allowed if the sulfur content is not higher than 0.25 percent.

Besides, if fuels that fell below the new standards were still in stock as of July 1, 2007, their sale should be allowed to continue, the ministry also recommended.

The government has not replied to this correspondence.

Ambiguity, unconvincing

The correspondence can be construed as allowing importers to continue import of high sulfur fuels.

For example, the ministry specified the RON (Research Octane Number) standards for gasoline but did not mention the sulfur content. If this suggestion is approved, gasoline with sulfur content higher than 0.05 percent can be considered legal for sale.

Retail sales of diesel with sulfur content five times higher than the new standard will also continue.

The ministry’s contention that is hard to find suppliers of clean fuels is unconvincing.

“It has been hard for fuel businesses to find a foreign supplier whose products can meet all technical specifications [of the new standards,” the ministry reasoned.

It warned that if the adoption schedule was to be followed exactly as planned, “[local] fuel businesses would have to depend on just a few of foreign suppliers.”

A trade ministry official told Thanh Nien on condition of anonymity that this argument “won’t convince anyone.”

“Vietnam imports fuels mainly from China and Singapore, which have had Euro II for very long. Next year, Beijing and Shanghai will even adopt Euro IV, which is 10 times stricter than Euro II,” he pointed out.

One is left wondering if the ministry is trying to protect the people and the environment, or the benefits of monopolistic fuel importers.

(To be continued)

Written by Hoang Hai Van