Sirivuthi said two ethanol producers had already closed down.

Producers can now make up to 900,000 litres of ethanol per day, but market demand can absorb just 400,000 litres daily.

The government should do something concrete to solve the oversupply problem as ethanol production is central to its effort to support the use of alternative energy, he added.

The government was originally committed to end sales of 95-octane petrol from January this year, but has yet to do so.

Representatives from the association yesterday met with Commerce Minister Krirk-krai Jirapaet to ask the ministry to help solve the oversupply problem.

Krirk-krai said it was government policy to support the use of alternative energy and his ministry would discuss the matter with the Energy Ministry and the National Energy Policy Council soon. The switch to ethanol will not only benefit the environment, it will also help the agricultural sector, he added.

Ugrit Asadatorn, vice president of the Thai Ethanol Manufacturers Association, said new ethanol plants had been forced to stop production. Many had tired to export, but they faced stiff competition from Brazil, the world's largest ethanol suppler, he said.

Urgit said many enterprises that had been preparing to build ethanol plants had scrapped their plans, deciding to pay fines for cancelling machinery orders rather than go forward.

Tapioca growers have also been affected by the slowdown in the number of new ethanol plants opening, as tapioca is used is used to make ethanol, he said.

Chalush Chinthammit, assistant vice president for business development at Khon Kaen Sugar Industry, said the company had solved its oversupply problem by exporting 350,000 litres of ethanol to the Philippines.

"Most ethanol producers are now asking for permission to export ethanol," he said. Chalush said exporting ethanol was not in the company's plan, as it is confident the domestic market will grow substantially.

Watcharapong Thongrung

Petchanet Pratruangkrai

The Nation