Ethanol short as plants shut for maintenance

Up to five ethanol plants will be shut down in the final quarter of the year for maintenance, which will lead to severe shortages, Bangchak Petroleum president Anusorn Sangnimnuan said yesterday. 

Aside from the maintenance issue, some plants are running only partial capacity. There is also the problem of traders exporting more ethanol.

Anusorn said supply had already been cut by about 400,000 to 500,000 litres per day.

"The Energy Ministry could solve this problem by convincing traders to reduce exports or allowing imports. If two new plants, with combined capacity of 300,000 litres a day, commence operations late this year, ethanol supply should increase," he said.

 Due to the tight supply position, the fourth-quarter ethanol price is set to rise to Bt24 per litre from the current Bt18. If the price gap at the pump between gasohol (fuel with ethanol content) and petrol is to be maintained, the Oil Fund should be required to set aside additional subsidies, Anusorn said.

 While stating that the situation would return to normal early next year, he said Bangchak had not been affected by the shortage due to its monthly inventory of 450,000 litres.

 A source from the Energy Ministry said operators of ethanol plants shut down for maintenance with a view to cashing in on a higher price later.

While some operators complain about higher exports of molasses, a key raw material for ethanol production, he said that should not affect domestic production. The output of sugar molasses was 3.3 million tonnes from January to July, while only 580,000 tonnes were exported in the period.

 "Theoretically, the ethanol price for the fourth quarter should be raised to Bt22 per litre, but shortages have led to the Bt2 premium," the source said, adding that Shell was affected the most as its main supplier, Thai Alcohol, had withheld supplies, waiting for the new price.

Chalat Chinthammit, executive vice president of Khon Kaen Sugar Industry, however said the ethanol shortage was a result of lower raw-material output. His company's 150,000-litre ethanol plant now has sufficient molasses for just two months' operations.

The ethanol plant supplies 90 per cent of its output to domestic oil retailers and exports the rest.

Chalat said it would be unfair to stop ethanol exports, which are mostly obligatory under long-term contracts.

He also said that ethanol producers in the first half of the year had sold their products at below the production cost, losing Bt1 per litre in the process. This forced operators to turn to exporting molasses.