Friday, July 9, 2010

By Euan Paulo C. Anonuevo

In a statement, the Independent Philippine Petroleum Companies Association (IPPCA) said the government has to seriously consider importing ethanol unless it decides to put on hold the country's bioethanol fuel program.

"Otherwise the country would not be able to meet the 10-percent blend requirement. If the [Department of Energy] does not compel Congress to act now, there would be a massive shortage of gasoline since oil companies would be forced to stop selling gasoline for failure to comply with the requirements for local ethanol," the group said.

Under the Biofuels Act, gasoline sold at the pump must be blended with locally sourced ethanol, starting at five percent in 2009 and 10 percent by 2011.

Despite the captive market, domestic ethanol supply is inadequate to meet oil firms' requirements. Production from the only ethanol producers in the country--San Carlos Bioenergy Inc. and Leyte Agri Corp.--is estimated at only 80 million liters per year. This is short of the 110-million liter demand.

Green Futures Inc. is scheduled to add 50 million liters when it begins commercial operations next year.

The nascent industry, however, claim that oil companies prefer to source their ethanol requirements abroad because it was cheaper to do so.

The Ethanol Producers Association of the Philippines (EPAP) wants government to impose higher import duties on ethanol and to compel oil companies to source their requirements locally.

EPAP admitted that the industry can only provide approximately 35 percent of the mandated blend.

"It will take years before this capacity can be increased to cover for the underproduction. That's why IPPCA doesn't understand EPAP's suggestion that oil companies be penalized when the local supply is very low," IPPCA said.

The contention comes amid a sugar shortage, with government scheduling another round of imports. Sugarcane is the Philippines' main raw material for producing ethanol.

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