Ethanol producers oppose biofuels law suspension
ETHANOL producers are seeking an audience with the Department of Energy (DoE) after a call from independent oil companies to suspend the Biofuels Act of 2006 to cushion against rising inflation, a move which they say could put at risk their P30-billion investment.
Gerardo T. Tee, president of the Center for Alcohol Research and Development (CARD), said suspending the biofuels law or Republic Act No. 9637 is akin to changing the rules in the middle of the game.
“[W]e are scaring the foreign investors away, we are sending a negative, wrong signal to these companies,” he said in a statement on behalf of the organization of potable alcohol producers in the country.
Mr. Tee, who is also chief operating officer of Absolut Distillers, Inc., said bioethanol investors spent about P3 billion to P5 billion for a distillery with capacity of 100,000 liters per day, depending on the technology used.
He said the biofuels law is not about lowering the prices of gasoline, but about rural development and the diversification of the sugar industry that empowers marginalized farmers, including sugarcane farmers.
“It is about putting the people, making the people go to agriculture, developing our farms, providing livelihood in rural areas rather than them moving away to Metro Manila,” he said.
His statement comes after the Independent Philippine Petroleum Companies Association (IPPCA) earlier this month called on the DoE to suspend the Biofuels Act of 2006 instead of directing them to bring back Euro 2 into their retail stations.
The department’s call came after the inflation rate in recent months had risen in part because of the imposition of the excise tax on diesel, which jacked up fuel prices. Diesel is largely used by public utility vehicles.
“The government should think twice before suspending a law after asking for investments,” Mr. Tee said.
He said the biofuels law, which mandates a 10% bioethanol blend in gasoline, can only be amended by Congress.
Mr. Tee noted the bioethanol industry is also still in its infancy stage as the first bioethanol plant was put up only in 2013 and requires strong support from the government.
“We are the solution, we are not the problem. We are trying to promote renewable energy, we are trying to plant our own fuel and we are in its infancy,” he said. “You have to nurture the industry and let it grow. There has to be a time for our biofuels to develop because it is the future of the country.”
The CARD president also questioned statements claiming that imported bioethanol is cheaper than locally produced bioethanol.
He said bioethanol in the US is cheaper by P26 per liter because the US government subsidizes its corn farmers. Local producers do not enjoy subsidies for their investments in bioethanol production.
“It is not true that we are increasing the prices of gasoline, that’s wrong. There are instances that we even help bring down the price of gasoline depending on the price of ethanol. Bioethanol is not indexed to petroleum,” he said.
Mr. Tee said bioethanol provides energy security as gasoline is a finite resource whose prices are likely to go up when demand rises while supply stays constant.
“Bioethanol would free us from bondage from imported oil, from our addiction to imported oil. Gasoline is a finite resource, sooner or later it will be used up. The prices are now is just temporary, once demand stays like this and supply starts diminishing that’s the end of oil and the prices will go up. We are doing it now so that when that scenario happens we are already quiet independent, we don’t need much oil anymore,” he said.
Domestic ethanol producers produce about 300 million liters per annum, equivalent to 60% of the 500 million liters per year demand. The remaining 200 million liters of bioethanol, equivalent to 40% of demand, is imported by the oil companies.
CARD is established to promote research and technological advancement in the industry.