FPI seeks inclusion of palm oil in fuel mix
The Federation of Philippine Industries (FPI) has called for a review of the product specification of the Biofuels Act of 2006 to include palm oil in the fuel mix in addition to the existing coconut oil blend.
FPI Chairman Jesus Arranza told a press conference that the current rules has specified a chemical formula that has been skewed in such a way that only coconut oil can qualify in the biodiesel fuel mix.
Arranza said they will be submitting a position paper to the technical committee on petroleum and petroleum additives of the Department of Energy to formalize their request to include palm oil.
According to Arranza, the addition of palm oil in the fuel mix would ensure a cheaper alternative choice on top of the coconut oil, which is sold at premium price and of insufficient quantity.
At present, the law requires a 2 percent blend of biodiesel (fatty acid methyl ester of mono-alkyl esters derived from vegetable oils or animal fats and other biomass-derived oils) in the fuel mix.
He will also discuss their position with Finance Secreratary Carlos Dominguez III because this will caution the impact of the proposed higher tax on fuel because palm oil is a lot cheaper than coconut oil.
Palm oil is sold in the international market at $725 per metric ton (MT) only as against $1,500 per MT for coconut oil. This will also ease the pressure on coconut oil, which can be prioritized for export and for use for the production of high value-added food products.
The disparity in price is largely due to the fact that palm oil is abundantly produced in other countries and can easily be imported.
Per hectare of palm plantation can produce 5 tons of oil or 4,500 kilos per hectare as against 450 kilos per hectare production for one hectare of coconuts.
“We are working on the inclusion of palm oil so oil refiners have a choice for a cheaper additive. This specification for the use of coconut oil only is a form of non-tariff barrier,” said Arranza, adding this will also legitimize, if there are, indeed, other refineries that are actually using the cheaper palm oil in their fuel blend.
Eventually, he said, this will benefit the farmers and to the whole country because it will filter down to buyers.
Alfredo P. Montecillo, director and COO of Kenram Palm Oil Industries – the country’s leading palm oil producer, said there are only 80,000 hectares of palm plantation in Mindanao and Visayas as against the potential of a million hectares suitable for palm plantation. So far, local palm oil production is only at 100,000 MT.
Montecillo noted that if there is not enough local supply of palm oil, this product is abundant in other countries and can easily be imported from Malaysia.
Kenram, which has been operating since the ’70s in San Francisco in Agusan del Sur, is already expanding its business. It has a milling plant in Isulan, Sultan Kudarat.