IPPCA opposed to sale of Euro 2 diesel

The offering of Euro 2 diesel by local oil companies should not be mandatory as it will burden firms with the need for significant investments, an industry group said.

In a statement over the weekend, the Independent Philippine Petroleum Companies Association (IPPCA) expressed apprehension on the Department of Energy (DOE)’s recent directive for oil companies to make Euro2 available at their retail stations.

Energy Secretary Alfonso Cusi earlier issued Department Circular 2018-08-0012 that mandates local oil players to make available Euro-2 diesel in their retail stations to cushion the impact of increasing world oil prices.

IPPCA stressed the DOE cannot force oil companies to sell Euro-2 diesel in their stations.

Despite being a temporary stop-gap measure, IPPCA said making it mandatory would entail significant investments in putting the necessary infrastructure (storage tanks, dispensing pumps and pipes).

“We cannot be forced to make significant investments for a temporary stop-gap measure for a problem that they created by imposing higher excise taxes across all fuel products,” IPPCA said.

IPPCA earlier suggested the relaxation of the implementing rules and regulations stipulated under Republic Act 9637 or the Biofuels Act of 2006, which require oil companies to buy biofuels from local manufacturers notwithstanding the huge difference between local and imported biofuels, particularly ethanol.

“With the relaxation of the prescribed biofuels blend, motorists could expect a P2 per liter and P0.30 per liter reduction on the pump price of gasoline and diesel, respectively,” IPPCA said.

IPPCA added that suspending the prescribed biofuel blend on fuel products would be more effective in bringing down the local fuel prices, instead of reintroducing Euro-2 diesel that might not be feasible due to logistical concerns and minimal price reductions.

With Euro-4 in effect and 10 times cleaner than Euro-2, IPPCA said blending of ethanol and biodiesel is no longer needed in achieving cleaner emissions from both gasoline and diesel products.

The government earlier mandated all fuel companies to sell Euro 4 compliant fuel products starting 2016.

Euro 4 is a globally accepted European emission standard for vehicles which require significantly low amount of sulfur and benzene. It has a significantly lower sulfur content of 50 ppm (parts per million), compared to the Euro 2 standard of 500 ppm.

Benzene in gasoline also measures only one percent by volume, compared to five percent for Euro 2 fuel.

IPPCA pointed out that recent spikes and scarcity of table sugar could be attributed to the use of the same raw material, as sugar cane used in ethanol production is given higher priority due to its mandatory 10 percent blend in all gasoline products, thus making locally produced ethanol more expensive by P4 per liter as against imported gasoline.

The group also emphasized there is not much difference between the price of Euro-2 and Euro-4 diesel as domestic and international refineries have upgraded and shifted their production to Euro-4 and even Euro-5 compliant diesel products, which made Euro-2 diesel even less available.

Moreover, the IPPCA said the reintroduction of Euro-2 is a setback to the government and industry stakeholders’ for cleaner air. It added that going back to Euro-2 means reverting to fuel with 10 times more sulfur at 500 ppm as against the much cleaner diesel that is 90 percent less sulfur with only 50 ppm.