“IPPCA SUPPORTS DOE TO REVISIT THE BIOFUELS LAW”
August 19, 2010
PRESS STATEMENT
July 8, 2010
“IPPCA SUPPORTS DOE TO REVISIT THE BIOFUELS LAW”
Independent oil players comprising the Independent Philippine Petroleum Companies Association (IPPCA) support the stand of Oil Industry Management Bureau Director Zenaida Monsada urging Congress to revisit the Biofuels Act of 2006.
The Biofuels Act of 2006 mandates that by February 2011, gasoline must contain at least ten (10) percent blend of ethanol. At present, the ethanol blend is at five (5) percent. The Department of Energy (DOE) is tasked to oversee the implementation of the new blend at ten (10) percent. In addition, the law provides that by 2011, all supply of ethanol must be locally sourced. These provisions contained in the Biofuels Act led Director Monsada to seek the intervention of Congress considering that the scarce production of local ethanol is not enough to fully supply the needs of the local oil industry.
IPPCA said with less than a year before the February 2011 deadline, the government has to reconsider importing ethanol unless it decides to put the Bioethanol Fuel Program on hold. Congress has to amend the law to allow importation even after February 2011, otherwise the country would not be able to meet the ten percent (10) blend requirement. If the DOE does not compel Congress to act now, there would be a massive shortage supply of gasoline since oil companies would be forced to stop selling gasoline for failure to comply with the requirements for local ethanol.
Even the Ethanol Producers Association of the Philippines (EPAP) admits that the current potential local sources can only provide approximately 35% of the current 5% required 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.
It may be recalled that the EPAP recently came out with a statement suggesting that the DOE strictly enforce the blending requirements, disclose and penalize the violators that fail to comply with the biofuels law.
IPPCA believes that the lack of supply of ethanol in the country is not the fault of the government nor the oil companies. Why penalize oil companies for being unable to comply with the blending requirement when EPAP itself admits that they can only provide 35% of the current 5% blend? “It is also not the fault of the consumers. They should not be burdened with the additional cost of shouldering the much more expensive 10% local ethanol component of the gasoline, just because the local suppliers deem it unprofitable for them to price it in parity with the world market prices.
In an earlier statement, IPPCA junked EPAP’s claim that the oil firms are against the Biofuels Act. "The oil industry players share the same vision of energy independence, protection of public health and ecosystems and rural employment for the people,"
"This is the main reason why despite the huge investments required for the oil companies to comply in terms of the purchase of blenders, service station rehabilitation, replacement of under-ground storage tanks, allocation of additional storage tanks and purchase of laboratory equipment, oil companies are faithfully complying with the provisions of the Biofuels Act, IPPCA explained."
EPAP, in its recent statement, compared the ethanol industry of Brazil and the Philippines and stated that with intense support from their government, the production of ethanol in Brazil reached significant levels. In reaction to this, IPPCA stated, “EPAP itself admitted that it took Brazil thirty-five (35) years to build its ethanol industry. It is unfair to compare the ethanol industry of Brazil and the Philippines since there is a great disparity of supply between the two countries and Brazil has been producing ethanol for quite a number of years already.”
Brazil is the recognized global leader in ethanol production, exporting some 3.5 billion liters of ethanol on an annual basis and supplying the domestic market of approximately 14 billion liters in 2007.
In the country, data show that only 80 million liters of local ethanol will be produced this year by San Carlos Bioenergy and Roxol Energy Inc. Another 50 million liters are scheduled to be supplied by Green Futures Inc. when its commercial operations begin next year. With the recent supply shortage of sugar and the government’s reliance on importation of sugar, it remains to be seen whether this latest development would have an effect on local ethanol production, sugarcane being the main source of ethanol in the country.
Written by: Leah FLor
IPPCA Executive Director