Locals buck oil firms’ ethanol imports

BY EUAN PAULO C. AÑONUEVO Reporter

Local ethanol players have said oil companies have not been complying with the Biofuels law because they continue to buy ethanol abroad.

Tetchi Cruz Capellan, Ethanol Producers Association of the Philippines (EPAP) executive director, said that as stated in the Biofuels Act of 2006, all liquid fuels for motors and engines in the Philippines should contain locally sourced biofuels.

“We cannot understand why the oil companies refuse to heed the law,” she said.

Because of this, the Department of Energy earlier issued a circular that controls the importation of ethanol by requiring all oil companies to declare compliance to the Biofuels Act.

Most oil firms continue to source most of their ethanol requirements from countries like Brazil because of limited local production.

“If the department fails to control the importation of ethanol from Brazil, [then] we are simply replacing Middle East oil imports with Brazilian ethanol imports,” Capellan said.

Brazil is the recognized global leader in ethanol production, exporting 3.5 billion liters of ethanol and has supplied the domestic market with approximately 14 billion liters in 2007.

The South American country imposes a 30-percent import tax on ethanol to protect its industry whereas the Philippines only slaps a 1-percent duty on such imports.

Capellan said that the uneven playing field slowed the entry of investments in the biofuels sector, consequently undermining the alternative fuels program of the government.

As a result, Alto Power Inc.—which has a potential to produce 40 million liters of ethanol—announced last month they would pull out investments from the ethanol plant project in Cagayan de Oro because of the government’s weak support for the industry.