Ethanol producers seek tariff protection to ensure local supply

The country’s biofuels policy is teetering toward failure path, but the Ethanol Producers Association of the Philippines (EPAP) is propounding one major solution so distilleries can shift production, consequently ensuring the country’s higher volume bioethanol requirements by year 2011 to be met.

In an interview, EPAP executive director Tetchi Cruz-Capellan disclosed that the domestic producers’ bid for 20-percent tariff protection has already been endorsed by Agriculture Secretary Arthur Yap and Energy Secretary Angelo T. Reyes to President Arroyo for signing – the latter’s concurrence of which was upon the endorsement of the National Biofuels Board.

“It has already been endorsed for the President’s approval. We have gone through all processes, primarily the public hearings at the Tariff Commission before securing the necessary endorsements from the government agencies concerned,” she said, raising hopes that this policy will be concretized soon so the lingering worries over availability of domestic ethanol supply may finally be resolved.

“We have supply base for ethanol and the total volume is even larger than what we actually need for 2011 and beyond. There are distilleries that can shift production from gin (liquor) to bio-ethanol, but definitely, they are looking for incentives to assess if it is viable for them to do it, that’s why we batted for tariff protection,” Capellan stressed.

She added that the industry’s bid for 20-percent most favored nation (MFN) rate of duty for anhydrous fuel bio-ethanol is very much aligned with the prescriptions of the Asean Free Trade Area, World Trade Organization (WTO) and other trade bloc agreements.

In reference to the experience of other countries, Capellan noted that the 20-percent duty is well within reasonable bounds and aligned or even lower than those imposed by other ethanol producers such as Brazil, India, United States, Japan, Thailand and Indonesia.

“Supply is not really a problem, but encouraging companies to invest is one specific area to be addressed,” she stressed.
If the tariff shield for domestic ethanol producers is in place, Capellan noted that the “from-gin-to-ethanol-formula” may already sidestep other rigorous concerns, such as securing forward contracts with the oil companies.

Presently, it becomes fairly advantageous for the oil companies to secure their ethanol supply from importation because the tariff is relatively low at 1.0-percent.

For the blanket mandate of 10-percent blend for gasoline at the pumps by 2011, concerns have already been raised that domestic production may not be able to underpin demand. But EPAP stressed such dilemma can be circumnavigated if they are successful in securing the tariff protection.

By 2011, the forecast local ethanol production just hovers at 80 million liters, and this is anticipated lower than what the industry actually needs within that timeframe.

SOURCE: mb