Raising ethanol blend will hit consumers

MANILA, Philippines – An oil company executive said Thursday it would be best for consumers if the required ethanol blend for local fuel remains at the current five percent, if only to prevent pump prices from skyrocketing.

“Huwag na sana doblehin dahil tiyak na tatama sa mga consumers (Hopefully it won’t be doubled because it would surely hit consumers),” Independent Philippine Petroleum Companies Association (IPPCA) Chairman Fernando Martinez told the Manila Bulletin.

Under the Biofuels Act of 2006, petroleum companies are required to have a 10 percent blend of ethanol in their products by 2011, or twice that of the required blend last year.

But the Department of Energy (DoE) itself has been thinking twice about pushing through with the increase in blend percentage this year, citing productivity problems for ethanol.

Local producers of bio-ethanol must be given priority by the oil companies, according to the law.

Martinez pointed out that the current local production of ethanol does not meet the demand in the country, making it both scarce and too costly for oil firms.

“The one that is really pushing to implement this is the sugarcane bloc. Pero hindi nila na-anticipate na tataas ang presyo ng ethanol (But they did not anticipate the spiking of ethanol prices). They want us to buy from them at whatever price,” Martinez said.

He said forcing oil firms to pay for higher prices from the local market of ethanol would only result in higher fuel prices, since they will pass on the additional costs to consumers.

“If there was an efficient producer, there would have been no need for this,” he added.

The Philippines would need more than 330 million liters of bio-ethanol annually starting this year to comply with the 10 percent blend mandate, Martinez said. The projected local production for 2011 is 83 million liters.

Figures provided by the Ethanol Producers Association of the Philippines (EPAP) showed that only 80 million liters of local ethanol was produced by San Carlos Bioenergy and Roxol Energy Incorporated in 2010, which was roughly a third of the actual demand that year.