MANILA, Philippines ? The Department of Energy is finalizing guidelines that will allow local oil companies to import ethanol even after February 2011, to enable them to comply with the mandated 10-percent ethanol blending in all gasoline products.
?Yes," Energy Secretary Jose Rene D. Almendras told reporters when asked during a recent briefing if the department would allow ethanol imports. "We are going to compute what is to be the local production to ensure local [supply] will be bought. And the importation that will be allowed will only be that which cannot be supplied by local production.?
?The intention of the Biofuels Act of 2006 is to develop indigenous resources. The idea was to put in a local component. Clearly there is that component that says we will encourage the expansion of the local industry,? Almendras told reporters.
Under the Biofuels Law, ethanol importations are allowed only during the first four years, which means that by February 2011, it is expected that oil companies will have to source all their ethanol requirements from local ethanol producers.
However, local ethanol production is expected to reach only 117 million liters by next year. This volume falls short of the expected demand of 460.63 million liters, based on the mandated 10-percent ethanol content of all types of gasoline by February 2011.
Almendras assured local ethanol producers that even if the government would allow oil companies to import additional ethanol requirements, the volume to be sourced abroad will strictly be limited to what these producers cannot supply.
Ethanol producers and oil companies have been at odds over whether ethanol importation should be allowed beyond February 2011.
Local producers are asking government to just strictly enforce blending requirements instead of wasting time to amend the law to allow importation, while oil companies are warning of a massive fuel shortage should they be barred from securing additional ethanol abroad. The oil companies said they would be forced to stop selling gasoline since they will not be able to comply with the mandated 10-percent blending.
Meanwhile, Almendras disclosed that issues regarding the appropriate tariff to be slapped on imported ethanol and the possibility of establishing a benchmark price for ethanol were still under discussion.
?The question is what is the appropriate tariff on ethanol. I think there was a position that was submitted that it should be 20 percent and there's another position that says it should only be 10 percent. I don't know yet what it's going to be,? Almendras said.
