AN OIL INDUSTRY PLAYER has bucked proposals to prematurely raise tariffs on ethanol imports to 20 percent from the current 1 percent, stressing that this might result in higher fuel prices for consumers.

Fernando Martinez, chair of the Independent Philippine Petroleum Companies Association and of Eastern Petroleum Corp., said that at this point when local ethanol production remained insufficient to meet the current demand of oil companies, the move to raise tariffs was not urgent.

?We will be penalizing the consumers because we might end up with higher prices for fuel blended with ethanol if we impose the tariff increase prematurely,? he said.

?There must be a trigger point, such that the tariffs should be raised only when local production can meet the demand 100 percent. It?s not fair for consumers to shoulder the 20-percent tariff,? Martinez explained.

He noted that in blending 2-percent coco methyl esther (CME) in diesel, consumers were ?shouldering at least 30 centavos in additional cost, and because ethanol requires a bigger mix of 10 percent, you might end up having to impose more costs and ultimately [these] will be shouldered by the consumers.?

Beginning 2009, the government has mandated oil companies to pre-blend 2 percent CME or coco biodiesel in diesel-fed vehicles, and 5-percent ethanol in gasoline-fueled ones. Most oil companies, if not all, are offering 10-percent ethanol blended gasoline.

The Biofuels Act also mandated that the blending of bioethanol should be increased to 10 percent by 2011.

Based on the Philippine Energy Plan (2007-2014), a 5-percent minimum blend would need around 208.11 million liters of ethanol by 2009. With a 10-percent blend, 460.63 million liters (inclusive of consumption growth rate) would be needed by 2011.

As of this year, only two companies?San Carlos Bioenergy Inc. and Leyte Agri Corp.?are producing a combined 40 million liters of ethanol for local requirement.

Local ethanol producers have been lobbying for the tariff increase to protect and boost investments in the industry.

According to the Ethanol Producers Association of the Philippines (Epap), raising tariffs on imported ethanol will not only curb the losses of local producers but will also ensure the country?s energy security.