Congress expected to pass ethanol measure next week

The House of Representatives is expected to approve next week the National Fuel Ethanol Act that will mandate the use of ethanol blend in gasoline.

"The bill has been certified as urgent by President Arroyo and will be approved by Congress next week. This should send strong signals to investors," said Bukidnon Rep. Miguel Zubiri.

Zubiri is chief sponsor of the bill seeking to establish a national ethanol program. The bill proposes the grant of fiscal and non-fiscal incentives and tax breaks to ethanol projects.

Under the government’s National Fuel Ethanol Program, private entities are encouraged to invest in the production of biofuels and distribution of bio-fuel blends.

The government’s ethanol program aims to intensify the use of bio- fuels in the transport sector by blending a minimum of five percent bio-ethanol fuel into all gasoline-fed motor vehicles.

Government wants to raise the percentage of bio-ethanol blend to 10 percent by 2010.

Zubiri said once the bill is enacted, the Philippines has the potential to become a major producer of alternative fuels.

There are already plans by four small oil players to sell ethanol-blended gasoline in at least 400 service stations nationwide by September this year.

Energy Undersecretary Peter Anthony Abaya said that Seaoil, Unioil, Flying V and USA 888 will be putting up additional pumps to jumpstart the Department of Energy’s National Fuel Ethanol Project aimed at reducing the country’s dependence on expensive imported oil.

"An even better news is that the oil companies, instead of blending a minimum five percent ethanol to gasoline, will be actually using a higher 10 percent blend. The companies will be initially importing 25 million liters of ethanol for this purpose but eventually, when the ethanol bill is passed and the infrastructure are in place, oil companies will be getting ethanol supply from local producers,"said Abaya.

To encourage investors to pour money into the establishment of ethanol production facilities, Malacañang recently issued an executive order that reduced the tariff on ethanol to one percent from 10 percent.

Zubiri said there are also several ethanol plants that are in various stages of construction in anticipation of the enactment of the ethanol bill.

Ethanol is an alternative energy resource produced from crops such as corn, grain sorghum, wheat, sugar and other agricultural feedstock. It can be used as a transportation fuel, as a blend to gasoline, a component of reformulated gasoline, or a primary fuel with gasoline as blend.

The use of ethanol should also bolster the local sugar industry.

"The use of ethanol as an additive to gasoline will be good for the sugar industry. It will encourage sugar planters that shifted before to planting other crops such as corn to go back to sugar production. This policy assures the industry of a stable market and will keep farmgate prices of sugar stable," said Sugar Regulatory Administrator James Ledesma Jr.

He added that ethanol for fuel can be produced at a cost of P24 to P28 per liter, making it even cheaper than current prices of gasoline and even diesel. Moreover, vehicle owners will benefit from the increased engine efficiency with the use of ethanol blend as well as a 25-percent improved mileage.

The Philippines needs about 400 million liters of ethanol by 2010 thus requiring about 20 ethanol plants all over the country by that time.

The group of British firm Bronzeoak Phils. and Bukidnon Sugar Milling Corp. (BUSCO) are putting up a fuel ethanol plant in Bukidnon province in the next three years.