Independent oil players support Biofuels Act

MANILA, Philippines - The country’s independent oil players junked yesterday the claim made by the Ethanol Producers Association of the Philippines (EPAP) that the oil firms are against the Biofuels Act, the law which seeks to enable the country to reduce its dependence on imported fossil fuels.

“That claim was farthest from the truth as the oil industry players share the same vision of energy independence, protection of public health and ecosystems and rural employment for the people,” said Fernando Martinez, chairman of the Independent Philippine Petroleum Companies Association (IPPCA).

“This is the main reason why despite the huge investments required for the oil companies to comply in terms of the purchase of blenders, service station rehabilitation, replacement of under-ground storage tanks, allocation of additional storage tanks and purchase of laboratory equipment, oil companies are complying with the provisions of the Biofuels Act,” he added.

Earlier, EPAP executive director Tetchi Cruz-Capellan accused the oil companies of refusal to heed the law, which she said mandates all liquid fuels for motors and engines in the country to contain locally- sourced biofuels.

Capellan said EPAP supported the move of the Department of Energy (DOE) to issue a circular on biofuels.

But Martinez pointed out that EPAP is barking at the wrong tree, adding it would do well for the biofuel firms to increase their efficiency and ethanol production the country’s needs.

“What the oil companies do not want is a situation wherein we will be forced to subsidize the inefficiency of the local industry by forcing us to pay for prices which are almost double that of the cost of the same product from other countries,” he said.

“Forcing the oil companies to pay for higher prices from the local market and increasing the tariff imposed on the ethanol will result to increased fuel costs for the consumers. This is definitely not what the law had intended,” Martinez added.

He said the EPAP can start by increasing local production of ethanol such as what leading ethanol producers - Brazil, Vietnam and Thailand - are doing.

Brazil is the recognized global leader in ethanol production, exporting some 3.5 billion liters of ethanol on an annual basis and supplying the domestic market of approximately 14 billion liters in 2007.

Fuel ethanol in Brazil displaces no less than 40 percent of gasoline that would otherwise be used.

Figures provided by EPAP show that only 80 million liters of local ethanol will be produced this year by San Carlos Bioenergy and Roxol Energy Inc. Another 50 million liters are scheduled to be supplied by Green Futures Inc. when its commercial operations begin next year.

Capellan cited in their position paper that the Biofuels Act of 2006 clearly mandates all liquid fuels for motors and engines in the Philippines to contain locally-sourced biofuels.

“We cannot understand why the oil companies refuse to heed the law, “ she said.  According to EPAP, the DOE was empowered by the Biofuels Act to regulate ethanol importation in order to reduce dependence on imported fuels and build local capacity to produce ethanol.

But Martinez reminded EPAP that the Biofuels Act was not passed solely to benefit the sugar industry, adding that what the law intended was to “develop and utilize indigenous and renewable clean energy sources to reduce dependence on imported fuels.”

“This means that other feedstock for ethanol can be used just like cassava, which, in turn, will not be as expensive as that of sugar,” Martinez explained.

Forcing the local oil firms to source their ethanol requirements domestically, he said, would only be detrimental to the public as they will have to contend with higher prices, effectively defeating the spirit of the law.

Martinez said oil players, especially the independent companies which were in the forefront of the country’s effort to wean away from dependence on imported fuels, mostly from the Middle East, support the move to increase the ethanol blend to 10 percent by 2011 provided the government also provides them an easier method to import the much-needed products.

“The local industry needs time to catch up before it can be competitive. We should therefore give it some time for alternative feedstock like cassava plantations to begin operating in a couple of years and by then, the oil companies will naturally purchase the product locally. Forcing the issue now will just be detrimental to the general public by increasing prices,” the IPPCA chairman added.