DOE requires local firms to source bioethanol locally

MANILA, Philippines - Oil companies should first contract all the bioethanol produce in the country before sourcing their requirements abroad, according to the Department of Energy (DOE).

The DOE has finally released the circular that would govern the utilization of locally-produced bioethanol as a blend to gasoline.

“In order to sustain and expand the local bioethanol industry, the mandatory exhaustion of locally-sourced bioethanol must be complied and importations of biofuel blended fossil fuels shall not be considered as part of the compliance to the biofuels mandate,” it said.

The use of bioethanol is mandated under the Biofuels Act of 2006 which aimed at reducing the country’s dependence on imported fuels.

The DOE noted that the law mandates the use of locally-sourced biofuels and exhaustion of its supply before importing biofuels for blending to gasoline.

It would be noted that local ethanol producers have been asking the government for certain concessions because imported bioethanol is cheaper than locally-produced ethanol.

The DOE noted that the Biofuels Act also recognizes that the country may not have sufficient bioethanol supply to meet the mandated volume of gasoline blended with bioethanol to be sold by the oil companies.

Since Aug. 6, 2011, all gasoline fuel distributed and sold by each and every oil company are required to contain a minimum of 10 percent bioethanol blend by volume.

“Given this situation, bioethanol may be imported by the oil companies subject to the guidelines set forth by the Energy Department and the Finance Department under Circular 2006-08-0011 and Revenue Regulation 8-2006, respectively,” the circular said.

At the same time, the DOE directed the oil companies to submit their performance compliance report every month on their procurement plan for local and imported ethanol.

Moreso, the DOE asked the ethanol producers to submit their production report monthly.

In the circular, the DOE also created a bioethanol committee that will recommend the committed volumes of the bioethanol producers for sale to the oil companies.

Violators of the circular will be fined from P1 million to P5 million and one year to five years imprisonment if found guilty.

The DOE can also confiscate the products of the violators and suspend the operation of their business.

According to Energy Undersecretary Jay Layug, the DOE tried their best to strike balance to be able to come up with a win-win solution to resolve the issue on bioethanol importation.

“It was a long process of consultation between the oil companies and ethanol producers, because we had to have a balance between pricing for ethanol and also protecting the general public against undue increases in the pump price of fuel,” Layug said.