MANILA, Philippines — The government is urged to allow the regulated importation of molasses – a raw material to produce bioethanol – to maximize the operations and lower the production costs of ethanol producers, thereby leading to better prices.
In a phone interview, Ethanol Producers Association of the Philippines (EPAP) chairman Gerardo Tee said the industry is facing a 500,000-metric ton (MT) shortage of molasses to produce bioethanol.
“We’re asking government to allow the importation of raw materials to have manufacturing value. They are allowing the importation of refined finished goods, so, why not also allow raw materials of the industry because there’s a shortage. Sugar supply is not enough, so there is also a shortage of molasses,” he said.
Molasses is a by-product of extracting sugar from sugarcane, used by distilleries to produce alcohol and ethanol.
The Sugar Regulatory Administration (SRA) Board recently approved a sugar importation plan of 440,000-MT of refined sugar to bump up supply and stabilize prices of the sweetener this year.
The SRA Board lowered its raw sugar production estimates to 1.831 million MT for this crop year. In its pre-crop year estimate, sugar production was projected to reach 1.876 million MT. In December last year, the SRA pre-final crop estimate was reduced to 1.834 million MT.
In a Viber message, EPAP executive director Queenie Rojo said the ethanol industry needs 1.6 million-MT of molasses to fully support their operations, however, the SRA only reports a maximum of 1.1 million MT.
Because of the shortage in raw materials, she said the industry’s capacity utilization hovers only at 75 to 78 percent, with smaller factories not operating for two to three months.
“We are not asking for unregulated importation of raw materials. We want to support farmers, but supply is not enough, so we proposed regulated importation of raw materials,” Rojo said. The EPAP had previously pushed for the regulated importation of molasses in 2013, 2019 and 2021, but was rejected by the SRA since this was found to be against the Biofuels Act of 2006.
Under the Biofuels Act of 2006, all liquid fuels for motors and engines sold in the Philippines should contain locally sourced biofuels such as bioethanol, biodiesel and other fuels made from biomass.
The law defines locally produced bioethanol as those derived from feedstocks grown/planted, harvested and processed in the Philippines.
“The law says locally sourced biofuels. But they are interpreting it as also locally sourced raw materials,” Tee said.
Meanwhile, Rojo said the SRA and the National Biofuels Board (NBB) has “the power to exempt based on national interest, especially if it hurts public through high cost.”
The NBB, the body tasked to study and implement the Biofuels Act of 2006, is composed of the Departments of Energy, Finance, Agriculture, and Labor and Employment, and the Philippine Coconut Authority (PCA).