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BY Euan Paulo C. Añonuevo Reporter
Next year, the Biofuels Act and
the government’s biofuels program will go into full operation.
The local oil companies will end
up having to import ethanol—the most commonly produced biofuel—from
the United States, China or India—because it does not look like
enough biofuels will be produced locally by 2009.
The oil companies will need at
least 70 million liters of biofuel additive for diesel fuel to
comply with the Biofuels Act. The law requires a 1-percent biofuel
blend for diesel. The Philippine transport industry consumes 7
billion liters of diesel.
Although the Department of Energy
(DOE) has proposals to invest billions of pesos in ethanol refining
facilities and biofuel crop plantations, only a handful of these
projects are expected to be completed in time to meet an expected
spike in demand for the alternative fuel next year.
Under the Biofuels Act of 2006,
diesel sold at the pumps are required to be blended with 1 percent
locally-sourced biodiesel. The additive requirement will be
increased to 2 percent in 2010. Gasoline, on the other hand, is
required to have a mix of 5 percent locally-sourced bioethanol in
2009, which will be hiked to 10 percent in 2011.
The country’s biodiesel supply
has proven to be enough to meet demand, with Chemrez Technologies
Inc., (ChemrezTech) supplying about two-thirds of oil companies’
needs. The lack of local ethanol producers is expected to drive
Chemrez and other biofuel suppliers to import.
Importing would defeat one of the
Biofuel Act’s objectives of saving on import dollars.
Glenn Yu, Seaoil Philippines
president, affirmed that local ethanol supply may not be able to
meet the expected increase in demand when the implementation of the
biofuels mandate goes into full throttle.
Besides this, he added that
importing ethanol may even prove to be more cost efficient for local
oil companies.
“We are not sure how much the
locally produced ethanol will cost. It might be even more expensive
than imported ethanol. The most logical thing for us is to import.
Definitely in 2009 there will be not enough local production,” he
said.
Rafael Coscolluela, Sugar
Regulatory Administration (SRA) Administrator, earlier said that the
country has been having a hard time attracting investors to set up
ethanol facilities because of feedstock problems.
“Our situation is more
complicated because of the difficulty of putting contiguous areas
under one ethanol plant. We’re struggling with complying with
setting up new ethanol projects because we have to match investors
with feedstock developers,” he said.
Ethanol, which costs about P1.50
less than gasoline and is relatively cleaner than its fossil-fuel
counterpart, can be derived from feedstock such as sugarcane,
cassava and sweet sorghum.
For 2009, the country’s demand
for bioethanol is seen reaching 300 million liters per day and 600
million liters per day in 2011. Because of this projected growth in
demand for bioethanol, the country would need 15 to 20 ethanol
processing plants.
So far, however, there are only
two such plants under construction in the country with a combined
capacity of 75 million liters per year, the Bronzeoak Philippines’
San Carlos and the First Bukidnon facilities in Negros Occidental
and Bukidnon, which are scheduled to start commercial operations
this year and by 2009, respectively.
Petron Corp., the country’s
largest oil refiner, will be sourcing its ethanol needs from San
Carlos facility, however, Kamal M. Al Yahya, Petron president, said
that the company would have to import if supply is not enough.
On the other hand, Pilipinas
Shell is in talks for its ethanol supply with Basic Energy Corp.,
which is planning to put up a P2.8-billion “greenfield” project
consisting of a dedicated sugarcane farm to be developed in
Zamboanga del Norte with a fully integrated ethanol plant facility.
But the country’s independent
oil players are taking a different approach in securing their
ethanol supply.
Eastern Petroleum Corp. (EPC)
earlier tied up with a Chinese business group Guanxi Estates for a
five-year $350-million deal to develop 10,000 hectares of land for
ethanol production.
Both companies are targeting to
produce about 400 million liters of ethanol by 2010 and is looking
to attract other independent oil players in the country to join the
partnership.
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