Manufacturers ask govt to hike tariff on imported ethanol

The Department of Energy (DOE) is looking into calls to raise the current tariff on imported ethanol as local producers claimed they might close shop as they could not match the lower prices of brands from Brazil and Thailand. A Palace executive has assured the Ethanol Producers Association of the Philippines (EPAP) that the government would look into their call to raise the current 1 percent tariff on imported ethanol. Ramon "Ricky" Carandang, head of the Presidential Communications Development and Strategic Planning Office, said the government is not rejecting outright the recommended tariff hike but it is also not agreeing to the proposal easily. Ethanol, also called ethyl alcohol, is a volatile, flammable, colorless liquid. It is widely used as a solvent for scents, flavorings, colorings, and medicines. It is also often used as a motor fuel, mainly as a biofuel additive for gasoline. Impact of tariff hike Carandang said they have to consider the impact of higher tariff and import duties on the importers, the local companies, the public, and even the pump prices. While oil companies warned that increasing the tariff may also jack up the pump prices, Carandang said they also have to consider the survival of the local manufacturers. Another factor is the ability of local manufacturers to produce and supply all the ethanol needs of the country, he said. Carandang assured local ethanol producers that they are not being ignored by the government. “They're not being ignored because the DOE is aware of their problems. As (energy Secretary) Rene Almendras said, they're studying possible solutions. But again, that has to be balanced with consumer protection. So hopefully they can find the right balance that is acceptable to the ethanol producers and encourages them to grow at the same time, doesn't unduly burden consumers," he said. He also explained that tariff is a very sensitive issue that needs a lot of consideration. “We've got to weigh that (manufacturers’ threat to close down) but we also need to weigh the interests of the consumers. Again, we want to encourage that but we need to make sure that that is all done without the consumers being burdened by high prices. I think the Energy Department is in the process of coming up with some kind of plan to address this," he added. Carandang said the DOE has already begun studying the matter and would soon submit its report, recommendations, and proposed solutions. "They are studying it carefully because an increase in tariff would mean an increase in pump prices. So there is no decision on that as of yet. We have to take into account all the implications and we have to balance it," he added. EPAP head Jose Ma. Zabaleta said the ideal tariff for imported ethanol is about 30 percent. However, EPAP is only asking the government to raise it to 20 percent which would have a "negligible impact on fuel users because ethanol is generally cheaper than petroleum," Zabaleta said. Biggest ethanol producer San Carlos Bioenergy Inc., (SCBI), the country’s biggest ethanol producer, said it may not resume operations unless the government acts on the tariff problem. Zabaleta, who is also the chairman of SCBI, said they are losing money and are unable to compete with the cheaper imports from Brazil and Thailand. The SCBI plant was shut down for maintenance in July. It is expected to resume operation in time for the harvest season. The P3-billion Negros plant produces at least 38 million liters of ethanol yearly. It started production in 2009 to support the Biofuels Law, aimed at lessening the country’s dependence on imported fuel and promoting renewable energy resources. Under the Biofuels Act of 2006, all gasoline products should have at least a five-percent bioethanol blend as of 2009. The law requires oil companies to increase the bioethanol content to at least 10 percent by 2011. The law also mandates that by 2011, all the ethanol that would be blended with gasoline should be locally sourced. –VVP, GMANews.TV