AT least P54 billion in fresh investments for ethanol production are now being held back by 18 companies as they are still awaiting a clear signal from the government that their projects will get enough government support, starting with a considerable tariff protection.

Tetchie Cruz-Capellan, executive director of the Ethanol Producers Association of the Philippines, said this is why the group’s petition before the Tariff Commission—for the increase to 20 percent of the current 1-percent tariff imposed on imported ethanol—is critical.

She said the investors want the Philippines to emulate other countries, particularly Brazil and Thailand, that built high tariff walls to show to the business community that their huge investments will be protected.

Right now, Capellan said, 18 companies are suspending their respective ethanol-production projects with a minimum investment of P3 billion each. Currently, only the San Carlos Energy and Leyte Agricultural Corp. have proceeded with their projects with a combined annual capacity of 50 million liters, way short of the 200-million liter domestic demand.

One example is Green Future Innovations Inc., which, according to its director Alexander Uy, has plans to invest $100 million for the biggest ethanol-production plant in the country to be located in Isabela, with a 200,000-liter daily capacity.

“We have been in the planning stage for three years now and we could not push through with it because we are still waiting for a clear signal from the government,” Uy told the BusinessMirror at the sidelines of the public hearing conducted by the Tariff Commission at its Quezon City office on Wednesday.

Tariff Commission Chairman Edgardo Abon said the petition will require lengthy deliberation, particularly since increasing the tariff to 20 percent is socially sensitive owing to the resulting P0.50-per-liter increase in ethanol-blended gasoline price.

“We have to balance the interest of the ethanol producers on the one hand and the end-users on the other,” Abon said.

Zenaida Monsada, directoar of the Department of Energy’s Oil Industry Management Bureau, said the agency is now using a mechanism that allows domestic users to sell all their outputs. The 1-percent tariff, she said, is only being imposed on the estimated 150 million liters of ethanol that local producers could not supply.

But Capellan said the DOE mechanism is forcing them to sell locally at a price lower than their production cost. This is happening, she said, because the buyers are using the low landed cost of imported ethanol as benchmark in negotiating for the selling price with them.

Sen. Miguel Zubiri, author of the biofuels law, supports the tariff hike, but he said the increase should be graduated—starting at 10 percent and then 20 percent.

The National Biofuels Board, on the other hand, completely supports the petition of the ethanol producers.

Epap said the tariff protection is needed this early, even if the biofuels law states that all the requirements for ethanol should be sourced locally starting 2012.