Gasoline pump prices could be reduced by over P1 per liter with the proposed voluntary implementation of increasing the ethanol blend in gasoline products to 20 percent.
The mandated blend for gasoline products being retailed at the pumps is at 10 percent. There has been clamor from the biofuels industry players to increase this to 20 percent. The lack of local feedstock to increase production, however, remains a challenge.
Energy Secretary Raphael Lotilla said the proposal to raise the ethanol blend, which needs to be approved by the Biofuels Board, is meant to mitigate rising fuel prices. Oil firms implemented another round of price hikes this week, resulting in a year-to-date net increase of P13.75/liter for gasoline, P11.70/liter diesel and P6.25/liter for kerosene.
Oil firms adjust their pump prices every week to reflect movements in the world oil market.
“The new policy we will be implementing is voluntary raising it to 20 percent. Increasing ethanol blend is more than one-peso reduction in gasoline pump price,” said Lotilla, who also chairs the Biofuels Board.
According to the DOE, oil firms were already informed about this but since the implementation is purely voluntary Lotilla is hoping for their compliance.
Lotilla stressed this is “a price-mitigation measure” because ethanol is cheaper than gasoline. “Right now, price of gasoline without ethanol is at P56.89…It will result in a price differential of around P1.28 or up to even P1.50 depending on prices.”
Lotilla and other concerned government agencies were convened by President Ferdinand Marcos, Jr. to discuss ways on how to bring down pump prices.
The possible increase of coco methyl ester (CME) content of biodiesel to 3 percent (B3) from 2 percent (B2) was also raised.
“Another thing the President considered was the increase in B2 to B3 which can actually be accommodated by the supply of feedstock. The increase in the blend can also drive down the cost of CME because there will be a bigger market for it. Right now, we expect pure diesel to be at parity with CME per liter,” said Lotilla.
The signing into law of Republic Act 9367 or the “Biofuels Act of 2006” paved the way for the blending of 1 percent (B1) coco-biodisel or CME in local diesel. It was last increased to 2 percent (B2) in 2007.
The Philippine Biodiesel Association (TPBA), the country’s leading group of biodiesel stakeholders and industry advocate, earlier proposed for a phased implementation of the blending of CME in local diesel from the current B2 to B3 and then to B5.
TPBA also proposed to government regulators a phased, yearly upshift starting with B3, then eventually leading to B5 to cushion sudden adverse market reaction. TPBA said there is “more than enough” to meet the expected surge in demand.
When sought for comment, the country’s biggest producer of premium CME, welcomed the new development.
“It is wonderful news to hear the President’s support for B3. The feedstock is available and the capacities for making CME are ready to support the increase in mandate.
We expect many benefits to come with a B3 mandate: mileage improvement; lower pollution; import substitution and value adding of coconut oil. These benefits will come with no practical cost to the government, yet have extensive benefits to the country,” said Chemrez Technologies Inc. President Dean Lao Jr.
Image credits: Nonie Reyes