By Kyle Aristophere T. Atienza, Reporter
THE PHILIPPINE government is looking to lower gasoline prices by urging fuel retailers to increase the ethanol blend to 20% on a voluntary basis, from the current mandatory 10%, the Department of Energy (DoE) said.
Increasing the ethanol blend — which the government considers a “price mitigation measure” — could cut gasoline prices by as much as P1 per liter, Energy Secretary Raphael P.M. Lotilla said at a Palace briefing.
“Right now, the price of gasoline without ethanol is around P56.89, then it will result in a price differential of… 28 centavos or up to even P1, depending on, of course, the prices,” he said.
Mr. Lotilla said the government will focus on ethanol imports, which are “cheaper” than the local ethanol.
“The local ethanol price per liter is currently around P79.49, which is higher than the imported ethanol which is at P41.44,” he said.
Local production of ethanol only supports 48% of the current 10% blend, he added, “therefore, the utilization of the highest share of imported ethanol will result in lower pump prices because of the increased blend.”
Mr. Lotilla said they have discussed the proposal with local oil companies and hopes to get approval from the Bioefuels Board by end-2023.
This comes after fuel retailers on Tuesday raised pump prices by P0.95 for gasoline and diesel by P1.30 per liter.
As of Oct. 24, year-to-date price adjustments stood at P12.25 per liter for gasoline, P11.70 per liter for diesel, and P7.74 per liter for kerosene.
Terry L. Ridon, a public investment analyst, said the impact of a higher ethanol blend on fuel prices will still be dependent on the global prices of molasses and sugarcane, which are among the major components of the Philippines’ bioethanol mix.
“If global prices of these commodities significantly increase in the future, it might still not result in lower fuel prices despite a higher ethanol blend,” he said in a Facebook Messenger chat.
Mr. Ridon said the local bioethanol sector should show that it can deliver supply for the mandated blend at 10% “before any discussions on increasing the percentage are entertained.”
“The sector has recently been calling on the President to allow molasses importation during the non-milling season. It is our position that importing biofuel feedstock contradicts with the objectives of biofuel blending to support our local agricultural sector,” he said.
Mr. Ridon said the move would only benefit biofuel traders “interested in lucrative importation contracts, with no certainty of impact on lowering fuel prices.”
Bienvenido S. Oplas, Jr, president of Minimal Government Thinkers, said wide use of ethanol and other biofuels could lead to higher food inflation by “reducing the supply of food for people and animal feeds, which are also food for people.”
“Overall, I am not in favor of agricultural crops being used to feed cars and trucks, instead of feeding people and livestock,” he said in a Viber message.
Should the government pursue the blend increase, “the mix should be voluntary, not mandatory.”
“If the voluntary 20% will bring down oil prices compared to the mandatory 10%, maybe good. But it will have an indirect effect on food prices,” Mr. Oplas said.
Meanwhile, Mr. Lotilla said the government is also considering increasing the coco methyl ester (CME) or coco biodiesel blend to 3% from 2% — which can be “accommodated by the supply of feed stock given the total coconut production at this time.”
“The entire country is at 15 billion coconuts. For the additional 1% blend, we need only an additional 2.6 billion nuts,” he said.
The possible blend increase could bring down the price of CME because there will be a bigger market for the product, he noted.
The Energy department expects the pure diesel landed price to be at parity with the price of CME per liter, he said.
Jun Lao, managing director at Chemrez, Inc., said the local “capacities” for producing CME — an important content of biodiesel — 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,” he said. “These benefits will come with no practical cost to the government yet have extensive benefits for the country.”
During the Tuesday meeting, Mr. Marcos also ordered the shortening of the “trigger period” for the provision of fuel subsidies for public utility vehicle drivers to just one month from three months, Mr. Lotilla said.
Under the existing fuel subsidy program, which was included in the 2023 national budget law, funds will be released when the average price of Dubai crude oil for three months reaches $80 per barrel.
The Energy chief said the President also ordered the “simplification” of requirements for accessing the subsidy.
The subsidy program has a budget of P3 billion under the 2023 national budget, which covers an estimated 1.36 million public utility vehicle drivers.
Mr. Marcos has also ordered government agencies to boost efforts for the “electrification” of the transport sector, “particularly mass transport and light cargo vehicles,” Mr. Lotilla added.
The President cited the need to prepare the economy “for the eventual manufacture of electric vehicles,” which will require the participation of the local mining sector, he said.
“[The mining sector] will produce minerals needed for the production of batteries and other components needed for EVs,” Mr. Lotilla said.