Philippine Congress passes law to boost biofuels use

Singapore (Platts)--24Nov2006

The Philippines' two Houses of Congress approved late Thursday a biofuels
bill set to mandate minimum biofuel blending levels in road fuels, the
Department of Energy said Friday.
The bill, which has been under deliberation since last November, mandates
a minimum 1% biodiesel blend into all diesel within three months from the bill
coming into force. It will also require at least 5% ethanol blending into
gasoline within two years upon coming into force. The minimum blend level will
increase to 2% for biodiesel after two years and to at least 10% for ethanol
after four years, the DOE said.
Ethanol-blended gasoline and coco-diesel or diesel blended with coconut
methyl ester, are currently sold in the Philippines, but on a voluntary basis.
Only government vehicles have been mandated to use 1% CME-blended diesel.
Shell and independent retailer Seaoil Petroleum sell 10% ethanol-blended
gasoline at their retail outlets in Manila, but have to rely on imported
ethanol for blending.
The bill allows for the minimum blending levels to be reduced within the
first four years only if locally-sourced biofuels are unable to meet the
initial mandated requirement, the DOE said. After this period the minimum
biofuel blends can no longer be decreased.
Passage of the bill is expected spur construction of biodiesel and
ethanol plants in the country, were total coco-diesel production in the
currently stands at 110 million liter/year.
Currently one 100,000 liters/day ethanol plant is under construction and
is slated to begin operations in late-2007.
Separately, state-owned Philippine National Oil Co. has tied up with
South Korea's Samsung Corp. to build a 200,000 mt/year jatropha based refinery
in Mindanao.
In fact, PNOC's newly created alternative fuels subsidiary
PNOC-Alternative Fuels Corp has on the drawing board plans to build a number
of jatropha-based biofuel refineries with a combined capacity of 1 million
mt/year.

TO PHASE OUT 'HARMFUL' GASOLINE ADDITIVES
The bill also sets up mechanisms to encourage investments in the local
biofuels industry. It provides incentives for the production, distribution and
use of locally-produced biofuels, such as the assurance of a mandated market,
specific tax and value added tax exemptions and financial assistance from
government financial institutions.
It directs the gradual phase-out of the use of harmful gasoline
additives within six months from coming into force, especially since the use
of biofuels is expected to help reduce toxic vehicular emissions in compliance
with the country's Clean Air Act, the DOE said.
The bill also imposes the penalty of imprisonment from one to five years
and a fine of Peso 1-5 million ($20,000-100,000) for those selling substandard
or under-blended biofuels and mislabeled biofuels products.
The bill now requires approval from Philippine President Gloria
Macapagal-Arroyo before it can be converted into the Biofuels Act. The
president is expected to approve the bill before the year-end, a DOE official
said.
Transportation fuels including gasoline and diesel account for nearly 70%
of the country's total products imports of around 114,000 b/d.
Initial estimates show that 1% biodiesel and 5% ethanol use in 2007 will
earn a combined foreign exchange savings for the country of about $167 million
annually, the DOE said in its statement. In 2010, the use of 10% ethanol and
2% biodiesel will result in annual foreign exchange savings of about $389
million.
The country spent some $3.6 billion on crude and products exports in the
first half of 2006, latest data available from the DOE showed.
--Mriganka Jaipuriyar, mriganka@platts.com

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