The Philippines' Department of Energy will enforce a partial implementation of a mandate which requires ethanol-blended gasoline to comprise at least 10% of the total amount of gasoline sold in the country starting from August, undersecretary of the DOE, Jose M. Layug said Tuesday.
The partial implementation of the E10 mandate, which follows a recommendation made by the National Biofuels Board to the DOE last Wednesday, includes exemptions for three grades of gasoline.
The first is 81 RON gasoline, which is being used in farm machinery and fishing vessels, the second 87 RON gasoline, which is being used in motorcycles. The third grade is 97 RON gasoline, that is being used in high-end passenger vehicles.
According to Layug, the DOE and NBB had been advised by auto manufacturers that there are vehicle warranties that require or stipulate solely the usage of regular gasoline, if not the warranty is nullified. As such, the partial implementation would give the manufacturers time to rework those warranty agreements, he explained.
Full implementation of the E10 mandate would be enforced in February 2012, a year later than what was expected. The E10 mandate was initially slated to take effect on February 5 this year, according to the Biofuels Act of 2006, but Layug said that the current schedule for full implementation a year later was not a deferment or sidetrack from the country's original plans.
"The Biofuels law provides that the NBB shall make a recommendation to the DOE on the feasibility of implementing the E10 mandate by February this year, which they have," said Layug. "The recommendation is that it is feasible six months to a year from now."
The Biofuels Act of 2006, passed into law in January 2007, mandates that ethanol-blended gasoline comprise at least 5% of the total amount of gasoline sold in the country from February 2009, and 10% by February 2011.
CIRCULAR ON COMPULSORY CONSUMPTION OF LOCAL ETHANOL TO BE RELEASED
In the run up to the impending implementation of the E10 mandate, the Department of Energy will publish a circular defining rules of consumption and blending in two weeks' time, Layug, who is also a member of the NBB said.
The circular encompasses a separate mandate that requires all oil companies in the Philippines consume local ethanol production before they are allowed to import to compensate for the shortfall.
The Philippines is severely net short of ethanol. In order to meet the E5 mandate, the country requires 200 million liters/year of ethanol, while up to the last quarter of 2010, its local production was only 40 million liters/year.
The Philippines is currently importing all its ethanol requirements, due to a production halt at local plants and its inherent structural shortages.
Due to a delayed 2010 harvest on the back of El Nino, high sugar prices in the country resulted in the supply of ethanol feedstock -- sugarcane, molasses and cassava -- being diverted to sugar production.
As such, the country has not had a single liter of ethanol production since the fourth quarter of last year, despite expanded domestic capacities. "Currently, a permit is issued to ethanol producers mandating that their production be used solely for gasoline blending," Layug said. "But we do not regulate the feedstock."
