OIL FIRMS may be mandated to source a percentage of their ethanol requirement from local producers based on the formers’ market share, a senior Energy official said in an interview earlier this week.
The Energy department is set to release a circular setting guidelines for ethanol sourcing in time for implementation next month.
“There will be allocation for all locally produced ethanol — basically, percentage allocation based on market share of oil companies,” Energy Undersecretary Jose M. Layug, Jr. said by phone.
He said bilateral contracts between local suppliers and petroleum firms will be recognized, but “those who overbought more than their share will have to coordinate with those without their share.”
The Energy official said companies with bigger market share will need to source more of their ethanol blending requirements locally compared to independent firms with smaller market share.
Petroleum companies are required under the Republic Act 9367, or the Biofuels Act of 2006, to blend gasoline with ethanol. The blend was raised to 10% for mid-octane fuels last month from 5%.
Full implementation of the 10% blend will begin next year.
Mr. Layug said the National Biofuels Board is finalizing a pricing methodology. “There will be a pricing methodology by October. This includes the formula the department will use to check on price impact of ethanol to gasoline prices. There will also be monthly meetings to check compliance of firms,” he said.
There is an estimated 200-million-liter demand for ethanol in the country, against current capacity of around 80 million liters.
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By: Emilia Narni J. David
Source: Business World, Sept. 19, 2011
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