LOCAL ETHANOL producers are asking the government to let them import molasses, the feedstock used to make their finished product, instead of allowing oil companies to continue bringing in imported ethanol.
“That’s the main bottleneck of the growth — basically there’s not enough feedstock in the industry,” George T. Cheung, Roxas Holdings, Inc. senior vice-president for commercial operations, told reporters in a briefing after the meeting of the Center for Alcohol Research and Development (CARD) at Century Hotel Manila on Wednesday.
“The law does not allow us to import the feedstock,” he said, referring to Republic Act No. 9637 or the Biofuels Act of 2006, which mandates a 10% bioethanol blend in gasoline.
The law aimed to reduce the country’s dependence on imported fuels and develop the use of indigenous renewable and sustainably sourced clean energy.
Mr. Cheung said the limitation to the ethanol industry’s growth is the feedstock rather than on the capacity of manufacturing plants.
Gerardo T. Tee, president of CARD, said the industry has more than enough capacity to meet existing demand. CARD was established to promote research and technological advancement for alcohol production.
“What we want from government is to allow us to import molasses . . . while we are trying to improve the efficiency of our agriculture,” Mr. Tee, who is also Absolut Distillers, Inc. chief operating officer, told reporters.
Domestic ethanol producers’ output reach around 300 million liters a year, equivalent to 60% of the 500 million liters per year demand. The remaining 200 million liters of bioethanol, equivalent to 40% of demand, are mported by the oil companies.
Mr. Tee said farmlands previously devoted to sugarcane had shrunk because of their conversion to subdivisions, memorial and industrial parks, and even solar farms. Molasses is a by-product of sugar production.
“If we perish as an industry that’s very negative for the investors,” he said.
The CARD president said the government should extend support to an industry that was invited by the framers of the biofuels law to invest in ethanol production. Mr. Tee previously said bioethanol investors spent around P3 billion to P5 billion for a distillery with a capacity of 100,000 liters, depending on the technology used.
“A robust alcohol industry can and will contribute to agricultural productivity,” said Mr. Tee.
Mr. Cheung said existing sugarcane farms have the potential of doubling their output by creating more efficiency in farming and increasing the yield per hectare. In turn, he said raw materials for ethanol production would increase thus improving the capacity usage.
“Capacity utilization can be monetized. Right now we have unused capacity, and unused capacity is a cost,” he said.
Mr. Cheung said the authority to import should come from the Sugar Regulatory Administration, which could determine the frequency of shipments, which he said may only be seasonal. — Victor V. Saulon
