OIL companies are reportedly lobbying for the removal of the 1% tariff on ethanol. While the tariff is simply nominal, its removal will send the wrong signals to investors interested in building ethanol plants in the country. What government should do instead is support Senator Migz Zubiri’s plan to increase ethanol tariff between five to twenty percent.

It was just less than two months ago that the San Carlos Bioenergy Inc. ethanol distillery and power cogeneration plant was formally inaugurated in San Carlos City. While there was already a foreign investor in Bronzeoak and a government counterpart financing from the National Development Corporation, the project did not immediately take off because the investors wanted local counterpart funds from the planters.

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The foreign investors reasoned out that there should be even just 10 percent to 20 percent counterpart funds from the local planters to make sure that the planters will really commit themselves to the success of the venture. 
If anything happens in the country or to the ethanol plant, the foreign investors cannot simply pack up their equipment and leave for another location. With local counterpart funding, the local partners will go all out to ensure the venture’s success because they also have a substantial investment in the plant. 

Thus, the San Carlos project was delayed a bit as the Ledesmas, Valmayors, Zabaletas and other San Carlos planters raised the counterpart fund. Raising local counterpart funds is not an easy thing to do. Even just at 10% of the P3 billion project, that’s P300 million. When there are local stakeholders who are willing to commit such a sizable sum to the ethanol project, the least that government can do is support the infant industry.

Aside from tax breaks, the industry should also adopt measures to encourage oil companies to patronize locally-produced ethanol. What is happening is that foreign ethanol producers are the ones benefiting from the ethanol demand created by the Biofuels Act. Removing the nominal 1% tariff on ethanol is hardly the step in the right direction to protect local ethanol producers.

The country is already on the second year of the Biofuels Act’s implementation. The mandated ethanol blend in gasoline is supposed to increase from its current 5%. Where will the oil companies get their ethanol? Of course, they will continue sourcing it from foreign producers because the country’s ethanol plants are still in the drawing boards.

It can be recalled that, during the formal inauguration of the San Carlos ethanol plant, Energy Secretary Angelo Reyes relayed PGMA’s satisfaction with the project. She reportedly said that the project is “is a realization of her dream to make the country less dependent on imported fuel.”

Reyes said PGMA hoped that “more bio-ethanol plants would be put up in Negros' sugar mills to feed the requirements not only of motor vehicles, industrial equipment and electrical appliances but also to supply power to the main electric grids of the country”.

For his part, Reyes shared PGMA’s hopes that the San Carlos bioethanol plant will be replicated all over the country so that "we can finally liberate ourselves from the uncertain fuel oil situation and promote cleaner energy in our local industries."

"Nothing should stop us from going renewable. We have what it takes to fulfill this dream and our laws are there to support in this direction," Reyes reportedly said.
 Well said. Now all the industry asks from Secretary Reyes is to back-up his words with action. It will have a profound effect and carry great weight if Reyes, the alter ego of PGMA in energy matters, will openly declare support for Senator Migz Zubiri’s plan to increase tariff on ethanol.

The sugar mills have always been here in sugarlandia. The demand for ethanol is there and will always be there. The need for the adjunct bagasse-fueled power cogeneration plant is more imperative now that the country is staring at a power deficit. What is the government waiting for?

As my friend, Maning Diaz, said, “The solution to our electric power and fuel problems is right in our own backyard.”

Why import ethanol if, with government support, we can produce it ourselves? Reliance on imported ethanol is as worse as reliance on imported fossil fuels. 

 Why insist on coal-fired power plants which rely on imported coal if, with government support, the country’s sugar mills can modernize their equipment and produce clean, renewable electric power? 
 It’s time for government to put its money where its mouth is!
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