The sugar industry and the Ethanol Producers Association of the Philippines won a temporary relief when Petron, the oil company, withdrew its petition to cut down to only 0 percent the tariff on imported ethanol.

The tariff commission, however, is still locked in their petition plus that of the Sugar Regulatory Administration to raise the tariff from the current one percent to 10 or 20 percent to provide a climate that will induce investors to put their money into ethanol projects.

Tariff Commission chair Edgardo Abon said the increased tariff rate as “pre-operating protection.”

Reynaldo Bantug said it could not be “pre-production protection since already two bioethanol plants are already in production and there are 20 more potential investors waiting in the sidelines for clarification of the government's position vis-à-vis questions of returns on investments.

Senator Juan Miguel Zubiri, principal author of the National Biofuels Act of 2006 appealed to the tariff commission yesterday to raise the tariff to 10 percent to 20 percent in the next five years, starting in 2010.

Executive Order No. 449, which reduced the tariff to 1 percent, because at the time it was issued in 2005, there was no local producer of bioethanol fuel and aimed to assure price competitiveness of ethanol blended gasoline vis-à-vis gasoline products.

The present environment however, has changed dramatically. Not only have ethanol production companies started to operate in the Philippines , our locally produced ethanol is competitive with current gasoline prices, Zubiri said.

He also said that potential investors are still reluctant to shoulder the billions of pesos required to put up a plant considering the current tariff of one percent.

Thus, he proposed a graduated rate of from 10 percent to 20 percent in the next five years.

Bantug hailed the intervention of Reps. Jose Carlos Lacson (Neg. Occ., 3rd District) and Rep. Monico Puentevella ( Bacolod ) on the issue.

Puentevella is supposed to deliver a privilege speech in the House when the chamber convenes again next week.

Puentevella pointed out the need for the government to address the tariff issue.

This, he said, has frustrated investors on ethanol, pointing out that government entities are deficient in implementing the provisions of the biofuel law and by imposing lengthy procedures in processing applications for relief.

Puentevella cited the SRA report that some 20 biofuel investors have signified their intention to invest in bioethanol production but are hesitant to proceed without favorable signals from the government.

So far, Puentevella pointed out, there are two bioethanol plants already operating in the country producing 39 million liters of the alternative additive with the mandated five percent blend with gasoline.

He also pointed out what the Nacusip-TUCP had warned - that the depreciation of the tariff on imported sugar to only 5 to 0 percent in 2014 paves the way for entry in the country of low-priced sugar.

Besides, Puentevella pointed out, countries which already have their bioethanol plant such as the United States, Brazil, India, and Japan have put up tariffs to protect their bioethanol manufacturers.*RLE

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