THE national government’s plan to allow higher ethanol blends of up to 20 percent on a voluntary basis would encourage local producers to expand their output and keep pump prices stable, according to an international agency.
The United States Department of Agriculture Foreign Agricultural Service in Manila (USDA-FAS Manila) said the current plan of the government to allow higher ethanol blends in gasoline on a voluntary basis is better for the market, particularly in lowering pump prices.
The USDA-FAS Manila said the voluntary higher blends of E15 and E20 would be facilitated through the approval of a Philippine National Standards (PNS).
“Until local ethanol production scales up, a voluntary PNS for E20 would force imported refined petroleum products to compete with imported ethanol for 10 percent of the total blended gasoline pool and have the effect of both immediately lowering pump prices as well as providing a safeguard against future oil price and supply shocks,” it said in its Global Agricultural Information Network (Gain) report.
The possibility of allowing higher ethanol blends in gasoline would allow local producers to consider scaling up their current capacities, according to the Gain report.
“Ongoing consideration and opportunity of a potentially larger ethanol market has incentivized local producers to consider scaling current investments as well as explore nontraditional feedstocks,” it said.
The USDA-FAS Manila estimated that the country’s total blended gasoline supply last year reached nearly 6.8 billion liters, “growing on average by 6 percent a year over the last decade.”
Local gasoline output accounts for 20 percent of the country’s total blended gasoline supply, represented by Petron, which remains as the sole domestic refinery.
Meanwhile, the Philippines sources its imported refined petroleum products from China, South Korea, Singapore, Malaysia, Brunei, among others.
“Whereas local and imported refined petroleum products compete openly on price, creating a market equilibrium price between the two, local and imported ethanol do not compete with one another nor with petroleum products. All local ethanol must be exhausted before ethanol imports are allowed,” it said.