Monday, May 7, 2007

PH: Price Impact Of New Law Requiring Biofuel Mix Unknown


Price Impact Of New Philippines Law Requiring Biofuel Mix Unknown

May 6, 2007 10:20 a.m. EST

Komfie Manalo - AHN Correspondent

Manila, Philippines (AHN) - At the stroke of 12 midnight on Sunday
(local time), gas stations in the Philippines started pumping biofuels
in diesel-powered cars in the country as the Biofuels Act took effect.
The law requires all oil firms to blend one percent of coco-methyl ester
(CME) in their diesel products. Within two years, oil companies will
also have to blend 5 percent of bio-ethanol in the other gasoline brands.

Transport groups meantime raised concerns over the possible effects of
the implementation of the law on oil prices. There have been fears that
oil companies may not be able to prevent prices from going up should
there be an impact on prices brought about by the implementation of the
one percent biodiesel blend.

"This is for the general health of the public and the drivers as the
emission will produce cleaner air. We just have two concerns: prices
should not go up and if our engines can carry the blend," said Zeny
Maranan, the President of The Federation of Jeepney Operators and
Drivers Association of the Philippines.

Oil firms said there is no immediate impact of biodiesel in oil prices
yet. They added that the movement of prices in the coming days would
still be determined by market forces.

Mark Quebral, Corporate Manager of Chevron Philippines also doubts that
the biodiesel blends would have negative effects on vehicles. "It's
clean, more efficient," Quebral said.

However, Flying V spokesperson Macky Lopez on Thursday said "upon the
implementation of the Biofuels Act, Flying V may increase its price of
biodiesel subject to what the competition may do as it also has to take
into account the increase in the price of diesel in the international

He said the company has to take into account the additional cost of the
additive to be blended with regular diesel in order to come up with
biodiesel, a cost being subsidized by Flying V.

"Flying V, for the past two years, has made available at its stations
pre-blended biodiesel at a price equal to that of regular diesel. The
objective was to make the public aware of the benefits of using
biodiesel," he said.

Total Philippines Corp. meantime estimated that their diesel prices
would increase by 30 to 50 centavos per liter if they would comply with
the Biofuels Act's mandate.

Department of Energy director Zenaida Monsada, on the other hand,
pointed out that the imposition of a zero value-added tax (VAT) on
biofuels would help minimize or even erase the impact of the biodiesel
blend on diesel prices.

"Zero VAT on biofuels may mean downward impact on biofuel price. It
could mean no price increase of the blend or minimal impact or even a
decrease depending on the cost of components," Monsada said.

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