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Petron wants more time to comply with biofuels law

January 22, 2007

PETRON Corp., a major oil refiner, will seek from the government a reasonable transition period for the implementation of the Biofuels Act of 2006, its top official said Friday night.

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Petron President and Chief Executive Officer Khalid D. Al-Faddagh said the oil firm, which is partly owned by the government-run Philippine National Oil Co., will work with government in formulating the implementing rules and regulations (IRR) of the recently approved law, which mandates the blending of biodiesel and bioethanol into diesel and gasoline, respectively.

He assured that the oil firm will comply with the law but wants to be given enough time to meet all the requirements. He said Petron may ask for a one-year transition period.

On the use ethanol, for instance, Mr. Al-Faddagh said there are technical issues with respect to the blending and the percentage.

“I think that time is needed for getting the system ready. It’s just the logistical side of it, which we’re working on. There are still uncertainties that have to be addressed such as if there is enough supply for the whole Philippines,” he told reporters.

He also said that the oil firm needs time to ensure that the blending of coco-methyl ester (CME) or biodiesel into diesel would have no effects on vehicle engines.

“Liabilities on damages that will come out from using CME have been one of the points we have initially raised. We want the rules of engagement to be clear. This is a law and we will comply with it but it has to make clear issues on liabilities,” he said.

Mr. Al-Faddagh said Petron is doing a lot of research and testing to ensure that the use of CME would not be harmful to motorists.

“So we’re working on it. And all we’ve been asking from the beginning is a transition period, and maybe the IRR can clarify this,” he said.

Aside from the technical and safety issues, Mr. Al-Faddagh said Petron is also looking into whether there is enough supply of CME as this would affect costs.

“We have a bigger issue on the steady supply of CME [including] the price of it and how it will be priced. I’m talking about the whole Philippines. We also have to look into the logistic system that has to take care of this blend, so we still have to figure it out,” he said.

Petron is allotting P269 million this year for its ethanol program which will be used to construct new pipes and holding tanks to store the alternative fuel. It has yet to finalize the budget for the use of CME or biodiesel.

Energy Secretary Raphael P.M. Lotilla, for his part, assured that the National Biofuels Board would consult all stake-holders in formulating the law’s implementing rules.

The Biofuels Act initially mandates a minimum of 1% biodiesel blend within three months after the law takes effect and at least 5% bioethanol blend within two years.

The law also mandates implementation of at least 2% biodiesel blend within two years upon effectivity and 10% bioethanol fuel within four years.

Estimates from the energy department show that the use of 1% biodiesel and 5% bioethanol this year will result to foreign exchange savings for the country of about $167 million annually.

In 2010, the use of 10% bioethanol and 2% biodiesel will result in annual foreign exchange savings of about $389 million. — Iris Cecilia C. Gonzales, BusinessWorld, Jan. 22, 2007

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