Gov’t urged to increase ethanol blend to keep fuel prices low

The government on Saturday has been urged to increase the country's ethanol blend to keep fuel prices low amid the looming implementation of the second tranche of excise tax on fuel under the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

Increasing ethanol blend from 10 percent to 20 percent could result in lower gasoline prices by as much as P5 per liter, according to Ilocos Norte Governor Imee Marcos.

“Given that ethanol is presently cheaper than gasoline, increasing the ethanol blend will result in cheaper ethanol-blended gasoline. Better still, this can be done without the need for additional legislation,” she said.

On December 4, President Rodrigo Duterte heeded his economic managers' advice to proceed with the imposition of the second round of increases in the excise taxes of petroleum products in 2019.

The price of ethanol, Marcos said, is lower than the price of gasoline prior to ethanol blending by at least P20 per liter. Imported ethanol is likewise cheaper than domestic ethanol by approximately P20 per liter.

Marcos said that at present, ethanol used for blending is 55 percent imported, which means the domestic industry can only support 45 percent of overall ethanol demand.

“If the ethanol blend is increased from 10 percent to 20 percent, then the key implication is that the domestic industry can only support less than 25 percent of the resulting ethanol demand, thus pushing the importation level to 75 percent even without amending or repealing the biofuel law. A shift to E20 would lower overall cost by almost P5.00,” Marcos said.

Marcos had earlier said she favors suspending the Value Added Tax on basic commodities for a year over deferring the second tranche of excise taxes in 2019. — MDM, GMA News