Sugar industry pushes for 20% tariff protection on Bio-ethanol
BACOLOD CITY — The sugar industry in Negros Occidental led by the Confederation of the Sugar Producers Association, Inc. (CONFED) is pushing for a 20% tariff protection on bio-ethanol.
Mr. Federico A. Locsin, III, CONFED President, in his letter to Tariff Commission Chairman Edgardo B. Abon stated that CONFED, the largest farmers’ federation producing 50% of the country’s sugar, strongly support the petition of the Ethanol Producers Association of the Philippines (EPAP) to increase the MFN tariff for bioethanol fuel from 1% to 20%,
In preparation for the impending tariff liberalization by 2015 when MFN tariff will fall to 0% to 5%, the sugar industry needs to diversify its products. Unless the other products, aside from sugar, is developed, the influx of cheap imported sugar will cause the collapse of the industry and the loss of livelihood of 5 million Filipinos dependent on it. To avert this impending crisis, “we are pinning our hope in the ethanol industry that will use sugarcane as feedstock. The Bio-Fuels Act mandates that 10% ethanol should be blended in all gasoline consumed in the country by the year 2011. To satisfy this ethanol market, some 130,000 hectares of sugarcane is needed. This is sufficient to prop up the industry from the threat of liberalized market come 2015.
It is very clear that the future and survival of the sugar industry depends on the establishment and viability of the ethanol industry.
He said, however, two years after the passage of the Biofuels Act, only two bio-ethanol plants are operating in the country with one under construction. Several other investors are seriously considering investing in bio-ethanol but are still waiting for clearer signals from the government before finally committing. Given the substantial cost of establishing an ethanol plant that runs in the billions of pesos, investors will stay in the sidelines unless government creates the environment that allows them a relatively secure investment with reasonable return.
“Thus, we humbly ask the Tariff Commission to provide protection to this infant industry until it is able to stand on its own. It is not fair to immediately open up the industry to competition from the mature ethanol industry of Brazil that has large-scale plantations and financially fully amortized plants. We urge the national government to push for tariff protection otherwise we will never get to see the development and establishment of the ethanol industry,” Mr. Locsin said.
He added that this is not a new strategy. Countries who have successfully adopted tariff protection to help establish their ethanol industries include the United States of America ($0.54/gallon), India, (P42.00/liter), Brazil (20%) and Japan (20%).
He said that for the sake of the millions of sugarcane farmers, they implore the Tariff Commission and the Philippine Government to consider increasing the tariff on bio-ethanol fuel to 20%.
Moreover, EPAP Executive Director Theresa Capellan in her letter to Chairman Abon states that for and in behalf of the domestic bioethanol industry and prospective investors and developers of bioethanol projects in the country, the Ethanol Producers Association of the Philippines is requesting/petitioning the Honorable Tariff Commission to create or extract and implement from the present ASEAN Harmonized Tariff Nomenclature an eight digit tariff line for anhydrous ethanol, in accordance with the Philippine National Standard, for use as fuel in an internal combustion engine or for motive power, to be assigned the AHTN code 22072013.
Also assign, impose and implement a twenty percent most-favored nation tariff on the created or extracted AHTN Code 2207.20.13 and pursuant to preceding paragraphs (1) and (u), amend or repeal Executive Order 449 issued on 22 July 2005.
