THE Independent Philippine Petroleum Companies Association (IPPCA) is expecting gasoline prices to surge by P7.65 as a result of an impending increase in excise tax on all petroleum products and increase in locally produced ethanol.

“With the increase in excise taxes compounded by the increase in prices brought about by the requirement of exhausting locally produced bioethanol, the general public bears the burden of the astronomical rise in gasoline price amounting to P7 and 65/100 [P7.65] by the year 2019 for gasoline,” the IPPCA said in a draft letter to Congress.

Thus, parallel to the initiatives of House Bill 4774, the IPPCA-proposed amendments in the Biofuels Act of 2006 in order to mitigate the significant increase in gasoline prices brought about by the former’s passage.

The IPPCA cited its study as showing that under the current Biofuels Act of 2006 and guidelines, there is a P2 impact on the price per liter of gasoline due to the combined effect of the price and local demand.

Republic Act 9367, otherwise known as the Biofuels Act of 2006, particularly Section 5 thereof, requires that all liquid fuels for motors and engines sold in the Philippines shall contain locally sourced biofuels components.

In sum, the law and the foregoing circulars state that all oil companies are mandated to distribute and sell gasoline fuel containing a minimum blend of 10 percent of bioethanol by volume. Further, in order to benefit the local bioethanol industry, the mandate extends to purchasing exclusively locally-sourced biofuels.

In order to facilitate the distribution of the local supply of bioethanol, the Department of Energy (DOE) determines the Committed Volume of locally sourced bioethanol, which refers to the amount declared by the local producers that they will produce within a specific timeframe. Thereafter, the DOE gives each oil company its Local Monthly Allocation (LMA). The oil companies are required to purchase the entirety of its LMA before they are allowed to import bioethanol. Under DOE’s current rules, oil companies are meted out a penalty of P500 for every liter of locally produced bioethanol not purchased based on the prescribed LMA.