MANILA (Dow Jones)--The Philippines needs to review a plan that requires gasoline products to be blended with at least 5% of ethanol by 2009 as investment for the production of sugar-based ethanol has been lower than expected, a sugar industry official said Tuesday.
To implement the plan, the country needs to build at least seven ethanol plants producing a total of 268 million liters of ethanol a year. Only one plant is currently under construction.
"We need to review the plan. Maybe we need to put in place more incentives in order to attract the investors," said Archimedes Amarra, executive director of the Philippine Sugar Millers Association, Inc.
Amarra said the low cost of importing ethanol from Thailand and Brazil could be the reason for the dismal investment level.
According to him, the landed cost of imported ethanol is around PHP29-PHP30 ($0.60) a liter, a price level that "is only break-even for local producers. There's no provision for ROI (return on investment)," he said.
The U.K.'s Bronzeoak Ltd. is behind the one plant under construction - a PHP2 billion refinery in San Carlos, Negros Occidental, the country's largest ethanol-producing province.
The San Carlos refinery has a production capacity of 100,000 liters a day, at which it would require around 450,000 metric tons a year of sugarcane as feedstock.
While Bronzeoak is also keen on establishing four other ethanol plants, construction will not start anytime soon, Amarra said.
According to him, it would take at least two years for investors to develop cane plantations and to construct a plant.
The Philippines approved this year legislation requiring preblending of ethanol in gasoline and biodiesel in diesel products.
Oil companies are required to sell gasoline blended with 5% ethanol by February 2009, with the level rising to 10% by 2011.
Source: Rhea Sandique-Carlos, Dow Jones Newswires, 63-918-9014158; rhea.sandique-carlos@dowjones.com