D&L Industries Inc. is ready to supply the needed demand for biodiesel component should the government increase the mandated blend from the current 2 percent.
Since biodiesel was mandated as additive to the conventional petrol-derived diesel in 2007 as a result of the Biofuels Act of the Philippines of 2006, the biodiesel component has been kept at 2 percent.
D&L’s biofuels manufacturing facility has the capacity to meet the higher demand and is ready to supply the needs should the required blend be increased, according to Alvin Lao, D&L president.
“The increase would mean the demand would go up automatically by 50 percent from two to three percent (B2 to B3 blend). So the effect on volume and margin, we expect that it will be substantial,” Lao said.
“Everyone in the industry expected the planned increase to 5 percent to proceed as scheduled but the blend was frozen at 2 percent from 2009 until today. However, biodiesel manufacturers like us had already increased capacity in preparation for the B5 blend,” Lao added.
The law mandates the use of only biodiesel using coconut oil as feeds stock for production of coco-methyl ester (CME) or coco-biodiesel.
“So, if you look at the biodiesel industry, we’re actually ready to provide even up to the 5 percent blend. What that means is the capacity to supply is the 5 percent blend, but the actual demand is only a 2 percent. So you have roughly 40 percent utilization,” Lao said.
“We think that when that increase comes, it will likely be gradual,” he added.
The government is reported to be planning to implement the increase in biodiesel blend to B3 by July next year and possibly increase this further by one percent per year until it reaches B5 by 2026.
