Online stockbroker Colfinancial.com said D&L Industries Inc. is set to benefit from the government’s plan to hike the biodiesel component on fuel in the market to 5 percent from the current 2 percent.
The Department of Energy (DOF) has drafted the circular on the plan that, if approved, will take effect by July.
Under the plan, the biodiesel component will be raised to 3 percent by July, then to 4 percent by July next year, and then to 5 percent by July 2026.
“Since 2009, all diesel fuel sold and distributed by oil companies in the country is required to have at least a 2 percent biodiesel blend by volume,” Colfinancial said.
D&L said unit Chemrez Technologies Inc. will be the direct beneficiary of the plan.
“This directive from the DOE is a huge step towards progress and the development of the biodiesel and coconut industry in general,” said Dean Lao Jr., Chemrez president.
“This should pave the way for a greater energy self-sufficiency while collectively reducing our CO2 footprint on the planet,” he added.
Chemrez is the country’s largest biodiesel manufacturer.
Lao said with an annual diesel consumption of around 15 billion liters in the Philippines, an eventual hike to B5 from B2 means a 3 percent reduction in diesel volume, or about 450 million liters of diesel displaced by biodiesel annually.
“Tests done by the DOE showed a hike to B5 from B2 will result in a mileage improvement of around 10 percent which will further add up to the previously mentioned CO2 reduction. This comes along with fresher air as CME improves the fuel quality which in turn allows it to burn completely and emit less black smoke,” he said.
Lao said the price effect of the higher CME blend will depend on the prevailing prices prior to the effectiveness of B3.
“If the price of CME is lower than diesel, the higher blend will make the pump price lower. Conversely, if the price of CME is higher than diesel, the higher blend will make the pump price higher. However, in either event, the attainable mileage improvement will far offset the cost of fuel on a net basis. The savings can be very significant for the motorist,” Lao said.
For over a decade already, the biodiesel industry has been operating amid an oversupply in the market as utilization is just around 40 percent.
