Tanduay, other distillers mull investments in ethanol

The country’s major distillery companies led by Filipino-Chinese business tycoon Lucio Tan’s Tanduay Distillery and Absolut Chemicals Inc. are considering to invest in the emerging ethanol industry.

"The distillery firms are weighing their options with government’s policy to promote the use of biofuels such as ethanol. Most of us are taking a wait-and-see attitude, but with expectations that Congress immediately acts on the ethanol bill," said Gerardo Tan Tee, plant manager of Absolut Chemicals.

Last Monday, President Arroyo certified as urgent the ethanol bill authored by Bukidnon Rep. Miguel Zubiri, seeking to provide various fiscal incentives and perks for companies investing in the ethanol industry.

Tee said the distillery companies are willing to convert their excess capacities and put up facilities such as dehydrators costing about $500,000 that would enable them to produce anhydrous alcohol or ethanol that would be pre-blended with gasoline.

"The industry has a five to 10-percent excess capacity which could be converted into ethanol. With an available market, the existing 13 distilleries will have the opportunity to earn new revenues and at the same time, contribute to government’s efforts to save on costly oil imports by producing homegrown and renewable biofuels," said Tee.

Aside from Tanduay Distillery and Absolut Chemicals, the other companies keen on investing in the ethanol industry are Distilleria Bago, Asia Alcohol Corp., Balayan Distillery, Consolidated Distillery, Kooll, Casino Rubbing Alcohol, Far East Alcohol, Tarlac Distillery Co., Dyzon Distillery and Leyte Agri Co.

The government’s push for renewable fuels is critical because of the relentless surges in the prices of oil in the world market. Last Monday, crude price reached an all-time high of $70 per barrel due to a hurricane in the US that threatened to disrupt supply, especially those coming from the Gulf of Mexico.

So far, independent local oil players Seaoil, USA88 and Eastern Petroleum have introduced 10-percent blend ethanol in gasoline which promises substantial savings for motorists. Meanwhile, Flying V has introduced cocomethyl ester or coco-biodiesel in its service stations.

On the other hand, ED & F Man Alcohols, a United Kingdom-based international processor and distributor of ethanol is currently in talks with major local oil companies such as Petron Corp. and Pilipinas Shell Petroleum Corp. for the supply of ethanol that will be blended with gasoline.

Ethanol’s three principal outlets are the beverage, industrial and fuel sectors. The fuel market accounts for over 60 percent of world ethanol production, with the main producing and consuming countries being Brazil and the US. Ethanol is produced through both fermentation and synthetic processes. The main fermentation substrates are sugar cane, molasses, grains and cassava. Fermentation grade ethanol accounts for the majority of world production.