Chemrez refutes claim on high power cost

The country’s leading coco methyl ester (CME) manufacturer has refuted claims by power producers that the one percent CME blend in diesel oil used in power generation would result in a P1 per kilowatthour (kwh) increase in electricity cost.

“Oil companies bought CME under P50 per liter.  It is impossible to have a price impact higher than 22 centavos on B1 (one percent biodiesel blend)-logistic costs considered. The P1 per liter increase only means better margin for fuel suppliers,” Chemrez Technologies Inc. chief operating officer Dean Lao Jr. said.

He also debunked allegations that there are problems on CME blending.

“It is important for all to know that CME is perfectly miscible with diesel. It will never separate. Furthermore, the blending is done by oil companies, not the fuel user. Oil companies will tell you how it is blended to be homogenous.  No separation is possible,” Lao said.

Eastern Petroleum Corp. chairman Fernando Martinez supported the CME suppliers, saying that “all CME manufacturers are accredited by the government and their products have passed the tests of the Bureau of Products Standards.”

“We do not see any problem in the blending of CME,” Martinez said

Petron Corp. chairman Nicasio Alcantara also echoed the same sentiment. “We have not encountered blending problems. We have emulsifiers (blending gadget).”

Earlier, several power producers claimed they would need to pass on about P1 per kwh to their customers due to the added costs on the expensive CME blending and insurance premiums.

But according to Florello Galindo, director of the Asian Institute of Petroleum Studies (AIPSI), “coco-biodiesel is 100 percent miscible with diesel and will result in a homogenous mixture.” AIPSI is a leading authority that has conducted extensive studies on coco-biodiesel.

Industrial users, Galindo said, need not do any on-site blending as the coco-biodiesel is already pre-blended by the oil companies at the depots and refineries.

However, even if industrial users decide on a higher blend of coco-biodiesel beyond the current one percent commercially available, the handling of coco-biodiesel would not be any different from current practices in handling standard petroleum diesel for industrial concerns.

From a cost perspective, Galindo shared the same computation as Lao’s: “Coco-biodiesel would at most only add a net amount of 22 centavos per liter at the pump assuming diesel at P36/liter and coco-biodiesel at P52/liter wholesale.”

“Naturally, as coconut oil and petroleum prices decline, the blended cost would follow suit if the reduction is passed on to the consumer,” Galindo added.

The start of the implementation of the Biofuels Act last May 6 with regard to the initial one percent mandatory coco-biodiesel blend was a significant event for the country.

The introduction and mandated use of coco-biodiesel is seen to ensure the long-term viability of the coconut industry as Filipinos consume more coconut oil as a higher-value added product in the form of biofuel. Its vast export potential could likewise be explored as the rest of the world increasingly shifts to renewable sources of energy.

Public attention on the legislative process that had led to the enactment of the Biofuels Act and the discussions around the benefits of biofuels has been primarily on its application to the automotive industry.

While the bulk of the country’s public transport system and the land-based movement of goods run on diesel, the approximately 1.43 million diesel vehicles on the country roads actually account for 55 percent of total yearly diesel consumption.