Alcohol makers push removal of levy on molasses

MANILA, Philippines - The alcohol industry is urging the Sugar Regulatory Administration (SRA) to minimize or entirely scrap the levy on molasses imports to lessen the upward pressure on the prices of ethanol which is an additive to fuel products as required by law.

There is currently a shortage in the local supply of molasses, driving the distilleries to import the raw material or use alternatives, Center for Alcohol Research and Development Foundation (CARD) chairman Gerardo Tan Tee told reporters in a briefing in Makati City.

Molasses is a darky syrupy by-product of extracting sugar from sugarcane, used by distilleries to produce several kinds of spirits such as rum and to brew beer and ethanol.

The Biofuels Act of 2008 provides all liquid fuels for motors and engines sold in the Philippines would contain locally sourced biofuels such as bioethanol, biodiesel and other fuels made from biomass.

“If molasses is not available here, we import. If we import, we are slapped with P400 for every ton of molasses. SRA said it is an old regulation for added protection for farmers,” Tee said.

This added cost will eventually be passed on to consumers buying fuel products. For now, motorists are enjoying relatively low fuel prices compared to last year, mirroring trends in the international market.

To prevent a spike in fuel prices, Tee said the alcohol industry group is asking the SRA to remove or reduce the P400 per ton levy on the import of molasses.

Currently, the Philippines produces one million tons of molasses per year, which is short of 600,000 tons due to strong demand.

To be able to produce alcohol and ethanol, Tee said distilleries are looking at sugar cane and sweet sorghum as alternative raw materials.

CARD Foundation said big distilleries have already put up or plan to put up front-end sugar mill to meet their respective requirements.

In particular, Absolut Distillers Inc. (ADI) of the Lucio Tan Group (LTG) is planning to put up a sugar mill which can process up to 2,000 tons per day, utilizing cane juices and sweet sorghum.

However, this will directly compete with sugar millers, said Tee, who is the COO of ADI and the overall-in-charge of LTG’s distillery operations.

Last October, ADI announced plans to invest at least P500 million to put up a sugar mill and co-generation plant in its Batangas facility.

But this investment can be put on hold if the SRA will hear the request of the alcohol industry on molasses imports and if sugar millers are open to supplying sugar cane juice to distilleries, Tee noted.

“The industry is open to talks with the SRA and sugar millers to address the rising raw material prices and preventing the rise of ethanol prices,” he said.

“If other sugar mills can produce (our raw materials), we might just agree on buying sugar can juice. If we do that, we control the rise of molasses prices. We will be relieving the pressure on the demand for molasses,” he said further.