Thursday, May 11, 2006

Happy Days Here Again for Sugar Industry?

With the approval of the Bio-Ethanol Bill in the House of Representatives last November, hacienderos, millers and even small planters must be excited over the prospect of the “good old days” returning for the sugar industry. Authored by Bukidnon Congressman Miguel Zubiri, the Bio-Ethanol Bill will be a boon to the local sugar industry because it proposes the mandatory mixing of gasoline with ethanol. As you may know, ethanol is a by-product of molasses and molasses is a by-product of sugar.

Various interest groups have pointed out several benefits of the bill. Environmentalists say that gasoline blended with ethanol is “greener” and more environment-friendly. Economists argue that it will lessen our dependence on imported crude oil: they estimate that P32 billion in foreign exchange dollars can be saved annually because of this bill. Sugar industry stakeholders declare that the bill will give their ailing industry a much-needed shot in the arm by giving planters another source of income.

Some are wondering: if mixing gasoline with ethanol is good for the country, why couldn’t the oil companies just do it without waiting for government intervention? The answer is that no oil company would be willing to compromise its profits by diluting gasoline with ethanol without receiving any form of tax incentive from government in exchange. That is the reality. This is why government needs to intervene.

I remember that during the oil crisis of the 1970s, the Marcos government tried to institute a similar program. I still remember it clearly because my mother, who then worked at Victorias Milling Co. (VMC) in Negros Occidental, was set to join the government’s “Alcogas” Research and Development Project. In fact, my parents sold their house at Canetown, Victorias in anticipation of our move to Bacolod. But world market prices of molasses suddenly went thru the roof and it became more profitable for planters to sell their molasses rather than convert it ethanol. After only a short trial period, government was forced to shelve the project because nobody wanted to sell molasses to them. In addition to this was the widespread perception that “Alcogas” would ruin your vehicle’s engine, probably because its composition was 60% gasoline and 40% ethanol. During the first two years of implementation, the Bio-Ethanol bill proposes a mixture of 95% gasoline and 5% ethanol and 10% ethanol in the succeeding years.

With gasoline pump prices nearing the P40 per liter mark, commuters definitely welcome any effort to develop alternative and cheaper fuels. I do hope that history will not repeat itself and that world market demand for molasses will remain at its current levels .

It is now up to the Senate to approve a counterpart version of the bill. Sadly, the Senate seems more interested in conducting investigations “in aid of legislation.” What is more bewildering is that the Senate today is headed by an Ilonggo, Senator Franklin Drilon, who definitely must be aware of the importance of the Bio-Ethanol Bill to the survival of Western Visayas’s largest industry. As Senate President, Drilon can easily have the bill calendared for public hearings and plenary debate. The “sugar lobby” is truly just a shadow of its former self and has lost much of its political clout. In the old days when hacienderos held sway over Congress, legislation such as this would have been enacted swiftly.

Perhaps what is needed is for more noise to be generated at the grassroots level to make our senators take notice. So whenever a senator comes to visit your locality, always make sure to mention the bill and push for its passage.

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