Malacañang has junked the petition of local ethanol makers for tariff protection, which the industry has been demanding since 2009 as a condition for the infusion of about P54 billion in fresh investments for new production facilities.

Edgardo Maralit, commissioner of the Tariff Commission, said the National Economic and Development Authority (Neda) Board, composed of Cabinet secretaries and chaired by the President, has already discarded the Ethanol Producers Association of the Philippines’ (Epap) petition for an increase in the ethanol tariff from the current 1 percent to 20 percent.

The Neda Board, he said, sustained the position of Trade Secretary Gregory L. Domingo and the other members of the Cabinet Committee on Tariff and Related Matters (CTRM) that it would not be proper to grant tariff protection to an industry that is not capable of supplying domestic requirements.

“We did not find it [petition] to be feasible,” Maralit told the BusinessMirror.

Thus, in the executive order (EO) that is scheduled to be issued in the next recess of Congress setting the country’s most-favored nation (MFN) rates from 2011 to 2015, imported ethanol will continue to be slapped with 1-percent duty.

Maralit said the Neda Board has already approved the final draft of the EO.

The technical committee of the CTRM is now in the process of proofreading the document.

“We are now reviewing it to make sure we do not miss anything. It is composed of over 8,900 tariff lines and every comma and semicolon are important,” Maralit said.

The EO setting the country’s new MFN rates, or tariffs imposed on products originating from outside Southeast Asia and those not covered by free-trade agreements, was supposed to take effect starting January 1, 2011, but the government could not immediately decide on the ethanol petition.

Epap had said this tariff reprieve is critical in the decision of at least 18 companies if they will proceed with their planned investments for new ethanol-production facilities totaling P54 billion.

The members of the group want the Philippines to emulate other countries, particularly Brazil and Thailand, which built high-tariff walls to show to the business community that their huge investments will be protected.

However, Domingo said granting the petition would be against the interest of the public as higher cost of imported ethanol would lead to the escalation of oil prices.

Also, he said he was informed that one of the local producers of ethanol has already stopped operation, and another one has shifted to a different product.

“They are producing only 5 percent to 10 percent of the local requirement. It is hard to give them tariff protection if their production is very small. It will considerably increase oil prices,” Domingo told reporters earlier.