D&L Industries, Inc. anticipates a substantial impact on its margins with the government’s plan to elevate the country’s coco biodiesel blend from 2% to 3%, based on a report by BusinessWorld.
The increase in biodiesel blend would automatically increase demand by 50% from 2% to 3%, which will have a significant effect on volume and margins, President and CEO of D&L Industries Alvin D. Lao said in a report by BusinessWorld.
Lao noted the existing capability of the local biodiesel industry to supply up to a 5% biodiesel blend, which exceeds the mandated 2% blend set by the government.
He highlighted the industry’s low utilization rate, estimating approximately 40%, which impacts margins due to underutilization and low operational capacity.
While expecting a gradual implementation of the increase, Lao emphasized the notable impact it would have when enforced.
The higher biodiesel blend is expected to bring benefits such as decreased pollution and increased value for coconut oil products.
The proposed increase in biodiesel blend is crucial due to oversupply challenges and stagnant demand faced by manufacturers in the sector.
D&L Industries holds a position in the Philippine biodiesel industry through its subsidiary, Chemrez Technologies, Inc., which operates a biodiesel plant.