Diaser halts bioethanol production

The freeze in biofuel prices in Argentina is beginning to have its effects, as local producer Diaser halted its corn bioethanol manufacturing plant.

As BNamericas previously reported, the current rates for mixtures with gasoline and diesel have not kept up with inflation and have depreciated 25-28% after remaining unchanged for 10 months by government decree. That has led to many of the 54 production plants in the country to have trouble covering operating costs, leading to reduced activity.

To try to alleviate the situation, President Alberto Fernández decided to increase the price of bioethanol made with sugar cane and corn by 10% to 32.78 pesos/l and biodiesel based on soybean oil to 48,533 pesos/t.

This was insufficient for Diaser, which is why it decided to close its bioethanol plant in Villa Mercedes, San Luis province, as it cannot cover operating costs. This is in addition to the biodiesel plant it already shut down in August. Between the two, 160 employees were laid off.

"With confidence we hope and need that the enforcement authority, the Secretary of Energy of the Nation, carry out an urgent recomposition of the prices and its price mechanism from now on, complying with the current legal regime," the company said in a release.

Diaser's biodiesel plant has a capacity to produce 7,200 tonnes/month, while the bioethanol plant can generate a total of 8,200m3 per month.

At the end of October, local firm Bio4 had taken a similar measure with its corn bioethanol factory located in the town of Río Cuarto, Córdoba province, for the same reasons.

“Since December 2019, the price of our product has only had a 10% increase, last October, and costs led by corn, the exchange rate and inflation have increased more than 50%, generating losses that are unsustainable," Bio4 said in a statement.

According to the regional chamber of biofuel SMEs (Cepreb), which groups 30 sector companies, production is halted, affecting the employment of nearly 10,000 workers.

“They are trying to promote everything that is biofuels, but there is still a long way to go. There are 2,000 workers who continue to receive 50% of their salary who are at home or working reduced hours, and they are greatly affected by the whole situation," an oil workers union told a local outlet.

Late last month, Argentina's senate approved a four-year extension of Biofuels Law 26,093, which now needs approval from the lowerhouse.

Meanwhile, ruling party senator Roberto Mirabella submitted a bill to create a national bofuel plan, with which it seeks to revitalize the sector and generate employment in provinces such as Santa Fe, Córdoba, Entre Ríos and Tucumán, where the country's production of soybeans, corn and sugar cane is based.