Energy and Natural Resources

The Secretariat of Energy ratifies agreement for domestic supply of biodiesel

The National Secretariat of Energy (the “Secretariat”) issued Resolution N° 7/2010 by which it ratified the agreement executed with local manufacturers (the “Manufacturers”) for domestic supply of biodiesel to be blended with fossil diesel oil (the “Agreement”). The Agreement, framed within the Biodiesel Law 26,093 (the “Law”), will be in force as from December 31, 2010 and will be automatically renewed for one year at the Secretariat’s request.

Below are the main aspects of the Agreement:

  • The Law created a promotional tax regime granting biodiesel producers certain tax benefits (the “Promotion”). However, the Agreement expressly excludes the Manufacturers from the Promotion. Notwithstanding, biodiesel volumes supplied under the Agreement shall be exempted from some taxes applied to the sale of fuels.

  • Biodiesel volumes jointly committed by Manufacturers under the Agreement are aimed to close the gap between the aggregate deliveries to be supplied by the beneficiaries of the Promotion and the quantities necessary to meet the blend requirements imposed by the Law. According to the Law, biodiesel shall be blended with diesel oil in at least 5% in volume, measured over the total quantity of the resulting product, which use shall be mandatory with the exception of ships, mining, first-load fuels, Antarctic diesel oil, and other non-compatible uses to the discretion of the Secretariat.

  • Each Manufacturer commits to deliver not less than the volumes awarded by the Secretariat as listed in the Annex below. Notwithstanding the foregoing, to the extent the maximum capacity of the relevant plant and the annual quantity offered are not exceeded, the Secretariat is entitled to request up to an additional 10% on top of the volumes awarded to each Manufacturer.

 ton/year ton/year ton/yearton/month
Soy Energy18,00018,00018,0001,500
Rosario Bio36,00036,00036,0003,000
Explora120,000120,00089,091 7,424 
Patagonia250,00084,00033,130 2,761 
Dreyfus305,000 84,00027,5002,292 
Renova480,000 144,00033,7502,813
Total2,406,600 1,388,200859,82071,652

  • The Secretariat will notify the companies authorized to blend fossil diesel oil with biodiesel (the “Blenders”): (i) the quantity of biodiesel awarded to each of them pro rata to their weighted average participation in the diesel oil domestic market sales for the past twelve months and (ii) the date from which they will be entitled to pull biodiesel from the Manufacturers.

  • Blenders shall inform the Secretariat their biodiesel delivery forecasts for the following month and afterwards confirm the volumes actually delivered during such month. A gap higher than 5% between forecasts and deliveries will require detailed explanations.

  • The Secretariat will calculate the price that Manufacturers will collect from Blenders in Argentine Pesos, applying a formula that includes costs of soybean oil, transaction, transportation, methanol and a profit equivalent to US$ 28 per ton.

For further information on this topic please contact Juan Martín Allende