Objective and Government Intervention
- The government sought to make the coconut industry viable again to protect farmers' livelihoods.
- It mandated certain industries, specifically electric power generation and land transportation, to partially shift to a blend of coconut oil with fuel oil/diesel oil as a substitute for conventional fuel.
Pricing and Financial Viability
- The Philippine Coconut Authority determined a selling price of approximately 28 US cents per pound (P4.282 per liter) for coconut oil to sustain industry viability.
- This price was above the current cost of petroleum-based fuels, making absorption of cost by power and transportation sectors difficult.
Subsidies and Funding
- As of issuance, the coco-diesel/fuel oil program involved the purchase and delivery of 48.8 million liters of blended fuel.
- This required a significant subsidy amounting to One Hundred Forty-Five Million One Hundred Thousand Pesos (P145,100,000), inclusive of levy.
Budgetary Directives
- The Ministry of the Budget and the Treasurer of the Philippines were directed to immediately release P145,100,000 to the Ministry of Energy from the Special Fund under Section 8(j) of R.A. 6173, as amended.
- Additional funds would be released as needed upon the President's directive to support the coco-diesel/fuel oil program.
Accountability and Reporting Requirements
- The Ministry of Energy was tasked with submitting periodic reports to the President detailing the disbursement and use of the funds released.
Effective Date
- The Letter of Instruction took effect immediately upon issuance on October 2, 1981.