By Jim Alouat, 16 July 2015

A BUNDABERG fuel retailer says the proposed ethanol mandate could see capital costs rise and small to medium sized service stations forced to close.

Wessel Petroleum managing director Paul Wessel, who owns about 20 service stations in Queensland including several in Bundaberg, said the 2% ethanol mandate proposed by the State Government was detrimental to independent service stations. “You can’t just put ethanol in fuel tanks, you need special fuel tanks,” he said.

“One new tank could cost about $150,000-$200,000 and if you have to upgrade a few tanks that could cost upwards of $1 million.”

Australasian Convenience and Petroleum Marketers Association CEO Mark McKenzie said pressure on fuel retailers could see higher fuel costs as they sought to recover these capital costs.

However, Energy Minister Mark Bailey said he did not expect any increase in fuel prices.

Mr Bailey said the ethanol mandate was about creating jobs and encouraging the development of a biofuels industry.

Mr McKenzie said anything beyond a 2% ethanol mandate of regular unleaded petrol sales, would force fuel retailers to invest in a reconfiguration of existing fuel storage and dispensing infrastructure to accommodate the corrosive characteristics of E10.

“We are opposed to any suggestion by anybody that the many small to medium businesses that comprise the fuel industry in Queensland be forced to fund the costs of developing a biofuels market in Queensland – this cost must be borne by either the biofuels industry itself or the State Government.”

Mr Bailey said the government was working with all stakeholders to ensure the proposed regulatory framework worked well with long-term business practices.

“We’re engaging with stakeholders about what an appropriate ethanol level is,” he said.

“An ethanol mandate is designed to give certainty to producers of biofuels feedstock, including sugarcane.”

Mr Bailey said he had received positive feedback from canegrowers, some of who would like to see a higher mandate.

Bundaberg Canegrowers chairman Allan Dingle said anything beneficial for agriculture would be supported.

“If it’s not profitable then why would we want to go down that path,” Mr Dingle said.

A discussion paper on the ethanol mandate was released in May with submissions sought from the public until earlier this month; 88 written submissions were received.

Extracted in full from the News Mail.