TO:  
The depressed price of crude coconut oil at the world markets brought about by an oversupply has caused the export price of coconut oil to drop recently from 42 to about 24 US cents per pound.  At this current price, the coconut industry will be exporting at a substantial loss.  The situation is further aggravated by the existence of a surplus that can not  be accommodated either in the domestic or foreign markets.  Lately, some coconut mills have stopped processing copra, thereby affecting seriously the livelihood of over a million Filipino coconut farmers.

To alleviate the plight of the coconut industry and for it to operate viably in order to protect the livelihood of our coconut farmers, it becomes necessary to require certain industries such as electric power generation and land transportation to partially shift to the use of a coconut oil/fuel oil/diesel oil blend as a substitute for industrial fuel oil and/or diesel oil.

However, the Philippine Coconut authority has indicated that the selling price of coconut oil should be about 28 US cents per pound or P4.282 per liter to keep the coconut industry viable.  This selling price will exceed the present cost of petroleum-based fuel which the power and transport industries can not absorb.

To date, the coco-diesel/fuel oil program has involved the purchase and delivery of 48.8 million liters which requires a subsidy of One Hundred Forty-Five Million One Hundred Thousand Pesos (P145,100.000) (inclusive of levy).  Accordingly, the Ministry of the Budget and the Treasurer of the Philippines are hereby directed to release immediately to the Ministry of Energy an initial outlay of One Hundred Forty-Five Million One Hundred Thousand Pesos (P145,100,000) from the Special Fund created pursuant to Section 8 (j) of R.A. 6173, as amended, to finance the foregoing.  Additional release shall be made from time to time as the coco-diesel/fuel oil program may require upon direction of the President.

The Ministry of Energy is directed to submit to the President periodic reports accounting for the disbursement and use of the amount released to it.

This Letter of Instruction shall take effect immediately.

Done in the City of Manila, this 2nd day of October, in the Year of Our Lord, nineteen hundred and eighty-one.