TO:
The continuing depressed price of crude coconut oil in the world market which can seriously affect the livelihood of over a million Filipino coconut farmers if no immediate alternative local market for the product is developed necessitates accelerated research and development on local commercial utilization of coconut oil.

To date, the utilization of coconut oil as diesel fuel extender appears to have the largest potential in terms of absorbing the country's coconut oil surplus as well as partially displacing the growing demand for diesel fuel, a 30% coconut oil and 70% diesel fuel blend has been found to be technically feasible on a limited scale in diesel engines.  A test program for the coco-diesel fuel blend to be undertaken by the Ministry of Energy is, therefore, necessary to demonstrate the feasibility and to gain public acceptance of the program before it is publicly implemented.

The price of coconut oil, however, is considerably higher than the present price of diesel fuel, necessitating price assistance to preclude financial loss on the part of the program participants arising from the use of the higher cost fuel.  The estimated additional fuel cost for a one-year test program which will involve the use of about 11 million liters of coconut, oil is Twenty-Four Million Pesos (P24,000,000).

In view of the above, 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 Twelve Million Pesos (P12,000,000) from the Special Fund created pursuant to Section 8(j) of R.A. 6173, as amended, to finance the foregoing.  Additional release may be made from time to time as the coco-diesel test 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 16th day of November, in the year of Our Lord, nineteen hundred and eighty-one.