Japanese Invests in $120-M Ethanol Plant in Isabela

MANILA, Philippines – Itochu Corp. of Japan is investing $120 million in an ethanol plant in San Mariano, Isabela, which is expected to become the Philippines’ biggest and the only integrated biofuel plant by 2012.

The project would be undertaken by Green Future Innovations Inc. (GFII), a joint venture of Itochu, another Japanese firm JGC Corp., the Philippine Bioethanol and Energy Investments Corp., and Taiwanese holding firm GCO.

Under the plan, the joint venture will plant sugarcane over an 11,000 hectares in San Mariano. It will employ an estimated 15,000 people in farm and 500 in the plant.

“We’re just waiting for its proclamation as an economic zone before we can start construction),” said GFII Chief Executive Officer Alexander Uy in an interview at the sidelines of the Philippine Corn Congress in Reina Mercedes, Isabela.

The GFII expects to avail of tax and other incentives as a pioneering biofuel producer from the Philippine Economic Zone Authority’s (PEZA).

The San Mariano ethanol plant will become the country’s biggest ethanol plant with a capacity of 54 million liters per year. Other ethanol producers now are the San Carlos Bioenergy Inc. which has a 37 million-liter annual capacity, and Roxol Bioenergy Inc., 30 million-liter capacity.

On top of the ethanol production, GFII will produce 19 megawatt (MW) of electricity from bagasse, a sugarcane residual, of which 13 MW will be sold to the national grid.

Uy said the GFII plant in San Mariano will be a greenfield plant in that it will have a sugarcane farm whose production will largely be used for ethanol. It will be the only fully integrated (production-processing) ethanol plant.

“We will be planting, growing sugarcane. We’ll be creating value with new farms developed out of idle lands. That’s from zero to something,” he said.

The company’s 54 million-liter annual displacement of petroleum fuel will translate to foreign exchange savings of $27.5 million. Its sugarcane production of 700,000 metric tons has an estimated value of P1.6 billion.

GFII will be using the expertise on contract growing with farmers of Filipino affiliate firm controlled by the Uys, the Universal Leaf Phils. Inc. (ULPI).

“We have been dealing with small farmers,” said Uy.

“Right now, we import 100 percent of our fuel needs, and foreign exchange goes to the rich Middle Eastern nations. Through partnerships like this, we procure ethanol domestically and provide added value for the low-income Filipino farmers,” Uy said.

Japanese firms Itochu and JGC Corp. have been attracted to invest in the country’s biofuel industry due to the incentives given by the Biofuels Act.

“Among our other Asian prospects, the Philippines is the most advanced in its implementation of a biofuels law. We are glad to be attuned to the market demand, especially as the mandated five percent blend of ethanol in gasoline mix will climb to 10 percent by next year,” said GFII Marketing Consultant Erwin Co in a statement.

With a 10 percent petroleum-based fuel to biofuel blend, the country’s ethanol demand will rise to 440 million liters.

source: mb