Tuesday, October 28, 2008

Honey Madrilejos-Reyes

In an interview, he said investors from South Korea, Guam, the Middle East, Australia and Canada have approached them and inquired about the projects total around P6 billion.

"They could come in as a strategic investor and invest directly to the company or enter at the project level. There are several options available to them," the official, who declined to be named, said.

Each plant would costs P3 billion to put up, of which 30 percent would be bankrolled by equity while the remaining 70 percent will be supported by bank debt.

"It is crucial that the corporation secures the necessary equity within 2008 since the ethanol projects will require two years to be completed," the official added.

BEC hopes to complete the projects by late 2010 or mid-2011 in order to meet the mandatory 10-percent blend of ethanol in all gasoline products sold in the country by 2011.

Ethanol can be used as a fuel mainly as a biofuel alternative to gasoline. Because it is easy to manufacture and process, and can be made from very common crops, such as sugar cane and corn, it is an increasingly common alternative to gasoline in some parts of the world.

The company`s plan is to establish an ethanol project, which includes the building of a fully-integrated plant capable of producing 200,000 liters of ethanol a day and development of a 10,000-hectare, sugar cane-leased farms.

The said venture will be partly funded by the proceeds of its planned follow-on offering of an estimated 120.8 million shares priced at P0.25 each.

In September, BEC said it had signed a memorandum of understanding with Canadian firm Nexum Energy Corp. for the construction and operation of an ethanol plant with a capacity of 200,000 liters a day.

In a disclosure to the Philippine Stock Exchange, BEC compliance officer Angel Gahol said the plant would generate up to eight megawatts of "green power, natural gas and organic fertilizers." The plant will use cassava as feedstock, he said.

"The ethanol project is in line with BEC`s recent signing of a MOA [memorandum of agreement] with EcoMarketFarms Inc. to greatly expand their cassava project in the Zamboanga Peninsula," Gahol said. "The MOA is expected to jump start the agricultural operations of BEC and generate initial revenues from the sale of cassava chips to local animal feed manufacturers and, eventually, to supply the feedstock requirements of the planned ethanol plant."

Under the agreement, BEC will buy EcoMarketFarms`s Tungawan Cassava Project in the province of Zamboanga Sibugay for P12.5 million.

BEC signed in July a memorandum of understanding with Metro Pacific Investments Corp. (MPIC) for potential partnership in ethanol production.

But after the 45-day due diligence conducted by MPIC, it decided not to pursue the partnership.

MPIC said earlier its potential entry in ethanol production was in line with its fundamental direction to create long-term value for its shareholders by actively and carefully considering opportunities in the vital sectors of the economy.


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