BOI okays P2.281-B bioethanol project

The Board of Investments (BOI) has approved the P2.281-billion bioethanol project of the San Carlos Bio-Energy Inc. (SCBI). SCBI is a joint venture between the National Development Co. (NDC) which owns 40 percent and Bronzeoak Philippines Inc. (BP), which owns 60 percent.

SCBI’s bioethanol project will be located in San Carlos City, Negros Occidental.

Its production capacity is 27.3 million liters per year. Aside from the production of bioethanol, SCBI will also put up a co-generation plant using the waste bagasse to produce eight megawatts of power.

It is expected to provide employment for 183 workers.

According to BOI managing head Elmer C. Hernandez, the project was approved on a pioneer bases based on the magnitude of the investment and because it is engaged in the production of a renewable source of energy.

The project, Hernandez said, was also endorsed by the Department of Energy.

The project’s benefit, Hernandez cited, include reduced emissions, improved air quality, energy security and carbon credits under the Kyoto Protocol.

SCBI’s bioethanol production would be purchased by Petron for blending into ethanol-gasoline.

SCBI will source its raw sugar cane requirement from sugar cane farmers and plantation and will not engage directly in sugar plantation.

SCBI is expected to start commercial operation in December 2007.

Based on SCBI’s projection, its bioethanol project would be able to earn up to P8.65 billion in foreign exchange savings from import substitution over a 10-year period.

The NDC, an attached agency of the Department of Trade and Industry (DTI), invested in SCBI as part of government’s commitment to the National Fuel Ethanol Program (NFEP).

The NFEP is an energy independence strategy in the Medium-Term Philippine Development Plan (MTPDP) that aims to promote the production and commercialization of ethanol, a fuel additive made from sugar cane.

The NFEP requires government and private financial institutions to provide credit to cooperatives and individual farmers who participate in the production of sugar cane for ethanol.

NDC put up 40 percent of the initial capital structure of SCBI which will develop and operate a stand alone mill and distillery complex for ethanol, among others.

BP put up the balance of 60 percent. BP’s organization, design and structuring of the mill and distillery complex constitute the NFEP’s development phase.

The agreement also stipulates that NDC would put up 30 percent of the equity component of the project’s operation phase.

This phase is planned to be financed by 30 percent equity participation and 70 percent debt.

Apart from NDC, the following entities would put up equity for the project operations: BP, 30 percent; Sugar Planters Group, 20 percent; and other investors, 20 percent.

Offering a unique bio-energy concept, SCBI will supply fuel ethanol to the transport sector, electricity to the distribution grid, CO2 to the beverage industry and generate Carbon Emission Reduction Certificates for the Senate-ratified Kyoto Protocol Treaty.