JBIC commissions study on RP biodiesel project

The Japan Bank for International Cooperation (JBIC) has commissioned two Japanese companies to undertake a feasibility study for the multi-million dollar biodiesel project of Bio-Energy NL, Inc. (BENLINC).

A ranking BENLINC official, who requested anonymity, told The STAR, that the proposed $300-million biodiesel manufacturing plant of the company, to be located somewhere in Northern Luzon, is likely to push through with the JBIC’s move to approve a grant for the project’s study.

The official declined to identify the two Japanese firms pending the result of the six-month study, which is expected to be completed by September this year.

However, the official said one of the companies conducting the study is one of the largest engineering firms in Japan.

Representatives of the two Japanese companies, arrived in Manila last week to start the initial study. "They started to meet with officials from different agencies as an initial step to start the study," he said.

According to the official, the representatives will be returning in May to officially kick off technical and financial studies on the project.

BENLINC, owned by a group of Filipino businessmen, plans to put up a 300-million-liter per year biodiesel manufacturing plant Northern Luzon.

Official documents obtained by The STAR showed that the feasibility study of the two Japanese firms would include comprehensive analyses on the supply and demand side of coconut oil and copra in the Philippines; investment incentives and priorities; project cost estimation; and logistics survey.

The study will also include technical details such as the environmental impact and the safety measures of the plant.

The BENLINC official also underscored the significance of the project as this is the first of its kind to be granted by JBIC. "It’s been a long time since JBIC gave a technical assistance. It is not just for infrastructure but for enhancement of livelihood in the area," he said.

Late last year, BENLINC received a confirmation letter from JBIC of the multilateral agency’s intention to push through with the study.

JBIC director for policy and strategy coordination division  Kazuhiko Amakawa, in a letter to BENLINC, said that the multilateral institution has approved the company’s request for funding for the conduct of a feasibility study.

In accepting the request of BENLINC, Amakawa said JBIC believes that "future economic interchanges between the Philippines and Japan will be enhanced by this study."

Based on its preliminary study, BENLINC intends to have a coconut plantation of about 500,000 hectares to support the 300-million liter a year processing plant.

Earlier estimates showed that it would take about three years to construct the so-called integrated coconut crushing/refinery plant. Fruit bearing coconut trees are expected within four years, of planting.

The official said that the manufacturing plant’s production will be exported to Japan, and the company will not compete with local producers of coco-methyl ester.

It was learned that with its production capacity, the plant can supply a little over 10 percent of Japan’s annual demand for biodiesel (2.5 billion liters).

Consistent with World Trade Organization (WTO) rules, the Japanese government mandates the use of a five percent blend of biodiesel by March 2007, which is seen to increase to 20 percent in 2020.

It was noted that only biodiesel from coconut has passed the oxidation test of the Japan Industrial Standard (JIS).

This project is consistent with the Biofuels Act of 2007 which aims to promote the use of alternative fuels and at the same time provide opportunity to increase the income of local coconut farmers.

In January this year, the Biofuels Act was signed into law. It mandates for a one percent blend of biodiesel starting May 2007.