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A big group of Chinese businessmen plans to invest around $350 million over the next five years for the development of the country’s ethanol industry, an oil company executive said.

Eastern Petroleum Corp. chairman Fernando Martinez said they have signed a memorandum of agreement (MOA) with the Guanxi Estates group for the development of some 10,000 hectares of land into an ethanol plantation.

Based on the MOA, Martinez said Guanxi and EPC will target to produce about 400 million liters of ethanol in 2010 in preparation for the implementation of E-10 blend.

Under the Biofuels Act of 2007, oil companies are mandated a five percent blend of ethanol in their gasoline products two years after the law’s implementation. After four years of the law’s effectivity, the mandated blend will be increased to 10 percent.

Martinez said EPC and Guanxi will form a 50-50 joint venture corporation to handle the investment.

As soon as the new company is formed, they expect other independent oil players such as Unioil to join the newly-established joint venture firm, he added.

He said after the MOA signing, they will start the so-called farm consolidation. “We will start looking for potential areas to develop into ethanol-producing lands.”

He said they are now looking at Zambales, Region 1, Region 10, Central Luzon, Cagayan de Oro, Davao, Batangas, and  Mindoro as possible sites for the ethanol plantation.

Martinez said they are likewise currently looking at cassava as the most likely feedstock to produce ethanol.

“We think that it would be more viable to produce ethanol from cassava instead of sugarcane,” he said.

It would be recalled that only two companies, San Carlos Bioenergy and Southern Bukidnon Bioenergy, have presented concrete plans for the construction of ethanol manufacturing plants. San Carlos, which will supply the bioethanol requirements of Petron Corp., will start commercial operations in 2008.

Prior to the entry of ethanol production from local manufacturers in 2008, the bioethanol program activities are currently limited to importation of anhydrous bioethanol, denaturing for local sale of fuel bioethanol, blending fuel bioethanol to gasoline and retail sale of E-gasoline.

The joint venture of EPC and the Chinese investors would help boost the government’s efforts to ensure the sustainability of bioethanol supply in the country.

President Arroyo signed last January the Biofuels Act, which took effect early this month.

The law is a landmark legislation that is expected to liberate the country’s transport sector from full dependence on imported fuel following the mandate of certain percentage of locally-sourced biofuel blends in gasoline and diesel sold and distributed in the country.

It is also expected to speed up the government’s efforts towards attaining energy self-sufficiency given that the needed investment and regulatory environment for the development of the local biofuels industry is already in place.