Universal Robina to produce ethanol

MANILA, Philippines - Corporate regulators have given the go-signal for the entry of Universal Robina Corp. (URC) into ethanol fuel production.

“The Securities and Exchange Commission (SEC) approved on May 25, 2012 the amendment of the secondary purpose of URC,” the food manufacturing unit of tycoon John Gokongwei’s JG Summit Holdings Inc. said in a disclosure to the stock exchange.

Specifically, the SEC allowed URC “to engage in the business of producing fuel ethanol and other similar products and to carry on all activities and services incidental and/or ancillary for such production.”

Bioethanol, also called ethanol fuel, is a light alcohol produced by fermenting starch or sugar from corn, sugarcane, cassava or nipa used as a substitute to gasoline.

It is a form of renewable energy intended to provide a more environmentally and economically-friendly alternative fossil fuels such as diesel and gasoline.

Also approved was URC’s plan to acquire, design, leasing, built and maintain fuel ethanol plants and related facilities.

URC said it plans to build a bioethanol plant in Negros Occidental with a production capacity of 100,000 liters of ethanol and will require an investment of around P27 million. Start of operations will be in the latter part of next year.

URC is into sugar milling and refining through Universal Robina Sugar Milling Corp. (the flagship sugar refinery of the JG Summit Group), Cagayan Robina Sugar Milling Co. and Southern Negros Development Corp.

The functions to sell, supply and distribute bioethanol products to any entity through markets by trading or by contracts were added to the secondary purpose, URC said.

Furthermore, URC gained the SEC’s approval to import equipment, tools and other necessary and related materials or chemicals for bioethanol production.

In February, URC’s board of directors approved the amendment of the secondary purpose to include the production of fuel ethanol and engage in such activity. The amendment was approved by the listed company’s shareholders last month.

Aside from sugar milling, URC also produces a diverse mix of snack food, chocolate, candy, biscuit, bakery, beverage, noodles and tomato-based products.

Its agro-industrial products segment operates three divisions, which engage in hog and poultry farming, the manufacture and distribution of animal feeds, glucose and soya products, and the production and distribution of animal health products.

URC has earmarked around P5.2 billion for its capital expenditure program this year, 14 percent higher than the P4.56 billion spent last year.

Majority of the capital budget, or 80 percent, will be used for the continued expansion of its branded consumer foods segment operations while the balance of 20 percent will be used to fund its diversification into fuel ethanol development.

Republic Act 9367, or the Biofuels Law of 2006, required all gasoline sold in the country to have a five percent blend of ethanol last year. The 10-percent minimum blend requirement will be fully implemented this year.

But local ethanol output supplies only around 15 percent of total demand, prompting oil firms to import from Brazil and other countries, data from the Independent Philippine Petroleum Companies Association show.