UNFAZED the competition posed by cheap ethanol from Brazil, Green Future Innovations over the weekend said that it has started construction of its P6 billion ethanol plant in Isabela.
The company said the plant would have a capacity of 54 million liters of ethanol, making it the biggest in the country. Construction of the facility is scheduled for completion in the second quarter of 2012.
“Right now we import our fuel needs, and foreign exchange goes to the rich Middle Eastern nations. This project will grow biofuel in the field,” Reynaldo P. Bantug, president of Green Futures Innovation, said.
Green Future Innovations is a venture between Japan’s Itochu Corp., JGC Corp., Philippine Bioethanol and Energy Investments Corp., and Taiwan-based holdings company GCO.
The Isabela bio-ethanol project will grow sugarcane in 11,000 hectare of idle and underdeveloped land for use as feedstock.
Apart from its economic benefits, Green Futures Innovation said the project will employ 15,000.
The Biofuels Act of 2006 mandates that gasoline should have at least 5 percent bioethanol blend by volume by 2009, to be increased to 10 percent by 2011.
The law also mandates that by 2011, all ethanol that would be blended with gasoline should be locally sourced.
Based on the latest Philippine Energy Plan the expected demand for ethanol last year was about 219 million liters. Demand would double to 438 million liters in 2011 at a 10 percent blend.
The government, however, is unlikely to impose a 10 percent blend this year for lack of adequate local supply.
San Carlos Bioenergy, which has the biggest existing capacity of 38 million liters a year, shut down late last year because of rising cost of sugar cane, the raw material for ethanol, and cheap imports from Brazil.
There are two other significant producers: Roxol Energy with a capacity of 30 million liters and Leyte Agri with 9 million liters.
The local producers said they cannot compete with Brazilian ethanol, which has a landed cost of P25 a liter, at their current marginal production cost of P36 a liter.
To make their products competitive, they have asked the government to raise the tariff on ethanol from the current 1 percent to 20 percent.
Green Future’s is apparently banking on cheaper raw materials by developing its own source of sugar cane.
San Carlos, Roxol and Leyte Agri are located in traditional sugar cane producing areas where they have to compete with sugar producers for the raw materials.
With sugar enjoying good prices because of an expected global shortage, sugar producers can outbid ethanol for the supply of cane.