All systems go for PNOC-AFC's $1.3-B deal with UK-based company on biodiesel venture
General Santos City (7 September) -- The Philippine National Oil Company-Alternative Fuels Corporation (PNOC-AFC), the biofuels arm of state-owned PNOC, clarified that it is 'all systems go' for the US$1.3B deal with UK-based bioenergy technology provider Natural Resources Group (NRG) Chemical Engineering Pte Ltd.
The $1.3B agreement to build what could be the biggest biofuel refinery and plantation complex in the Philippines represents the biggest investment by a foreign firm in the country's biofuels industry.
"NRG has been looking for an investment haven in various countries in the region and they have decided to invest in the Philippines, " said Clovis T. Tupas, General Manager of PNOC-AFC.
"PNOC-AFC is very prudent in selecting joint venture partners (JVP) because as a government owned and controlled corporation, there is a process that we need to follow before our projects with our JVPs push through. But it does not necessarily mean that we will let that process delay our plans. PNOC-AFC has a roadmap to follow and we believe that we are on the right track," Tupas explained.
Tupas added that PNOC-AFC is currently working with two other JVPs which he refused to identify at the moment.
He also clarified that the PNOC-AFC and NRG are in constant communication and that the NRG is flying-in this month to the country. "We will have a meeting with NRG next week about our memorandum of understanding (MOU) signed in May this year," said Tupas.
Under the memorandum of understanding (MOU) between PNOC-AFC and NRG signed during the Biofuels Conference in EDSA Shangri-La in May this year, NRG and PNOC-AFC are expected to set up a local company of which 70% shall be owned by NRG and 30% by PNOC-AFC.
Chris de Lavigne, corporate advisor of NRG, told reporters during the Biofuels Conference that a joint venture between NRG and PNOC-AFC would spend about $450 million for a 3.5 million metric ton (MT) biodiesel plant, $200 million for a bioethanol factory with a capacity of 500,000 MT and $600 million for jatropha plantations.
Lavigne said that NRG chose to invest in the Philippines because of its arable lands, fair weather, and pro-active stance on biofuels policies. He added that the projects focus on jatropha since it is inedible unlike other sources of biofuel feedstocks that are also food crops.
"The PNOC-AFC will embark on an integrated biofuel production to ensure sustainable supply of feedstock and lower production cost while providing maximum benefits/returns to the company and the farmers. The company will also serve as a catalyst in biofuels production using cheaper indigenous feedstocks one of which is jatropha, thereby reducing the country's dependence on imported oil while contributing to the economic development in the countryside. It is a commitment made by PNOC-AFC and we will deliver," Tupas ended.
With the entry of PNOC-AFC in the market, the production of biodiesel in the Philippines is projected to increase by at least 200,000 MT in 2009. PNOC-AFC will initially focus on jatropha as its primary feedstock for biodiesel production.
PNOC-AFC has the primary purpose to explore, develop and accelerate the utilization and commercialization of existing and emerging alternative sources of energy and technologies and carry on the business of alternative fuels and other related activities. PNOC-AFC has been directed by President Gloria Macapagal Arroyo to have the primary responsibility over the Biofuel Project and to be the one to coordinate with the concerned agencies.
Meantime, NRG focuses on cutting-edge innovative clean technologies. It intends to enter into the renewable energy and chemical sectors in the Philippines through biorefining and expects to emerge not only as a significant producer in the biodiesel sector but also in green chemicals and downstream end-products. (PNOC/PIA SarGen) [top]