Bioenergy’s new plant to supply 50% of country’s biodiesel needs

REPORT FROM BUSINESSWORLD DAVAO CITY — Bioenergy Corp., with independent oil players among its stakeholders, is eyeing to supply half of the country’s bio-diesel requirement when it starts operating its biodiesel plant in Coronon, Davao del Sur in March. The coco-methyl ester plant is expected to initially churn out 30 million liters of biodiesel fuel this year. The country’s biodiesel requirement at 1% blend with diesel is around 70,000 metric tons (MT) per year. Macky Lopez, Flying V spokesman, said the plant is one way of ensuring that the price of biodiesel remains affordable. Mr. Lopez also said that the Davao plant will help reduce the government’s dependence on imported fuel, as mandated by the biofuels law signed by President Gloria Macapagal-Arroyo. The Biofuels Act of 2006 mandates the use of nontraditional fuel at least 5% of a car’s fuel input starting this year and 1% for diesel within three months from now. The decision to set up the Davao plant was influenced by easy access to raw materials. Mindanao produces 58% of the 1.7-billion liter total coconut oil production in the country, and accounts for 40% of the local coconut plantation. The mandate for coco-biodiesel use will benefit 3.5 million coconut farmers and 20 million Filipinos dependent on the coconut industry, the Flying V official said. "Mindanao will easily be able to supply the raw materials needed in the plant’s production of methyl ester," said Mr. Lopez. Half of Bioenergy Corp., is owned by Enerfuse Holdings, Inc. composed of new independent players Flying V, Seaoil, Eastern and Unioil. The remaining 50% is owned by coconut producers Golden Asian Oil, Mt. Holly Coco Industrial Co., and other local investors. "There were earlier fears that the price of biodiesel will go up. But with competition, the forces of supply and demand will come into play," Mr. Lopez said. Industry giant Chemrez, Inc. inaugurated its P650-million coco-biodiesel plant located in Libis, Quezon City last year. At an annual production capacity of 60,000 MT, it is said to be the biggest and most modern such facility in Asia. Although it is already exporting coco-biodiesel to Germany and Japan, the company presently is concentrating on the domestic market. Chemrez is one of the three Department of Energy-accredited coco-biodiesel manufacturers in the country, the other two being Senbel Fine Chemicals with capacity of 30,000 metric tons and RI Chemicals with 12,000 MT. While maintaining to serve first the needs of the Philippine market, these biodiesel manufacturing plants are also looking at the US, Australia, China and the European markets as potential export markets. Stakeholders of Bioenergy Corp. also plan to invest in another plant in Laguna and export bio-diesel to the Asian region as well as other countries through a foreign trading partner. Meanwhile, the Energy and Clean Air Project, a technical assistance program funded by the US Agency for International Development, is also promoting the use of coco-biodiesel. The project, which is implemented in partnership with the Department of Energy, said use of coco-biodiesel is expected to benefit vehicle owners, the coconut industry, and the country as a whole. Christine Rizardo-Omar, project area office coordinator for Davao, said the use of coco-biodiesel helps vehicle owners cut maintenance costs because of its superior lubricating and cleaning properties. She said fuel economy by as much as 20% was also recorded, which means vehicle owners get more mileage and big savings per liter. — Christie E. Uayan/BusinessWorld Biofuels joint venture mulls IPO Enerfuse Holdings, Inc., a joint venture among four independent oil firms, plans to list in the Philippine Stock Exchange within three years to raise capital for future projects. "We are looking at doing an IPO [initial public offering] within a three-year time period. For now, we are already putting in resources for our projects," said Fernando L. Martinez, chairman and chief executive officer of Eastern Petroleum Corp. Eastern Petroleum, Seaoil Philippines, Flying V and Unioil are the shareholders of Enerfuse, which owns 50% of a larger company, Bioenergy Corp. Bioenergy, which also includes coconut oil producers Golden Asian Oil and Mt. Holly Coco Industrial Co., earlier announced plans to infuse roughly P50 million to operate a biodiesel plant in Davao by March. The plant, with an operating capacity of 30 million liters yearly, is projected to supply half of the country’s yearly biodiesel requirements. Mr. Martinez said aside from Enerfuse’s investment in the bio-diesel plant, the company will also put up an ethanol plant in the future to make biofuels production more efficient. Eventually, Enerfuse may also venture into the shipping business to deliver biofuels to different parts of the country, he added. Initially, the company will acquire three double-hulled vessels for the sea transport business. Energy Secretary Raphael P.M. Lotilla, for his part, welcomed BioEnergy 8’s plan to build a biodiesel plant in Davao, saying that it would be the first biodiesel production facility in Mindanao and is expected to enhance access to biodiesel supply in the country. "This new biodiesel plant is a welcome development in our quest to attain energy security and self sufficiency for the country through the utilization of locally produced biofuels," he said. He expects local players to increase biofuels production in the country and eventually allow the Philippines to supply regional and global markets following the signing of the Biofuels Act of 2006. The law mandates a nationwide minimum 1% biodiesel blend in all diesel-fed engines within three months from the effectivity of the Act. Estimates from the energy department show that the use of 1% biodiesel and 5% bioethanol this year will result to foreign exchange savings for the country of about $167 million annually. In 2010, the use of 10% bio-ethanol and 2% biodiesel will result in annual foreign exchange savings of about $389 million. — Iris Cecilia C. Gonzales/BusinessWorld