Itochu raises $120M for ethanol plant proj

MANILA, Philippines - Japan’s Itochu Corp. has raised $120 million to finance its proposed 50-million-liter ethanol processing plant in Isabela.

Itochu general manager Kenichi Hisato told reporters that they hope to start construction soon as they were able to tap Banco de Oro to partly finance the project.

He said they can draw from the loan once they get the approval of the Philippine Economic Zone Authority (PEZA).

Hisato said they are also waiting for the guidelines on the ethanol importation to be released by the Department of Energy (DOE).

“Most important point is the importation guidelines. Now, the DOE is finalizing the guidelines but we expect the importation guidelines to protect domestic ethanol,” he said.

He said these guidelines are crucial to convince oil companies to source their requirement from local sources.

“Without this importation guidelines, oil companies cannot make a decision because an oil company tends to import cheaper ethanol,” he said.

Another consideration, he said, is the resolution of the tariff issue.

“Second one, tariff. Because your domestic ethanol is very new compared to Brazil, I think you should have some kind of protection against ethanol outside the country,” he added.

Itochu’s investment will be coursed through Green Future Innovations Inc. (GFII). Specifically, the PEZA approval will allow GFII to convert its 24-hectare ethanol facility into an ecozone.

Based on its initial plan, GFII intends to produce ethanol from a total of 11,000 hectares of sugarcane. Once completed, the proposed ethanol facility will also to contribute power to Luzon.

The ethanol facility will make available 19 megawatts (MW) of renewable energy, of which 13 MW can be offered to the Luzon grid to help ease the power supply problem.

The Department of Energy (DOE) expects the five percent mandated blend per total volume sold to go up to 10 percent in 2011 and consequently increase the country’s ethanol requirement to 536 million liters in 2014 from 208 million liters in 2009.

At present, there are only two existing ethanol plants in the country. These are the San Carlos Bioenergy Inc. and Leyte Agri Corp. the San Carlos facility in Negros produces around 30 million liters annually while Leyte Agri’s plant in Ormoc produces nine million liters annually.

GFII is composed of Itochu and JGC Corp., in partnership with local investors. The group will invest more than $100 million for the ethanol plant.

JGC is a global engineering company while Itochu is engaged in trading, and has investments in insurance agencies, finance, construction, real estate trading, and warehousing, among others.