Metro Pacific Investments Corp. (MPIC), the local arm of Hong Kong-based industrial conglomerate First Pacific Co. Ltd., is partnering with Basic Energy Corp. for its planned foray into the potentially lucrative area of bioethanol manufacturing.

Basic Energy, through unit Zambo Norte BioEnergy Corp. (ZNBC), is putting up a P2.8-billion “greenfield” project consisting of a dedicated sugarcane farm to be developed in Zamboanga del Norte and a fully integrated ethanol facility. The plant is expected to produce 200,000 liters of ethanol per day or around 41-50 million liters yearly.

In a disclosure to the Philippine Stock Exchange, MPIC said it has entered into a memorandum of understanding with Basic Energy to study the viability of establishing a joint venture company that will engage in the production of ethanol and other related fuels following a due diligence on Basic Energy’s proposed ethanol projects in Zamboanga del Norte and South Bukidnon.
MPIC said should results of the due diligence prove feasible, the two companies will then pursue a “basic framework for collaboration, cooperation and coordination in the establishment of the joint venture, preparatory to further discussions on a more definitive agreement between the parties.”

Sources familiar with the deal said MPIC will take a controlling stake in the planned joint venture should both parties approve the deal.

“MPIC will provide the financial muscle to carry on Basic Energy’s proposed bioethanol projects which would cost P3 billion for each plant,” the source said.

MPIC said the move is in line with its fundamental direction “to create long term value for its shareholders by actively and carefully considering opportunities in the vital sectors of the Philippine economy, which include mining and port operations.”

MPIC has investments in real estate development through Landco Pacific, health care services through Makati Medical Center and Davao Doctors, and the water business through Maynilad Water Services Inc.

Basic Energy itself is planning to raise between P375 million and P750 million from a follow-on offering of shares to fund its approximately 35 percent share in the financing requirements for one or two ethanol plants, and its geothermal project in Mabini, Batangas.

The company’s entry into green energy is in anticipation of the huge demand for cleaner fuel as mandated by the Biofuels Act, which requires a five-percent blend of bioethanol with gasoline by May 2009.

According to a recent study, the growth prospects for Asia’s biofuels markets are extraordinary and will present significant opportunities for companies in this industry. The study estimated that Asia’s biofuels consumption could hit 100 billion liters by 2020, a market value of around $60 billion.

In another development, Basic Energy said it has signed a geothermal service contract with the Department of Energy for a project covering the Calumpan Peninsula in Mabini, Batangas. The project involves exploratory geophysical and geological activities and well drilling to determine the viability of a geothermal resource in the area for power generation.

Basic Energy said its board likewise authorized management to negotiate the terms of a proposed memorandum of agreement with EcoMarket Farms for the acquisition and development of a cassava farming and production project in Zamboanga initially involving about 200 hectares. The project is expected to cover about 25,000 hectares within the next five years.

“The joint venture will provide in the transition a stream of revenues to be derived from the sale and export of cassava chips or nuggets and will eventually ensure the supply of cassava as one of the crop feedstock to be used for the ethanol plant to be constructed in Gutalac, Zamboanga del Norte,” Basic Energy said.

Basic Energy has also approved the proposal of Praj Industries Ltd. of India for a sweet sorghum trial plantation in Gutalac where Praj Industries undertake the demonstration of the performance of sweet sorghum as rotational crops and the required techno-commercial evaluation for the viability of these crops as feedstock for industrial ethanol and biodiesel production.

Source: http://www.philstar.com/business/72257/metro-pacific-inks-bioethanol-partnership-basic-energy