http://www.manilatimes.net/national/2006/may/04/yehey/business/20060504bus6.html

Thursday, May 04, 2006

Chemrez poised to supply global demand for biofuels

By Niel Mugas, Reporter

FILIPINO-OWNED Chemrez Inc. positions itself as a possible exporter of biodiesel to important markets in Europe, China, Australia and the United States.

President Arroyo said Wednesday during the inauguration of Chemrez's P650-million plant that the last three countries have, in fact, shown interest in sourcing their biodiesel requirement from the Philippines. 

The President also hinted that Chemrez would be able to meet the demands of China, Australia and the US demand as the company boasts of the biggest biodiesel plant in Asia with a production capacity of 60 million liters a year. 

Besides the P650-million investment for the plant's construction, Chemrez has also allocated P350 million for the acquisition of raw materials and for operating expenses.

Chemrez's total production capacity stands at 75 million liters a day, inclusive of its existing capacity of 15 million a year.

 Dean Lao Jr., Chemrez operating manager, said the three interested countries, which are set to mandate the use of biodiesel fuel in the near future, are scouting for possible sources of cheaper supply.

Lao also disclosed that the company is positioning itself as possible biodiesel exporter for European countries such as France, Germany, Netherlands and Italy, all of which have existing mandates to use biodiesel.

He assured that Chemrez has the capacity to meet global demand, since its plant uses coconut for the production of biodiesel, which is a cheaper feedstock compared to grape seed, a commonly used biodiesel component in Western countries.  

"Coconut is actually just the second most expensive feedstock next to grape seed and most markets look for a cheaper replacement for diesel," Lao said. 

In the Philippines, the proposal for the mandated use of one percent biodiesel has not been approved despite a ready domestic market for the Chemrez product.

Lao assured that it will allocate most of its output to the domestic market if the demand supports it and once the proposed legislation is passed into law. 

Chemrez is already exporting some of its output to Japan and Germany, and Lao said the company's distributor in Germany is presently looking for other possible markets.

 "We have a German distributor who tries to look for available markets. The more volume we [sell] the faster our cost-recovery for our new plant," he said.  

Chemrez is bound by the laws of the Board of Investment to export at least 50 percent of its output to enjoy fiscal and nonfiscal incentives on a pioneer status such as a six-year income-tax holiday and exemption from import duties and wharfage fees.  

The BOI, however, relaxed this policy and allowed Chemrez to initially export most of its output since the Bio-Fuels bill mandating the 1-percent biodiesel blend is still pending in the Senate.  

Energy Secretary Raphael P.M. Lotilla, meantime, said the commercial importation of Chemrez's plant will boost the country's energy independence program. 

A 1-percent biodiesel blend will effectively offset 70 million liters of diesel, based on the Philippines' annual diesel requirement of 7 billion liters.

It will also give savings to vehicles since a 1-percent blend is expected to give 10 percent additional mileage  >>>more news