By JAMES A. LOYOLA
PNOC-Alternative Fuels Corporation, a subsidiary of state-owned
Philippine National Oil Company, has signed a $ 1.3-billion memorandum
of understanding with NRG Chemical Engineering Pte Ltd of the United
PNOC-AFC president Peter Abaya said the MOU calls for the setting up of
a local firm which will produce biodiesel, polyols, and bioethanol
mainly from the cultivation of jatropha.
The local firm will be 70 percent owned by NRG and 30 percent by
PNOC-AFC and aims to build a 3.5 million metric ton biofuel refinery in
The joint venture also aims to plant at least one million hectares of
jatropha plantations commensurate to the needs of the refineries to be
put up or attract third parties to plant up to the quantity of the land.
It will also build two cellulosic ethanol plants which will produce
bioethanol from jatropha biomass or other materials for the ethanol
requirements of bio-refineries.
PNOC-AFC chairman Renato Velasco added that they also intend to develop
and utilize the commercialization of by-products from the processing of
jatropha oil and convert polyols into polyurethane for an array of
Under the MOU, NRG will build 350,000 to 700,000 tons of biodiesel
capacity by 2007, build 3.5 million tons of capacity through expansion
or new plants in three years, plant one million hectares of jatropha and
produce two ethanol plants with a refining capacity of 300,000 metric tons.
The 3.5 million ton refining capacity will cost NRG $ 455 million since
PNOC-AFC will infuse 30 percent of the $ 47 million needed for first
350,000 tons while NRG will fully finance the succeeding 3.15 million
tons at a cost of $ 460 million.
PNOC-AFC will be given 30 percent free-carry ownership of the 3.15
million tons refining project with no liabilities or other financial
NRG expects to spend $ 600 million for 500,000 hectares of jatropha
plantations of which PNOCAFC will also get 30 percent free-carry interest.
Another $ 200 million will be spent by NRG for bio-ethanol plants with a
capacity of 300,000 metric tons wherein PNOC-AFC will also get a
free-carry interest of 30 percent.
NRG corporate advisor Chris de Lavigne said they are also looking at
sugar cane as a feedstock for bioethanol, but it will be predominantly
the jatropha biomass that will be used.
He said they are focusing on the use of jatropha for the production of
biodiesel since it produces a non-edible oil compared and, therefore, it
does not compete with the food chain.
"It's also very attractive, because it is a crop that grows very quickly
and gives high yields of oil per hectare. It can also grow in very arid
conditions or wastelands –that's why it's a very attractive feedstock,"
De Lavigne said adding that biodiesel made from jathropa has very good
The locations for the plants are being discussed at the moment, most
likely the first facility will be located at the PNOC industrial park,
and with regard to the jathropa plantation there are many areas that
have been identified, but it will predominantly be in Palawan and