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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 coco-biodiesel exports eyed
The Philippines is looking at increasing its exports of coco-biodiesel after yesterday's inauguration of Chemrez Inc.'s P650-million plant, the biggest and most modern facility in Asia, The new plant, located in Libis, Quezon City, represents an additional 60 million liters of coco-biodiesel production per year.
In her speech during the inaugural ceremony, President Gloria Macapagal Arroyo said the Philippines is looking at the US, Australia and China as potential markets for coco-biodiesel.
Chemrez operations manager Dean Lao told reporters that the company is also looking at other European markets like France, Netherlands and Italy. Its existing export markets are Germany and Japan.
For now, however, Chemrez is still concentrating on the domestic market as its primary market.
"At this time we want to focus on the Philippine market," Lao said.
According to Lao, the passage of the Bio-Fuels Bill mandating the use of 1 percent blend of coco-biodiesel will serve as catalyst for the expansion of the market.
Due to the continuing uptick in world oil prices, there has been pressure on Congress to pass the Bio-Fuels Law this year.
The inauguration of the bio-diesel plant is a major boost to the Philippines' Energy Independence Agenda, which outlines the roadmap for the attainment of 60 percent energy self-sufficiency by 2010.
The country's annual diesel demand is about six billion liters. It is expected that the country's diesel consumption will be reduced by 540 million liters per year of every diesel vehicle in the country will use at least one percent for coco-biodiesel.
The President said this will "free our people" from the uncertainties of an energy supply heavily dependent on imported oil.
Chemrez is currently one of the three Department of Energy-accredited coco-biodiesel manufacturers in the country with an existing capacity of 15 million liters per annum.
With the additional 60 million liters production per year of Chemrez expected to come on stream in the next two days, the country now produces about 110 million liters of CME per year.
Of the 110 million liters, 25 million liters are being produced by Senbel while 10 million liters are being produced by RI Chemicals.
Energy Secretary Raphael Lotilla said the inauguration of the plant is one of the country's sustainable and long-term solutions to the rising oil prices.
"The inauguration of this bio-diesel plant comes on the heels of soaring oil prices. The use of CME or coco-biodiesel as an alternative transport fuel will reduce reliance on imported oil thus more foreign exchange savings for our country," Lotilla said.
Apart from foreign exchange savings, the use of coco-biodiesel as alternative transport fuels is expected to yield savings to motorists in terms of mileage efficiency.