ITOCHU and JGC Launch Large-scale Bio-ethanol Production and Power Plant Businesses in the Philippines

ITOCHU Corporation and JGC Corporation have agreed to participate in large-scale bio-ethanol production and power supply businesses in the Philippines together with other local partners.

The newly formed joint venture, Green FUture Innovations, Inc. (“GFII”), will become a new operating company for the business. GFII will produce and sell ethanol produced from sugarcane feedstock (54,000 kl/year (14.3 million gallons US)), and also sell electricity generated by a power plant (maximum of 19 MW) fueled by sugarcane residuals (bagasse).

The project will create the country’s largest ethanol production facility. Meanwhile, the government intends to enact a new law during 2010 concerned with renewable energy–fueled power generation. Under the law, an incentive program will be created which provides favorable treatment for the supply of electricity generated by renewable energy resources. As bagasse-fueled electricity production is regarded as renewable energy, a power generation plant will be built in the ethanol production plant complex and excess electricity will be sold to outside users.

The business location is in Province of Isabela, about 400 km north from Metro Manila. Start of ethanol production and electricity supply is slated for February 2012.

The Philippine Bio-fuel Act, enacted in February 2009, requires that gasoline produced for automobile fuel contain a minimum 5% ethanol by volume, today, and 10% starting in 2011. The law mandates that locally-produced bio-ethanol be favored over imported bio-ethanol. However, the locally-produced volume falls far short of demand.

ITOCHU and JGC began preparing a basic scheme for a bio-ethanol business in the country a few years ago. Studies were conducted on the details of the business, including securing agricultural fields for growing sugarcane (area: 11,000 hectares) with a plan for harvesting, constructing ethanol production plant facilities, financing, and finding buyers. The final decision to invest in the business was made with the launch of GFII.