Corporate News

Eastern Petroleum readies biomass plant

Posted on August 23, 2012

EASTERN PETROLEUM Philippines Corp. expects to award the construction contract for its planned 20-megawatt biomass power plant by October, an official told reporters yesterday.

The firm is also planning to apply for incentives from the Board of Incentives soon.

“In about two months’ time we will be naming the firm for our engineering, procurement and construction contract. We are still finalizing that,� said Eastern Petroleum Chairman and Chief Executive Fernando L. Martinez in an interview on the sidelines of the Makati Business Club general membership meeting.

The firm plans to build its biomass plant in Agusan del Norte, signaling its diversification away from the fuel retailing business.

The power plant is expected to be operational before the end of 2015 and will provide power to Mindanao.

The feedstock to be used for the plant is woodchips from three- to seven-year-old industrial trees, coconut husks, rice husks from the company’s plantation and local plantations in Agusan del Norte, giving returns to the community.

Eastern Petroleum will spend about $70 million for the power plant which will be funded through borrowings.

The company still needs to secure an environmental compliance clearance for the 4,000 hectares it needs for feedstock.

Mr. Martinez said the firm is just having difficulty in securing all the needed requirements due to the policies enacted by the government.

Mr. Martinez said the firm already has a buyer for the power, thus allowing it to operate without relying on feed-in tariffs.

“We will seek incentives but since we already have a buyer it’s not much of an issue for us. We will be filing for incentives once all the requirements are finished,� he said.

Power generation projects are eligible for tax breaks under the investments priorities plan of the government.

The biomass plant will initially be run by Eastern Renewable Fuel & Commodities Trading Corp. Management will be transferred to a still unincorporated Eastern Energy Group. -- Emilia Narni J. David