Biofuel producer San Carlos Bioenergy Inc, has announced that they will shelf plans to increase production of their bioethanol due to the lack of long term contracts being offered by the oil companies for their products. What they will do instead with their funds is build a 15MW biomass power plant. The company already has an existing 8MW Biomass power plant running near their distillery.
The main culprit for this is the lack of credit being offered, since banks won’t lend to the biofuel producer without a long term contract from the oil companies to guarantee a sure market for their bioethanol. With this, biofuel producers are feeling the tight credit market brought about by the world wide credit crunch.
With world oil prices being very volatile at the moment, swinging both ways either up or down. Oil companies are but right to play it safe, to not lock themselves into long term contracts which could be unfavorable to them.
I think it was a great move for San Carlos Bionenergy to shift focus to producing energy for the national grid. Considering that the Renewable Energy Law was just passed, which gives incentives to those who set up renewable energy power plants. And the fact that there is an energy shortage in the Visayan region of the Philippines (where their plant is situated) which gives them a ready market.
San Carlos Bioenergy Inc is a subsidiary of Bronzeoak Philippines, Inc.
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Category: Bioethanol, Automotive, Financing
